Dave Ramsey recommends purchasing traditional long-term care insurance around age 60 with specific features including inflation protection, a benefit period of three to five years, a daily benefit amount that covers the average cost of care in your area, and an elimination period of 90 to 180 days. He suggests working with insurance experts through Zander Insurance, his endorsed provider, to compare policies from multiple companies.
The federal government does not mandate long-term care insurance through any specific statute. However, the absence of comprehensive Medicare coverage for long-term custodial care creates a significant financial risk for aging Americans. Medicare covers only up to 100 days of skilled nursing care after a qualifying hospital stay, with full coverage for the first 20 days and partial coverage for days 21-100. This limitation leaves individuals responsible for potentially hundreds of thousands of dollars in long-term care expenses. The immediate negative consequence is that families often must either deplete their life savings to pay for care or qualify for Medicaid by spending down assets to $2,000 in most states.
Here is a compelling statistic: 70% of adults turning 65 will need some form of long-term care during their lifetime, yet only 7.4 million Americans own long-term care insurance policies.
What You Will Learn:
💰 Financial Protection Strategies – Discover how to protect your assets from nursing home costs that average $111,325 per year while maintaining eligibility for government programs.
🏥 Policy Features That Matter – Learn which specific coverage options Dave Ramsey recommends, including daily benefit amounts, elimination periods, and inflation protection that keeps pace with rising costs.
🕒 Optimal Timing for Purchase – Understand why buying at age 60 balances cost and risk, and what happens if you wait too long or purchase too early.
⚖️ Common Pitfalls to Avoid – Identify the specific mistakes that cost families thousands, from over-insuring to ignoring inflation protection and relying on Medicare.
📊 Real-World Cost Comparisons – See actual premium examples, benefit calculations, and scenarios showing how different policy choices impact your financial outcome over time.
Understanding Dave Ramsey’s Long-Term Care Insurance Philosophy
Dave Ramsey approaches long-term care insurance as a critical component of a comprehensive financial plan. His philosophy centers on protecting the wealth you have built over a lifetime from being eroded by catastrophic long-term care costs. Unlike other insurance products where he advocates for term life insurance only, Ramsey recognizes that long-term care represents a unique risk that most people cannot self-insure against.
The financial expert emphasizes that long-term care insurance should be purchased once you have completed other financial priorities. These include eliminating all debt except your mortgage, building an emergency fund of three to six months of expenses, and consistently investing 15% of your income toward retirement. Long-term care insurance fits into Baby Step 6 of his financial plan, which focuses on paying off your home early and building additional wealth.
Ramsey’s recommendations differ from some insurance agents who suggest purchasing long-term care insurance in your 40s or early 50s. He believes this is unnecessarily early for most people. The risk of needing long-term care before age 60 remains relatively low at less than 1%. Purchasing too early means paying premiums for decades without likely needing the benefits, which represents an inefficient use of financial resources.
However, waiting beyond age 60 creates significant problems. As individuals age into their 60s and 70s, health conditions emerge that can make them uninsurable. A person who develops diabetes, experiences a stroke, or receives a cancer diagnosis may find themselves unable to qualify for coverage. Additionally, premiums increase substantially with age. The cost often doubles between age 55 and age 60, and continues rising steeply thereafter.
Why Age 60 Is the Sweet Spot for Purchasing Long-Term Care Insurance
Dave Ramsey’s recommendation of purchasing long-term care insurance around age 60 reflects a careful balance of multiple factors. At this age, most people have completed their peak earning years and have accumulated substantial assets worth protecting. They remain healthy enough to qualify for coverage at reasonable rates, yet are approaching the age range where long-term care needs become more common.
The health qualification aspect represents a critical consideration. Long-term care insurance companies conduct thorough medical underwriting. They review your complete medical history, current prescriptions, and may require a medical exam or phone interview. Common conditions like controlled diabetes, heart disease history, or orthopedic problems can result in higher premiums, coverage limitations, or outright denial.
Statistics show that the percentage of applicants who receive preferred health ratings declines significantly after age 60. At age 55, approximately 40% of applicants qualify for preferred health discounts of 10% to 15%. By age 65, this percentage drops to around 20%. Simultaneously, the rate of declined applications increases from roughly 10% at age 55 to 25% or more at age 65.
Premium costs demonstrate the financial reality of waiting. Using real rate examples from major carriers, a healthy 60-year-old male might pay $2,400 per year for a policy with $150 daily benefit, three-year benefit period, 90-day elimination period, and 3% compound inflation protection. That same individual at age 70 would pay approximately $5,200 per year for identical coverage, assuming they still qualify medically. Over 10 years of paying premiums from age 60 to 70, the total cost equals $24,000. If you wait until age 70 and pay premiums for just five years until age 75, you would pay $26,000 total while being uninsured during the entire decade from 60 to 70.
The risk of needing care during the waiting period cannot be ignored. While most long-term care needs occur after age 75, accidents and unexpected illnesses strike people in their 60s and early 70s. A severe car accident, stroke, or early-onset dementia diagnosis could create immediate care needs. Without insurance during this vulnerable period, you would face paying out of pocket until qualifying for Medicaid by spending down assets.
