How much long-term care insurance do I need?

There is no one-size-fits-all answer to the question of how much long-term care insurance you need. That’s because everyone’s situation is different, and the amount of long-term care insurance you need will depend on several different factors. They include:

• Your age
• The cost of care in the geographic region in which you live (or plan to receive care)
• Your personal health history
• Your family’s health history
• The kind and extent of care you’d want and if you can count on family members for any amount of care
• The period of time you want the policy to cover
• Your financial situation and personal budget for coverage

One method for calculating how much long-term care coverage you need is to subtract the daily cost of care in your area from your daily income. For example, let’s say you make $4,000/month, or $133/day. And let’s also use the median daily cost of $247 for a semi-private room in a nursing home.¹ This means you’d want a benefit of at least $114/day.

That said, this method should only be used to get a rough idea of how much long-term care coverage you may need. The best way to know for sure is to work with a financial professional who can walk you through the entire process.

Today’s Long-Term Care Insurance

In years past, you typically bought long-term care insurance as a standalone policy. This kind of policy offered coverage only for long-term care coverage in either your home or in a specialized facility.

Today, nearly all long-term care insurance policies are bundled with life insurance coverage (or an annuity). This means you get two important coverages in one policy: life insurance coverage that offers your loved ones financial support if you were to pass away and long-term care coverage if a chronic illness or disability required you to need long-term care.

There are many benefits to these long-term care insurance hybrid policies. But they do add another decision to the process of deciding how much coverage you need. That’s why it’s so important to work with a financial professional. He or she can help you find a policy that works with your life and your budget⁠—plus, you may also be able to deduct long-term care insurance premiums from your federal and state taxes. Learn about the three main ways to get long-term care insurance.