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Why Don’t Older Americans Buy Long-Term-Care Insurance?

“You need long-term care insurance.”


It’s a statement financial advisers have been telling many of their clients for years now.  And it’s pretty clear why, as the costs to pay for long-term care on your own can be staggering: The average assisted living facility charges $39,516 per year and the average nursing home $83,585 per year for a private room, according to the MetLife Mature Market Institute — and these costs often aren’t covered by Medicare. In other words, without long-term care insurance, a stint in such a facility “can be financially ruinous” for many people, says James Poterba, an economics professor at Massachusetts Institute of Technology, in a speech at the Innovations in Retirement Security conference in Washington, D.C. Thursday. But despite advisers’ recommendations, only an estimated 10% to 12% of people 65 and up have purchased these policies.

Why?  A new study presented at Thursday’s conference came up with several reasons. First, 57% of surveyed older Americans said the cost was the main reason they hadn’t purchased such a policy.  (In this case, cost includes both the fact that people think the prices of these policies were too high and that the person himself couldn’t afford the policy.)  And to be sure, these policies aren’t cheap: the average cost for a policy is more than $2,500 per year, for those 65 and up, according to the U.S. Health and Human Services’ National Clearinghouse for Long-Term Care Information.

Also, two in ten people either don’t think they currently needed a long-term care insurance policy or were unaware of the need or availability of this insurance.  Among the other reasons cited for not purchasing a policy are myopia/procrastination (5%), the (likely mistaken) belief that another insurance policy they have will cover their long-term care needs (4%) and the belief that they aren’t qualified for a long-term care policy (4%).

Not sure if you’ll need long-term-care insurance? Try this calculator to help you figure out.  Next, because cost is of major concern to many consumers, it’s important to shop around for the best policy for the money. You can use this calculator to help you evaluate your options.


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    • Based on my experience with them, I do not rbmmeeer receiving my fees for insurance class and the exam. They do not have their own insurance classes, you have to go to a local insurance school. After you are licensed, then they have in-house training. The first three months they give you some leads. After the three months, you purchase them. Better get great real fast.References :

    • This article is to attunceace the concept of having a plan….not a policy. Nobody wants to buy insurance for something they do not think will happen. After all, I do not buy the extended warranties on my kitchen appliances. I do know it is possible they can need service, but I am willing to take the risk. That is my plan. However, if I have to replace my dishwasher…it will not be financially devastating or have any major effect on my family.Although I believe that the risk of needing care my be less than my dishwasher breaking (hopefully) … the consequence to my family financially and emotionally could be devastating. My “plan” would most likely be to be able to stay in my own home…my last choice would be to enter a facility. The cost of home care can be as much as $100,000 per year. Where would the money come from? Without insurance I would have to rely on my income or assets. In retirement, my assets would be providing most of my income….and there is no “extra” income. So in actuality, Long Term Care Insurance would be the least expensive way to finance my “plan”. This way my assets and income would be undisturbed, and my family could continue their lives and lifestyles without having to sacrifice. The conclusion is that Long Term Care planning is not about the risk of needing care…..its about the consequences to your finances and family. A good Long Term Care Insurance specialist can custom tailor an insurance plan to suit your needs and your budget. Schneider & Shulman Associates will do that for you at no charge. Call us toll free at 1 877 View LTC or visit

    • My husband and I agonized over whether or not to buy LTC. Our main concern was that should one of us need LTC, the other would become impoverished before Medicaid would pick up the costs. To make a long story short, he died of cancer without ever going into LTC and without having purchased an LTC policy. The new question was should I get LTC for myself. I applied and was accepted. However I felt very uncomfortable paying $3000/yr. or so for an affordable policy that would cover only half the cost of a nursing home here in the Boston area. My children told me, “Don’t do it. We don’t need your money. Take care of yourself.” Also there was the worry that in the future even that $3000/yr. could be a financial burden and how would I feel if I had to drop it in ten years after having “invested” $30,000. Needless to say, I do not have LTC.

    • Surveys often do not uncover underlying misconceptions and concerns. With respect to Baby Boomers, there are a lot more issues at stake than simply LTC affordability. Those who sell these policies need to be mindful that this generation has experienced loss-of-faith with insurance providers, and a dark cloud hovers today.

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  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.