Essential Policy Features Dave Ramsey Recommends
Daily Benefit Amount
The daily benefit amount represents the maximum amount your policy will pay per day for covered care services. Dave Ramsey advises choosing a benefit amount that aligns with the average cost of care in your geographic area. In 2024, the national median cost for a semi-private nursing home room reached $305 per day or $9,277 per month. Private rooms cost $350 per day or $10,646 per month on average.
However, costs vary dramatically by location. States like Alaska, Connecticut, and Massachusetts see nursing home costs exceeding $400 per day, while states like Louisiana, Missouri, and Mississippi have costs below $200 per day. You should research the actual costs in your specific region or where you plan to retire.
Ramsey suggests that you do not necessarily need to purchase coverage equal to the full cost of care. Many families plan to supplement insurance benefits with income from Social Security, pensions, or investment accounts. For example, if your monthly retirement income totals $5,000 and nursing home costs in your area average $8,000 per month, you might purchase coverage for $3,000 per month ($100 per day), planning to use $3,000 of your income to cover the gap.
This approach keeps premiums more affordable while still providing substantial protection. The goal is preventing the complete depletion of your assets, not necessarily covering 100% of costs through insurance. Many policies today offer monthly rather than daily benefits, which provides more flexibility. If care costs $90 per day and your policy pays $100 per day, the unused $10 per day ($300 per month) remains in your benefit pool, potentially extending your coverage beyond the stated benefit period.
Benefit Period
The benefit period determines how long your policy will pay benefits. Common options include two years, three years, five years, and lifetime coverage. Dave Ramsey typically recommends a three to five year benefit period for most people, which aligns with the average duration of long-term care needs.
Statistics from the Department of Health and Human Services show that men who need long-term care require services for an average of 2.3 years. Women need care for an average of 3.2 years. Approximately 40% of people who need long-term care use services for two years or less. Only about 15% of people spend more than five years in a nursing home.
Understanding how benefit periods actually work prevents common misconceptions. The benefit period does not represent a strict time limit. Instead, it serves as a multiplier to calculate your total benefit pool. A three-year benefit period with a $200 daily benefit equals $219,000 in total benefits ($200 × 365 days × 3 years). If you use only $150 per day of care, your three-year policy would actually last four years.
Most modern policies pay benefits on a pool-of-money basis rather than a strict daily limit. This means if you receive $150 per day of care when your policy pays up to $200 per day, the unused $50 stays in your benefit pool. Over time, these savings accumulate and can significantly extend the duration of your coverage beyond the stated benefit period.
Lifetime benefit periods cost substantially more in premiums. A policy with a three-year benefit period might cost $2,500 per year, while the same policy with lifetime benefits could cost $4,500 per year. Given that very few people need care for longer than five years, the additional cost of lifetime coverage may not represent good value for most families.
Inflation Protection
Inflation protection stands as one of the most critical features Dave Ramsey emphasizes. Without inflation protection, your coverage becomes inadequate over time as care costs rise. If you purchase a policy at age 60 with a $150 daily benefit and need care at age 80, that $150 may cover only a fraction of actual care costs if nursing home expenses have increased to $400 per day.
Two main types of inflation protection exist: compound inflation and simple inflation. Compound inflation protection increases your benefit by a set percentage (typically 3% or 5%) applied to the growing benefit amount each year. Simple inflation increases your benefit by a percentage of the original amount.
Here is the dramatic difference: Starting with a $150 daily benefit and 5% compound inflation, your benefit grows to $243 after 10 years, $394 after 20 years, and $640 after 30 years. With 5% simple inflation, the same benefit reaches only $225 after 10 years, $300 after 20 years, and $375 after 30 years. The compound inflation benefit nearly doubles the simple inflation benefit after 30 years.
For people under age 65, Ramsey and most insurance experts strongly recommend 3% to 5% compound inflation protection. This ensures your benefits keep pace with or exceed the rate at which long-term care costs typically increase. People over age 70 might consider simple inflation or future purchase options to keep premiums more affordable, though this represents a calculated trade-off of coverage adequacy for lower cost.
Some newer hybrid policies include automatic inflation that increases both the long-term care benefit and the death benefit. These can offer attractive options for people who want both protections to grow over time.
Elimination Period
The elimination period functions like a deductible but is measured in time rather than dollars. It represents the number of days you must receive and pay for care before insurance benefits begin. Common elimination periods include 30, 60, 90, or 180 days. Dave Ramsey suggests choosing a 90 to 180 day elimination period to keep premiums affordable.
Longer elimination periods significantly reduce premiums. The difference between a 30-day and 90-day elimination period might reduce your annual premium by 15% to 20%. A 180-day elimination period could save 30% or more compared to a 30-day period. For someone paying $2,500 per year for a policy with a 30-day elimination period, choosing a 90-day elimination period might reduce the cost to $2,000 per year, saving $500 annually.
