Long-Term Care Insurance vs Self-Insure Calculator
Compare long-term care insurance premiums vs self-insuring with dedicated savings. The math reveals whether a 65-year-old should buy LTC insurance or invest the premium instead.
Long-Term Care Cost Reality 2026
Average annual nursing home cost: $108,400 (private room) per Genworth Cost of Care Survey 2024. Assisted living: $64,200. Home health aide: $75,500. 70% of people age 65+ will need long-term care at some point. Average duration of need: 2-3 years women, 1-2 years men. Total expected lifetime cost: $200K-$400K average; some need $500K-$1M+. Medicare does NOT cover long-term custodial care.
LTC Insurance Cost and Coverage
Traditional LTC policy at age 55: $2,000-$5,000/year premium for $200-$300/day benefit, 3-5 year benefit period, 3% inflation rider. At age 65: premiums jump 50-100%. Hybrid policies (LTC + life insurance): single premium $50K-$150K. Premiums NOT guaranteed level — many traditional LTC insurers raised premiums 50-100% in recent years (Genworth, John Hancock notable). Buying younger locks in better rate but commits more years of premium.
The Self-Insure Math
$3,000/year LTC premium invested at 6% from age 55 to 85 = ~$237,000 saved. Average LTC need: 2 years × $108K = $216K. Self-insurance roughly breaks even on average. BUT: insurance covers tail risk — what if you need 7 years of care? Self-insure fails catastrophically; insurance pays. The decision is risk-tolerance + asset-protection: people with $500K+ liquid net worth can often self-insure; those with $100K-$500K should consider insurance.
Strategy Considerations
Couples: at least one likely needs care. Insurance with shared benefit pool covers either spouse. Estate planning: LTC drains heirs' inheritance — insurance protects the estate. Tax: LTC premiums deductible up to age-based limits if itemizing. Hybrid policies popular for those uncomfortable with 'use it or lose it' traditional LTC. State Partnership Programs offer additional Medicaid asset protection beyond policy benefits. Long-term care planning is best done at age 50-55.
Sources: Genworth Cost of Care Survey 2024, AALTCI 2024 Price Index, IRS Pub 502. Last updated: May 2026.
Frequently Asked Questions
How much does long-term care cost?
Average nursing home: $108,400/year (private room) per Genworth 2024. Assisted living: $64,200. Home health aide: $75,500. 70% of seniors need some long-term care.
Should I buy LTC insurance?
Depends on net worth. <$100K: rely on Medicaid (spend down). $100-500K: insurance often valuable for catastrophe protection. >$500K: can typically self-insure with dedicated investment account.
When should I buy LTC insurance?
Age 50-55 is sweet spot. Premiums lock in lower; health is still good enough to qualify. Wait too long and either premiums are unaffordable or you're declined for health reasons.
Traditional or hybrid LTC?
Traditional: lower premium, 'use it or lose it'. Hybrid (LTC + life insurance): higher single premium, but provides death benefit if no LTC needed. Hybrid popular for those wanting guaranteed return.
Is this tool free?
Yes. 100% free, no sign-up. All math runs in your browser \u2014 your financial data never leaves your device.