Cost of Nursing Home Insurance: What You Need to Know

Nursing home insurance, also known as long-term care insurance, is a type of coverage that helps pay for the expenses of living in a nursing home or receiving other long-term care services.

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These services can include assisted living, home health care, adult day care, and hospice care.

Nursing home insurance can provide financial protection and peace of mind for you and your family, as the cost of long-term care can be very high and unpredictable.

According to the U.S. Department of Health and Human Services, about 70% of people aged 65 and older will need some form of long-term care in their lifetime, and the average duration of care is about three years.

However, nursing home insurance is not cheap, and it may not be suitable for everyone.

There are many factors that affect the cost and benefits of nursing home insurance, such as your age, health, location, coverage options, and policy features.

In this article, we will explain some of the key aspects of nursing home insurance and help you decide if it is worth it for you.

How Much Does Nursing Home Insurance Cost?

The cost of nursing home insurance varies depending on your provider, age, location, daily costs, benefit period, payment method, coverage, limits, elimination period, interest option, and whether or not you choose a joint policy.

According to the American Association for Long-term Care Insurance (AALCI), the average cost of nursing home insurance is $1,200 a year for a 60-year-old man for $165,000 coverage, and $1,960 for a 60-year-old woman for the same coverage.

Married couples can buy a joint policy, which can be more affordable than two separate policies, but it also means that the coverage limit is shared between the spouses.

The average cost of a joint policy for a 60-year-old couple is $2,550 a year for $165,000 coverage.

The cost of nursing home insurance also increases as you age, so the younger you buy the policy, the lower your initial premiums will be.

However, you should also be aware that nursing home insurance premiums are not fixed, and they can increase over time due to inflation, claims experience, or other reasons.

Therefore, you should make sure that you can afford the potential rate hikes in the future.

Another factor that affects the cost of nursing home insurance is the inflation protection option, which allows your benefits to grow over time to keep up with the rising cost of care.

You can choose different levels of inflation protection, such as 1%, 3%, or 5% annual compound growth.

However, adding this feature will also increase your premiums significantly.

For example, a 60-year-old man who buys a $165,000 policy with 5% inflation protection will pay $3,820 a year on average, compared to $1,200 a year for a policy without inflation protection.

How Much Money Will Nursing Home Insurance Pay?

The amount of money that nursing home insurance will pay depends on your daily benefit amount, which is the maximum amount that the policy will reimburse you for each day of care.

You can choose your daily benefit amount based on the average cost of care in your area, your personal preferences, and your budget.

The higher your daily benefit amount, the higher your premiums will be.

According to the AALCI, the average daily benefit amount for nursing home insurance policies sold in 2020 was $172.

However, the actual cost of care can vary widely depending on the type, quality, and location of the service.

For example, according to Genworth’s 2020 Cost of Care Survey, the national median cost of a private room in a nursing home was $290 a day, while the national median cost of a one-bedroom unit in an assisted living facility was $141 a day.

Therefore, you should do some research on the cost of care in your area and choose a daily benefit amount that can cover most or all of your expected expenses.

How Long Will Nursing Home Insurance Cover the Costs?

The duration of nursing home insurance coverage depends on your benefit period, which is the maximum length of time that the policy will pay benefits.

You can choose your benefit period based on your needs and preferences, such as two years, three years, five years, or lifetime.

The longer your benefit period, the higher your premiums will be.

According to the AALCI, the average benefit period for nursing home insurance policies sold in 2020 was 3.1 years.

However, the actual length of care can vary depending on your health condition, level of care, and availability of family or community support.

According to the U.S. Department of Health and Human Services, the average duration of long-term care for people aged 65 and older is about three years, but 20% of them will need care for more than five years.

Therefore, you should consider your risk factors and family history when choosing your benefit period.

When Does Nursing Home Insurance Start Paying?

Nursing home insurance does not start paying benefits immediately after you need care.

There is usually a waiting period, also known as an elimination period, which is the number of days that you have to pay for your own care before the policy kicks in.

You can choose your elimination period based on your preferences and financial situation, such as 30 days, 60 days, 90 days, or 180 days.

The longer your elimination period, the lower your premiums will be.

According to the AALCI, the average elimination period for nursing home insurance policies sold in 2020 was 87 days.

However, you should also consider the cost of care during the elimination period and whether you have enough savings or income to cover it.

For example, if the cost of care in your area is $200 a day and you choose a 90-day elimination period, you will have to pay $18,000 out of pocket before the policy starts paying.

What Is the Best Age to Buy Nursing Home Insurance?

There is no definitive answer to the best age to buy nursing home insurance, as it depends on your personal circumstances and preferences.

However, some general factors to consider are:

1.Your health

If you have pre-existing conditions or health problems, you may have difficulty finding nursing home insurance or face higher premiums.

Therefore, it may be better to buy the policy when you are younger and healthier, as long as you can afford the premiums and the potential rate increases.

2.Your family history

If you have a family history of chronic illnesses or disabilities that require long-term care, you may have a higher risk of needing care yourself.

Therefore, it may be wise to buy the policy sooner rather than later, as long as you are eligible and comfortable with the coverage options and policy features.

3.Your financial situation

If you have limited savings or income, you may not be able to afford the cost of long-term care or the premiums of nursing home insurance.

What Happens If You Never Use Nursing Home Insurance?

If you never use nursing home insurance, you will not receive any benefits from the policy, and you will not get a refund of the premiums you paid.

However, some policies may offer optional features that can provide some value or flexibility if you never use the policy, such as:

1.Return of premium

This feature allows you to get back some or all of the premiums you paid if you cancel the policy or die without using the benefits.

However, this feature may have some limitations, such as a maximum age, a minimum duration, or a reduced percentage of the premiums returned.

It will also increase your premiums significantly.

2.Shared care

This feature allows you to share your benefits with your spouse or partner if you buy a joint policy.

For example, if you and your spouse each have a three-year benefit period, and you never use your benefits, your spouse can use your unused benefits and have a total of six years of coverage.

This feature can provide more flexibility and value for couples who buy a joint policy.


This feature allows you to keep some of your benefits if you stop paying the premiums or lapse the policy.

For example, if you have a $200 daily benefit amount and a three-year benefit period, and you lapse the policy after paying the premiums for 10 years, you may still have a reduced benefit amount or a shorter benefit period.

This feature can provide some protection against losing all your benefits if you can no longer afford the premiums.


Nursing home insurance is a complex and expensive product that can help you pay for the cost of long-term care.

However, it is not a one-size-fits-all solution, and it may not be suitable or affordable for everyone.

Therefore, you should do your homework and compare different policies and providers before you buy one.

You should also review your policy periodically and adjust it as your needs and circumstances change.

Nursing home insurance can be a valuable tool for planning your future, but it is not a substitute for saving, investing, and living a healthy lifestyle.

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