The logic behind accepting a longer elimination period connects to emergency fund planning. If you have built an adequate emergency fund as Ramsey advocates, you should be able to cover two to six months of long-term care costs out of pocket. At $8,000 per month for nursing home care, a 90-day elimination period requires approximately $24,000 from savings. A 180-day elimination period needs about $48,000 from savings.
Most policies offer two ways to satisfy the elimination period: calendar days or service days. Calendar day elimination periods count every day from when you first receive care, whether you receive services that day or not. Service day elimination periods count only days when you actually receive paid care. Calendar day elimination periods satisfy the waiting period faster, which benefits the policyholder.
Top Long-Term Care Insurance Companies Dave Ramsey Recommends Working With
Dave Ramsey does not endorse specific insurance companies directly. Instead, he recommends working with independent insurance professionals who can compare policies from multiple highly-rated carriers. His endorsed insurance partner is Zander Insurance, which specializes in comparing options from various companies.
Industry analyses from 2025 identify several companies as leaders in the long-term care insurance market. Mutual of Omaha ranks as the number one choice for traditional long-term care insurance. This mutual insurance company maintains an A+ Superior rating from A.M. Best and has paid millions in benefits since entering the market in 1987. Mutual of Omaha offers two main products: MutualCare Custom Solution and MutualCare Secure Solution, with experts typically recommending the Custom Solution for its flexibility.
Thrivent Financial holds the second position in industry rankings for traditional long-term care insurance. As a not-for-profit fraternal organization and Fortune 500 company, Thrivent maintains an A++ rating from A.M. Best, the highest possible rating. The organization offers coverage exclusively to its members, though membership is open to most people.
National Guardian Life (NGL) ranks third for traditional long-term care insurance options. This mutual insurance company founded in 1909 manages nearly $5 billion in assets and offers competitive pricing with comprehensive features. NGL policies typically include generous home care benefits and various optional riders.
For hybrid long-term care insurance that combines life insurance or annuities with long-term care benefits, Nationwide Financial leads the category. Nationwide maintains an A (Excellent) rating from A.M. Best and offers innovative products that provide death benefits if you never use the long-term care coverage. OneAmerica Financial ranks second in the hybrid category, offering solutions that allow you to fund policies using qualified funds from 401(k) or IRA accounts.
Brighthouse Financial, a MetLife spin-off, ranks third for hybrid products with its all-cash benefits and comprehensive international coverage. The company offers flexible underwriting guidelines that may accommodate applicants with diverse health histories who might not qualify elsewhere.
New York Life and Northwestern Mutual, while financially very strong, consistently rank as the most expensive options in the market. Their premiums often run 20% to 40% higher than competitors for similar coverage. Unless specific policy features unique to these companies matter to you, the high cost makes them less attractive options.
Comparing Traditional vs. Hybrid Long-Term Care Insurance
Traditional long-term care insurance provides pure insurance protection. You pay premiums, and if you need long-term care, the policy pays benefits up to specified limits. If you never need care, you paid premiums for protection but receive no return of premium or death benefit. This creates what insurance professionals call “use it or lose it” coverage.
Hybrid policies combine long-term care insurance with life insurance or an annuity. You typically pay a single large premium or a shorter series of premiums. If you need long-term care, the policy pays monthly benefits. If you die without needing long-term care, your beneficiaries receive a death benefit. This structure appeals to people who worry about “wasting” money on insurance they never use.
Here is a real example comparing the two approaches: A 60-year-old male purchasing traditional long-term care insurance might pay $2,400 per year for coverage providing $150 daily benefit, three-year benefit period, 90-day elimination period, and 3% compound inflation protection. Over 20 years until age 80, total premiums equal $48,000. If he needs care at age 80, his benefit has grown with 3% compound inflation to $270 per day, or $8,100 per month. The three-year benefit period provides approximately $295,000 in benefits.
The same individual purchasing a hybrid policy might pay a single premium of $100,000 at age 60. This provides long-term care benefits of $6,000 per month for six years, totaling $432,000 in available benefits. If he never needs care, his beneficiaries receive a death benefit of approximately $115,000. The benefits typically increase annually with inflation protection built into the policy.
Traditional policies offer several advantages. They require lower upfront costs, making them accessible to more people. You can adjust coverage as needs change more easily than with single-premium hybrid policies. Traditional policies often provide more comprehensive daily or monthly benefits per dollar of premium, especially for people who purchase at younger ages with good health.
Hybrid policies provide different benefits. The return of premium through a death benefit eliminates the concern about “wasting” money on unused insurance. The large upfront premium means you have finished paying for coverage immediately rather than facing decades of ongoing premium payments. Many hybrid policies offer guaranteed level premiums that can never increase, whereas traditional policies may face rate increases approved by state insurance regulators.
The choice between traditional and hybrid coverage depends on your specific financial situation. If you have $100,000 in cash available that you do not need for emergency funds or other purposes, a hybrid policy might work well. If paying $100,000 upfront would deplete your liquid savings, traditional coverage with affordable annual premiums makes more sense. For people who strongly dislike the idea of paying for insurance they might never use, the death benefit feature of hybrid policies provides psychological comfort worth considering.
