Fewer than 3 percent of Americans over age 50 currently hold long-term care insurance, as the stand-alone market has shrunk from 235,000 policies sold in 2010 to fewer than 35,000 in 2024, according to data from LIMRA. High premiums, market exits by major insurers, and stringent health underwriting have left most Americans without dedicated coverage for future care needs.
Why has the long-term care insurance market collapsed?
The private long-term care insurance market faced a crisis after major carriers like Genworth, John Hancock, and MetLife exited the sector. According to Claude Thau, director of the annual Milliman Long-Term Care Insurance Survey, the industry was driven by a psychology of panic due to mounting financial losses. Insurers initially projected that many policyholders would drop their coverage—a profitable outcome—but lapse rates remained far lower than expected. When interest rates fell following the Great Recession, investment returns struggled to cover the costs of existing policies, forcing companies to raise premiums or leave the market entirely.
Roughly one in six applicants for long-term care insurance is denied coverage due to pre-existing health conditions, according to estimates by Claude Thau of the Milliman survey.
How do current policies compare to past protections?
Legislative attempts to solve the coverage gap have historically failed. The Affordable Care Act’s 2010 CLASS Act, a voluntary long-term care program championed by Senator Edward M. Kennedy, was eventually scrapped by the Obama administration after officials deemed it financially unworkable. Today, the few remaining stand-alone policies are significantly more expensive. Milliman reports that a 60-year-old purchasing a new policy today faces an average annual premium of $3,265 for a projected daily benefit of $369 at age 80.
What are the alternatives to stand-alone insurance?
As stand-alone policy sales have plummeted, the insurance industry has pivoted toward hybrid products. Companies are now bundling long-term care benefits with life insurance or annuities. While these products are gaining market traction, they represent a fundamental shift in how consumers prepare for aging. Instead of purchasing insurance specifically for care, policyholders are increasingly forced to integrate these needs into their broader financial and estate planning strategies.
Pro Tips for Planning
- Review Hybrid Options: Look into life insurance policies with long-term care riders, which may offer more value than stand-alone plans.
- Start Early: Because one in six applicants is denied coverage based on health, seeking information before chronic issues arise is essential.
- Analyze Benefit Limits: Compare the $369 daily benefit average against current local costs for home health aides or facility care to gauge your actual risk.
Frequently Asked Questions
Why is long-term care insurance so expensive?
Premiums spiked because insurers underestimated the longevity of policyholders and overestimated the number of people who would abandon their policies, according to industry reports.
Can I get long-term care coverage if I have health issues?
It is difficult. Roughly 16 percent of applicants are turned away due to health reasons, according to data from the Milliman Long-Term Care Insurance Survey.
What is the alternative to buying a policy?
Many individuals are turning to hybrid products that combine long-term care benefits with life insurance or annuities, as traditional stand-alone policies become rarer.
Are you concerned about how to fund your future care needs? Share your thoughts in the comments below or subscribe to our newsletter for more updates on financial planning and aging.