How We Chose the Best Long-Term Care Insurance Providers
Stand-alone long-term care coverage
Long-term care insurance is actually available in a few different forms. Traditional, stand-alone LTC coverage is the most common, although there are more recent hybrid policies that pair with another insurance product like life insurance. While we explored these hybrid policies, we focused our attention on stand-alone plans, since they are still the most widely used.
Available to all
We started with a list of 31 LTC insurers. To ensure our top picks’ relevance and accessibility, we required providers sell plans in at least 35 states and hold no special eligibility requirements. We also nixed any that didn’t underwrite their own policies, serving instead as middlemen for the policies of other insurers. The best long-term care provider is available to many people and meets all of its policyholders’ needs in-house.
An insurance company’s financial strength ratings are the best indicators of its ability to pay out on claims. Of the three largest independent ratings agencies, only A.M. Best rates strictly insurance. We strongly weighted these ratings, requiring a minimum grade of A- (“Excellent”). Then, because the Insurance Information Institute recommends getting ratings from at least two agencies, we also required one of the following: AA- (“Very Strong”) or higher from S&P Global or Aa (“High Quality”) or higher from Moody’s.
Benefit periods as short as two years
A long-term care policy’s benefit period is the length of time it will pay for care after you make a claim. Ideally, it lasts as long as you need care, but so-called “lifetime policies” are practically extinct today. Instead, most LTC policies offer a benefit period measured in years (although some use a “pool of money” model in which benefits are gradually subtracted from a lifetime amount with no set time period). The longer the benefit period, the more expensive the policy, sometimes prohibitively so. Because smaller policies can still be useful, potentially saving you from having to sell assets to pay for care, we required companies offer benefit periods as short as two years.
‘Waiver of Premium’ as a standard provision
With insurance types like auto or homeowners, you continue to pay premiums even when you’re collecting benefits. But long-term care insurance typically kicks in at a time when most people are on a fixed, limited income, and “waiver of premium” removes the burden of paying premiums once your claim is approved. It’s not standard with every policy, but it is a wise inclusion and one we wanted to see in all of our top picks.
‘Shared Care’ rider option
Shared Care enables couples to pool their coverage so that one person’s unused benefits are available to the other. “Shared Care saves couples money by letting them each buy shorter policies than they would otherwise buy separately,” explains Mickey Batsell, board member at National Insurance Marketing Executives. Partners can each purchase a shorter, more affordable benefit period (say three years) but keep their partner’s identical benefits on reserve should they end up needing them (allowing each the potential for six years of care). The risk: The first person to need care could exhaust the entire benefit. Still, the option of adding a Shared Care rider means greater flexibility and value, so we required our picks to include it as an option.
The 3 Best Long-Term Care Insurance Providers
Mutual of Omaha — Best for Robust Coverage
Why we chose it
In choosing our top picks, we prioritized flexibility — from designing a policy to total benefit amounts and how they’re dispersed. All three of our picks excel, but none more than Mutual of Omaha, which offers benefit periods of two to five years, as well as the alternative “pool of money” model (up to $500,000). This gives policyholders more choice in their policy design than any of our other finalists.
Quick access to benefits
Mutual of Omaha is our only top pick to count its Elimination Period in calendar days instead of service days, which means policyholders can get access to their benefits faster. (What is an Elimination Period? Read our answer below.) It’s a thoughtful touch that’s standard with the company.
Independent home caregivers covered
Your caregivers don’t need to be from an expensive agency in order to receive payment from Mutual of Omaha. Home care services (such as health aide visits) are also not subject to the Elimination Period at all — they’re covered as soon as you need them. And Mutual of Omaha’s “cash alternative” payout can also be up to 40% of your policy’s maximum monthly benefit, which is 10% higher than our other finalists’. That means if your care costs are low in a given month, you can opt for a check equal to 40% of your policy’s monthly maximum in lieu of other benefits. You can spend that cash on anything, not just covered services — another nice measure of flexibility.
Points to consider
Complex range of options
In addition to the company’s vast repertoire of plan options, you also have premium and payout specifics to decide on. While this range of options is something we loved about the company, Mutual of Omaha’s spread of services may leave you feeling overwhelmed if you’re not insurace-savvy. If this is the case, it may be time to turn to a broker. An independent agent is often the best way to make sure you thoroughly compare your options. The Society of Financial Service Professionals can help you find one you can trust.