Real-World Scenarios: How Long-Term Care Insurance Works
Scenario 1: Home Care for Stroke Recovery
| Situation | Financial Impact |
|---|---|
| Sarah, age 78, suffers a mild stroke affecting mobility and requiring help with bathing, dressing, and meal preparation | Without insurance: $6,500/month for in-home care ($78,000/year) paid from savings |
| Policy purchased at age 60: $165/day benefit (grown from $100/day with inflation), 90-day elimination period, 3-year benefit period | First 90 days: $19,500 from savings. Policy then pays: $4,950/month for 36 months = $178,200 in benefits |
| Total cost over 3 years: $214,500. Total paid from savings: $19,500. Net savings: $195,000 preserved for spouse and children | Premium investment: $45,000 over 18 years. Return: 333% ($150,000 net benefit after premiums) |
Scenario 2: Nursing Home Care for Dementia
| Situation | Financial Impact |
|---|---|
| Robert, age 82, diagnosed with Alzheimer’s dementia requiring nursing home placement at $9,500/month ($114,000/year) | Without insurance: Depletes $456,000 in savings over 4 years, then qualifies for Medicaid. Family loses entire inheritance. Estate recovery claims home after death. |
| Policy purchased at age 60: $180/day benefit (grown from $120/day with inflation), 90-day elimination period, 5-year benefit period | First 90 days: $28,500 from savings. Policy then pays: $5,400/month shortfall covered by Social Security/pension. Benefit pool: $324,000 lasts full 5 years. |
| At year 5, Robert transitions to Medicaid with $350,000 in assets still protected. Children inherit home and savings. | Premium investment: $65,000 over 22 years. Asset protection: $350,000 preserved for heirs plus policy benefits paid. |
Scenario 3: Assisted Living with Minimal Care Needs
| Situation | Financial Impact |
|---|---|
| Margaret, age 76, needs assisted living for safety ($5,000/month) but requires minimal hands-on care | Without insurance: $60,000/year from savings depletes $300,000 over 5 years. Then relies on children or Medicaid. |
| Policy purchased at age 60: $150/day benefit ($4,500/month), 90-day elimination period, 3-year benefit period | First 90 days: $15,000 from savings. Policy covers most costs: $4,500/month benefit + $500/month from Social Security covers full cost. |
| Using only $4,500/month of $5,000/month maximum benefit, unused $500/month extends coverage. 3-year benefit pool lasts 4+ years. | Premium investment: $39,000 over 16 years. Benefits received: $194,400. Net value: $155,400 benefit after premiums. |
Understanding Medicare and Medicaid Coverage Limitations
Many people mistakenly believe Medicare will cover long-term care costs. This dangerous misconception leads families to inadequate planning and financial devastation when care needs arise. Medicare provides only very limited coverage for skilled nursing care under strict conditions.
Medicare covers up to 100 days in a skilled nursing facility per benefit period, but only following at least a three-day qualifying hospital stay. For days 1 through 20, Medicare pays 100% of approved amounts for skilled nursing care. For days 21 through 100, you pay a daily coinsurance amount, which equals $217 per day in 2026. After 100 days, Medicare provides zero coverage, and you become responsible for all costs.
The “skilled nursing care” requirement eliminates most long-term care situations from Medicare coverage. Skilled nursing care means services that require the skills of licensed nurses or therapists, such as wound care, IV therapy, or physical rehabilitation following surgery or illness. Custodial care, which includes help with activities of daily living like bathing, dressing, eating, toileting, and transferring, is not covered by Medicare even for one day.
Most people who enter nursing homes need custodial care, not skilled nursing care. A person with Alzheimer’s dementia who needs help with daily activities but has no acute medical needs receives zero Medicare coverage. Someone who suffered a stroke and cannot walk independently but has completed rehabilitation receives no Medicare coverage for ongoing custodial care.
Medicaid does cover long-term care for people who meet strict financial eligibility requirements. However, qualifying for Medicaid requires spending down your assets to $2,000 for a single person in most states. Notable exceptions include California ($130,000), New York ($32,396), and Illinois ($17,500) with higher asset limits.
The Medicaid “spend down” process forces you to deplete your life savings on care costs before qualifying for assistance. If you have $200,000 in countable assets, you must spend $198,000 on care costs before Medicaid coverage begins. This process typically takes two to three years at average nursing home costs, completely wiping out savings that took a lifetime to accumulate.
Medicaid also employs a five-year “look-back period” that penalizes asset transfers made within five years before applying. If you gave $100,000 to your children two years before entering a nursing home and applying for Medicaid, the state imposes a penalty period of ineligibility based on that transfer. The penalty period equals the transferred amount divided by the average monthly cost of nursing home care in your state. A $100,000 transfer in a state where nursing homes average $8,000 per month results in a 12.5-month penalty period where you are ineligible for Medicaid despite having depleted your assets.
Medicaid estate recovery adds another harsh consequence. After a Medicaid recipient dies, most states pursue recovery of long-term care costs paid on their behalf by placing liens on the deceased person’s estate. This primarily affects the home, often the most valuable remaining asset. States can force the sale of the family home to recover Medicaid expenses, leaving nothing for children or other heirs. In 2026, only the spouse of the deceased person, minor children, or blind/disabled children can prevent estate recovery.
Common Mistakes to Avoid When Purchasing Long-Term Care Insurance
Mistake #1: Waiting Until Age 65 or Later
Many people delay purchasing long-term care insurance until age 65 because that is when Medicare begins. This creates two serious problems. First, premiums at age 65 cost dramatically more than at age 60 or 55. Second, health problems that emerge in your early 60s can make you uninsurable by age 65.
Real-world consequences include paying double or triple the premium for the same coverage. A policy costing $2,000 per year at age 55 might cost $4,500 per year at age 65. Over your lifetime, waiting costs tens of thousands of dollars extra. Worse, a diabetes diagnosis at age 62 or arthritis at age 64 might result in declined coverage, higher premiums, or exclusions that severely limit the policy’s value.
Mistake #2: Purchasing a Policy Without Inflation Protection
Buying long-term care insurance without inflation protection or with inadequate inflation protection creates coverage that becomes worthless over time. A policy with a $100 daily benefit purchased at age 60 might seem adequate when nursing homes cost $250 per day. By age 80 when you need care, nursing homes cost $400 per day, and your $100 benefit covers only 25% of costs.
The consequence is having insurance that provides minimal value when you need it most. You paid premiums for 20 years but face paying 75% of care costs out of pocket, which defeats the entire purpose of the insurance. Always choose compound inflation protection of at least 3% if under age 70.
Mistake #3: Buying Coverage That Only Pays for Nursing Home Care
Some older or limited policies pay benefits only for nursing home or facility-based care. They exclude or severely limit coverage for home health care, assisted living, or adult day care. This creates a terrible situation where you must enter a nursing home to access benefits, even if home care would be preferable and less expensive.
Modern policies should provide comprehensive benefits across all care settings. Look for policies that pay the full daily or monthly benefit regardless of where you receive care, whether in your home, assisted living, adult day care, or a nursing home. This flexibility allows you to make care decisions based on what is best for you, not what your insurance will pay for.
Mistake #4: Choosing Too Short of a Benefit Period
Purchasing a policy with only a one or two-year benefit period to save on premiums backfires if you need care longer than expected. While average care duration is 2 to 3 years, many people need care for four, five, or more years, especially women and people with dementia diagnoses.
Running out of benefits while still needing care means depleting your savings just as you hoped to avoid. A two-year benefit period might save $500 per year in premiums compared to a four-year period. Over 20 years, you save $10,000 in premiums but risk exhausting benefits and spending $100,000 or more from savings if care needs extend beyond two years.
Mistake #5: Not Shopping Multiple Companies
Working with a captive insurance agent who sells only one company’s products prevents you from finding the best value. Long-term care insurance premiums vary by 30% to 50% between companies for similar coverage. Company A might charge $3,000 per year while Company B charges $2,000 per year for equivalent protection.
Over 20 years, this difference equals $20,000 in unnecessary premium payments. Additionally, each company has different underwriting standards. One company might decline you or charge higher premiums due to a health condition, while another company rates you as preferred health. Independent agents or brokers who represent multiple companies can find the best combination of price and underwriting for your specific situation.
Mistake #6: Ignoring Your Spouse’s Coverage
Married couples should purchase long-term care insurance together to receive spousal discounts ranging from 15% to 40%. These discounts significantly reduce the annual premium cost. More importantly, coordinating spousal coverage provides protection for both partners.
The financial impact of one spouse needing care can devastate the healthy spouse’s finances. If the husband enters a nursing home costing $10,000 per month and has no insurance, the wife must pay this cost from their joint assets. This depletes the nest egg meant to support both of them, potentially leaving the wife in poverty after the husband dies. Proper spousal coverage planning prevents this outcome.
Mistake #7: Selecting Group Coverage Without Comparing Individual Options
Many employees assume the group long-term care insurance offered through their employer provides the best value. In reality, group policies often lack the discounts available on individual policies. Group policies typically charge standard health rates with no preferred health discounts or spousal discounts.
Individual policies frequently offer 10% to 15% preferred health discounts and 15% to 40% spousal discounts. These combined discounts often make individual coverage cheaper than group coverage for the same benefits. Additionally, group policies may have reduced benefits for home care or assisted living. Always compare group and individual options before deciding.
Do’s and Don’ts of Long-Term Care Insurance Planning
Do’s:
Do purchase coverage in your mid-50s to early 60s – This timing provides the optimal balance between affordable premiums and health qualification. You lock in lower rates while still healthy enough to pass underwriting easily. Starting at age 55 costs significantly less than waiting until age 65, often saving 40% to 60% in annual premiums.
Do include comprehensive inflation protection – Choose 3% or 5% compound inflation protection if you are under age 70. This ensures your benefits keep pace with rising care costs over the decades before you likely need care. Without inflation protection, your coverage becomes inadequate precisely when you need it most.