Transamerica — Best for Affordable Policies
Why we chose it
Small benefit amounts
Transamerica is a solid option for long-term care insurance, and it’s an especially good choice if you are looking for a modest policy — one to supplement, not shoulder, future financial burdens when it comes to healthcare. The company offers total benefit amounts as small as $18,250. Small benefits means greater affordability.
‘Pool of money’ model
Transamerica uses the flexible “pool of money” model to define its policies’ benefits instead of years of care. This means that if a debilitating injury or surgery requires more intensive care one year and much lighter care the next, the pool of money can be drained as needed without yearly caps.
Competitive cash alternative
While Transamerica’s standard features are slightly less generous than Mutual of Omaha’s, it too boasts a zero-day waiting period for home care, reimbursing those costs as soon as you first have a need for them. And its monthly cash alternative caps at 30% of the policy’s maximum monthly value, not much less than Mutual of Omaha’s 40%.
Points to consider
Requires agency caregivers
Transamerica requires that you receive in-home care from agency-affiliated caregivers before paying out. Because agency services are likely more expensive than an independent caregiver would be, this stipulation could drain your benefits more quickly.
MassMutual — Best for Extended Care
Why we chose it
Long benefit period
MassMutual offers the only six-year benefit period of our top three insurers. While the general rule — shorter benefit period/lower rates, longer benefit period/higher rates — applies, a lengthy plan could prove vital if a late-in-life illness leads to prolonged bed rest. A generous time frame means that paying for the care you need won’t weigh heavy on your mind.
MassMutual claims the best financial strength ratings of all of our finalists, meaning it has a proven track record of solvency and a confident outlook. You can rest assured that MassMutual will make good on its claims for as long as you need its payouts, and beyond.
Independent home caregivers covered
Like Mutual of Omaha, MassMutual will foot the bill for in-home care even if the caregiver you secure isn’t affiliated with a larger agency. This is an important point, since shopping around for independent caregivers could mean getting all the help you need for a more reasonable rate.
Points to consider
Missing policy options
Guide to Long-Term Care Insurance
How to shop for long-term healthcare insurance
Consider future need
We all need help as we get older, though how much help is impossible to predict. The US Department of Health and Human Services estimates that 70% of all Americans 65 and older will need some kind of long-term healthcare during their lifetime. The average need for care in the US is currently about three years, but 20% need it for more than five. The most expensive scenario is a nursing home (with average annual costs currently around $90,000 per year), but having weekly or daily assistance in your home can still require tens of thousands of dollars annually. It makes sense to insure yourself for at least two to three years of care, if you can afford it.
Addressing the need for care sooner rather than later can make a huge difference in both your peace of mind and your bank account. The older you get, the more you’ll pay in premiums (and the more likely it is that you’ll develop a condition that makes getting covered more difficult). Lenny Robbins, a licensed life insurance broker with LifeNet Insurance Solutions, suggests, “Your early 50s are an ideal time to investigate your options for long-term care.”
Choose your policy type
If you’re worried you might never use the benefits in a traditional long-term care policy, a hybrid that combines LTC with life insurance might be more appealing. Such policies secure a benefit no matter what — either in the form of care for you or cash for your loved ones. There’s also no danger of premiums going up unexpectedly.
However, there are trade-offs. For one, most hybrid products have a higher upfront cost: They require either a large one-time payment or a shorter set payment term (10 years is typical). And even if you have the cash available (a meaningful LTC benefit will require between $50,000 to $75,000 in total premium), paying it sooner means it’s not available to earn interest elsewhere. If you do end up needing care, the death benefit will decrease as a result, leaving your heirs with less.
You should address your respective needs for life insurance and long-term care insurance in their order of urgency. If you’re 55 or older and shopping primarily for life insurance, you may want to read our review on the best life insurance for seniors, but keep in mind that the accelerated death benefits we discuss may not cover all of your long-term care needs.
Decide if you can afford to protect against inflation
Buying insurance is about removing financial risk from your life, and inflation is a legitimate risk to your policy’s future value. Think of it this way: At 3% annual inflation, the care you can get today for $200,000 will cost $268,783 in 10 years and $361,222 in 20 years. That’s why it’s worth considering a 3% inflation rider.