Do consider home care benefits equal to nursing home benefits – Modern policies should pay the full benefit amount regardless of care setting. Most people prefer receiving care at home rather than in a facility. Equal benefits across all settings provide maximum flexibility to make care decisions based on preference rather than insurance limitations.
Do work with independent agents who compare multiple companies – Independent agents can quote policies from five to ten or more companies, finding the best combination of price, benefits, and underwriting for your situation. Captive agents representing only one company cannot provide this valuable comparison shopping service.
Do review your policy coverage every few years – As you age and your financial situation changes, your coverage needs may change. Some policies allow you to increase benefits without new medical underwriting through built-in purchase options. Reviewing coverage ensures it remains adequate and aligned with current care costs.
Do integrate planning with your overall financial strategy – Long-term care insurance should fit within your broader financial plan alongside retirement savings, estate planning, and other insurance coverage. Work with financial advisors who can help you balance long-term care protection with other financial goals and ensure adequate resources for all needs.
Don’ts:
Don’t rely solely on Medicare for long-term care coverage – Medicare covers only skilled nursing care up to 100 days after a qualifying hospital stay. It provides zero coverage for custodial care, which represents the vast majority of long-term care needs. Relying on Medicare for long-term care creates a devastating financial surprise when care needs arise.
Don’t wait until health problems emerge to purchase coverage – Once you develop health conditions like diabetes, heart disease, cancer, or neurological problems, you may become uninsurable or face substantially higher premiums. Purchase coverage while healthy to ensure eligibility and affordable rates.
Don’t over-insure by purchasing coverage for 100% of care costs – You can reduce premiums by planning to pay a portion of care costs from retirement income like Social Security or pensions. For example, if care costs $8,000 monthly and you have $3,000 monthly income, purchase coverage for $5,000 per month rather than the full $8,000.
Don’t choose an elimination period shorter than you can afford – Longer elimination periods significantly reduce premiums. If you have adequate savings to cover 90 to 180 days of care costs, choosing these longer elimination periods can save 20% to 30% on annual premiums compared to a 30-day period.
Don’t ignore policy features that add meaningful protection – Features like shared care benefits for couples, return of premium riders, or survivorship benefits add cost but provide valuable protections. Evaluate these features based on your specific situation rather than automatically declining them to minimize premiums.
Don’t forget to involve family members in planning discussions – Adult children and other family members who might become caregivers should understand your long-term care insurance coverage and your care preferences. This prevents confusion and conflict when care decisions must be made.
Pros and Cons of Long-Term Care Insurance
Pros:
Asset protection from catastrophic costs – Long-term care insurance shields your life savings, home, and investments from being consumed by care expenses averaging $100,000 or more per year. This protection ensures you can pass assets to heirs rather than depleting everything on care costs.
Flexibility in care choices – Insurance benefits provide financial resources to choose quality care providers, private rooms, and additional services. Without insurance, financial constraints often force acceptance of lower-quality or less desirable care options, including qualifying for Medicaid in state-selected nursing homes.
Reduces family caregiver burden – Professional care paid by insurance prevents family members from leaving jobs or sacrificing their own finances to provide care. This protects family relationships and prevents the physical and emotional burnout common among family caregivers.
Tax advantages for premiums and benefits – Premiums for qualified long-term care insurance policies may be tax-deductible as medical expenses subject to adjusted gross income limitations. Benefits received from qualified policies are generally not taxable income, providing additional financial value.
Peace of mind from financial security – Knowing you have protection against potentially catastrophic long-term care costs reduces anxiety about the future. This psychological benefit allows you to enjoy retirement without constant worry about care costs destroying your financial security.
Cons:
Premiums increase over time for many policies – Insurance companies can request and often receive approval from state regulators to increase premiums for entire classes of policyholders. Rate increases of 20% to 60% have occurred, creating situations where policyholders struggle to afford premiums after paying for years.
Use it or lose it nature of traditional policies – If you never need long-term care, traditional policies provide no return of premium or death benefit. You pay premiums for protection but receive no financial return if care is never needed, which can feel like wasted money.
Strict underwriting requirements limit access – People with existing health conditions often cannot qualify for coverage. Common conditions like diabetes, prior strokes, or orthopedic problems result in declined applications or premiums so high they become unaffordable for many people.
Benefits have limits and restrictions – Policies cap benefits at daily, monthly, or lifetime maximums. Elimination periods require paying out of pocket before benefits begin. Some policies exclude certain types of care or impose waiting periods for pre-existing conditions, limiting when and how you can access benefits.
May outlive benefit period – If you need care longer than your benefit period (typically three to five years), you exhaust insurance benefits and must pay costs from savings or qualify for Medicaid. This risk particularly affects people with dementia diagnoses who often need care for seven to ten years or longer.
Can You Self-Insure Instead of Buying Long-Term Care Insurance?
Dave Ramsey acknowledges that some people with substantial assets can successfully self-insure for long-term care rather than purchasing insurance. His general guideline suggests that if you could afford to pay for nursing home care at current rates for 20 to 25 years from assets and income, you might safely self-insure.
Here is what self-insuring requires: Nursing home costs average $111,325 per year for a semi-private room nationally. Over 20 years, this totals $2,226,500 without accounting for inflation. Accounting for 3% annual inflation in care costs, the 20-year total exceeds $3 million. You would need investable assets of $3 million or more, separate from your home and retirement income needs, to truly self-insure.
Very few people have this level of assets. According to Federal Reserve data, only about 2% of American households have net worth exceeding $3 million. For the remaining 98% of families, self-insuring creates unacceptable financial risk of complete asset depletion.
The mathematics of self-insurance versus insurance premiums often favor purchasing coverage even if you theoretically could self-insure. Consider this example: A couple age 60 purchases long-term care insurance with premiums totaling $4,000 per year for both spouses. Over 20 years until age 80, they pay $80,000 in premiums. Their combined policies provide $400,000 or more in benefits if either or both need care.
If they self-insure instead and invest that $4,000 annually, earning 7% annual returns over 20 years produces about $164,000. However, if one spouse needs care for three years, actual costs total approximately $335,000. The self-insurance fund falls short by $171,000, requiring spending additional savings. If both spouses eventually need care, which occurs in about 35% of couples, self-insurance fails completely.
People in the “middle market” with net worth between $500,000 and $2 million face the greatest benefit from long-term care insurance. They have assets worth protecting but insufficient resources to safely self-insure. Those with minimal assets below $100,000 may choose to plan for Medicaid, though this means giving up control over care choices and potentially subjecting assets to estate recovery.
How Zander Insurance Fits Into Dave Ramsey’s Recommendations
Zander Insurance represents Dave Ramsey’s endorsed insurance provider for long-term care insurance. The relationship extends over 20 years, with Ramsey recommending Zander because the company operates as a debt-free business with principles aligned to his financial philosophy. Zander employs independent agents who can compare policies from multiple insurance companies rather than representing a single carrier.
The Zander Insurance approach involves having consumers complete a simple request form providing basic information about age, health status, and coverage preferences. Zander agents then generate side-by-side quotes from several highly-rated insurance companies. This comparison shopping process helps identify which company offers the best combination of coverage, price, and underwriting for each individual’s circumstances.
Zander agents specialize in understanding the specific policy features Dave Ramsey recommends. They focus on appropriate benefit periods of three to five years, adequate daily benefit amounts for local care costs, proper inflation protection, and reasonable elimination periods of 90 to 180 days. This alignment ensures recommendations match the financial principles Ramsey teaches rather than pushing expensive policies that benefit agent commissions more than consumers.
The independent agent structure provides important consumer value. When an agent represents only one insurance company, they can quote only that company’s products regardless of whether it offers the best value. Independent agents access multiple companies, which creates genuine competition for your business. For example, one company might quote $3,200 annually while another quotes $2,400 for similar coverage. Without comparing options, you would never know you could save $800 per year.
Ramsey’s endorsement should not be interpreted as guaranteeing that every person receives the lowest possible price through Zander. Other independent agents and insurance brokers also provide multi-company comparisons. Consumers benefit from obtaining quotes from two to three different independent sources to ensure competitive pricing. However, Zander’s specialization in insurance types Ramsey recommends and their understanding of his financial principles creates natural alignment for people following his advice.
State-Specific Considerations and Partnership Programs
Long-term care insurance regulations vary significantly by state, creating important differences in available coverage, consumer protections, and partnership programs. Understanding these state-specific factors helps you make informed decisions about purchasing coverage.
Most states participate in the Long-Term Care Partnership Program, which provides special Medicaid asset protection for people who purchase qualifying partnership policies. Here is how partnership policies work: Every dollar your insurance policy pays in benefits earns you one dollar of asset protection from Medicaid’s spend-down requirements.
For example, if you purchase a partnership policy and the insurance company eventually pays $150,000 in benefits before your coverage exhausts, you can qualify for Medicaid while retaining $152,000 in assets ($150,000 earned through the partnership plus the standard $2,000 Medicaid asset limit). Without the partnership policy, you would need to spend down to just $2,000 before qualifying for Medicaid.
Partnership programs operate in over 40 states including California, New York, Texas, Florida, and most other major states. The specific rules and benefits vary by state. Some states offer dollar-for-dollar asset protection as described above. Other states offer total asset protection, meaning once your partnership policy exhausts, you can qualify for Medicaid regardless of how many assets you have remaining.
California residents should note that the state eliminated asset limits for Medicaid long-term care eligibility in 2024, raising the limit to $130,000 for individuals. This dramatically changes the calculus of purchasing long-term care insurance for California residents. With higher Medicaid asset limits, the urgency to purchase insurance decreases somewhat, though income limits still apply and estate recovery remains a concern.
New York allows residents to retain over $32,000 in assets while qualifying for Medicaid, significantly higher than the $2,000 limit in most states. Illinois permits $17,500 in countable assets. These higher thresholds provide modestly better protection than strict $2,000 limits but still leave most middle-class families facing spend-down requirements that consume their life savings.
Home equity limits also vary by state. Most states use either $752,000 or $1,130,000 as the home equity cap, which determines whether your home counts as an exempt asset for Medicaid eligibility. Recent legislation proposes standardizing the home equity limit at $1 million nationally starting in 2028, which would impact residents of states currently using the higher $1,130,000 limit.
Frequently Asked Questions
Does Dave Ramsey recommend buying long-term care insurance?
Yes. Dave Ramsey recommends buying long-term care insurance around age 60 as part of a comprehensive financial plan to protect assets from catastrophic nursing home and care costs.
What age does Dave Ramsey say to get long-term care insurance?
Around age 60. This timing balances affordable premiums with health qualification, as waiting longer increases costs dramatically and health problems may cause denial of coverage.
Should I buy long-term care insurance or save money instead?
Buy insurance unless you have $3 million+. Self-insuring requires enough assets to pay $100,000+ annually for 20+ years. Most families benefit from insurance protection for catastrophic costs.
Does Medicare pay for long-term care in a nursing home?
No, only 100 days maximum. Medicare covers skilled nursing care for up to 100 days after hospitalization, with cost-sharing after 20 days. Custodial long-term care receives zero coverage.
How much does long-term care insurance cost at age 60?
$2,000 to $4,000 annually. Costs vary by coverage amount, benefit period, inflation protection, elimination period, health status, and gender. Women pay more than men due to longer life expectancy.
What does inflation protection mean on long-term care insurance?
Benefits increase annually. Compound inflation protection increases your coverage by 3% to 5% yearly on the growing amount, ensuring benefits keep pace with rising care costs over decades.
Can I get long-term care insurance if I have diabetes?
Sometimes, at higher cost. Controlled diabetes may qualify for coverage with higher premiums or exclusions. Uncontrolled diabetes or complications like neuropathy typically result in denied applications.
Does long-term care insurance cover home health care?
Yes, if policy includes it. Quality policies pay benefits for care received at home, in assisted living, or in nursing homes. Verify your policy covers all settings equally.
What is an elimination period in long-term care insurance?
Waiting period before benefits start. Like a deductible measured in days, typically 30 to 180 days, during which you pay for care out-of-pocket before insurance begins paying.
Is long-term care insurance tax deductible?
Partially, with age limits. Premiums for qualified policies are tax-deductible as medical expenses subject to AGI thresholds. Deductible amounts increase with age from $450 at age 40 to $5,640 at age 70+.
Do I need long-term care insurance if I have Medicaid?
Medicaid requires spending assets first. You must deplete assets to $2,000 (most states) before qualifying. Insurance protects assets from this spend-down requirement while providing better care choices.
Should married couples buy long-term care insurance together?
Yes, for 15% to 40% discounts. Couple discounts significantly reduce premiums. Coordinated coverage protects both spouses’ finances, as one spouse needing care can devastate the other’s financial security.
What happens if I can no longer afford my premiums?
Contact insurer about options immediately. Some policies offer reduced paid-up options, extended grace periods, or benefit reductions that maintain some coverage. Never let policies lapse without exploring alternatives first.
Does long-term care insurance cover Alzheimer’s and dementia?
Yes, if you develop it after buying. Policies cover care needed due to cognitive impairment diagnosed after purchase. Pre-existing cognitive issues would prevent qualifying for coverage initially.
Can I buy long-term care insurance for my parents?
Yes, if they consent and qualify. Your parents must complete the application and medical underwriting. You can pay premiums. However, health conditions common in older ages often prevent qualification.
What is the difference between nursing home and assisted living coverage?
Coverage amount, not medical intensity. Quality policies pay benefits based on inability to perform activities of daily living or cognitive impairment, regardless of where care is received.
How long does long-term care insurance approval take?
Four to eight weeks typically. The underwriting process includes reviewing medical records, phone interviews, possible in-person assessments, and insurer review. Simple cases resolve faster; complex health histories take longer.
Does long-term care insurance cover my spouse caring for me?
No, only licensed professionals. Policies require care from licensed or certified caregivers. Family members cannot receive payment unless they hold appropriate professional licenses and work through agencies.
Should I buy traditional or hybrid long-term care insurance?
Traditional if cash-limited; hybrid if well-funded. Traditional offers lower annual premiums. Hybrid requires large upfront payment but provides death benefit if care is never needed.
What is a shared care benefit for couples?
Combined benefit pool both spouses access. If one spouse exhausts their benefit period, they can access unused benefits from the other spouse’s policy, extending coverage when needed most.
Related reading
- Are Long-Term Care Policies Worth It? (w/Examples) + FAQs
- Is Lincoln Financial Long-Term Care Insurance Worth It? (w/Examples) + FAQs
- Is Nationwide Long-Term Care Insurance Worth It? (w/Examples) + FAQs
- Should I Get Long-Term Care Insurance? (w/Examples) + FAQs
- What Happens When Long-Term Care Insurance Runs Out? (w/Examples) + FAQs
- Does Long-Term Care Insurance Cover Hospice? (w/Examples) + FAQs