The idea that you may someday need long-term care is easier if you know you can pay for it. That is where long-term care insurance can make a difference for you and your family.

The expense of long-term care can quickly eat into your retirement savings. Long-term insurance allows you to take the extra step to help care for yourself and protect your retirement.

What Is Long-Term Care Insurance?

Long-term care insurance pays for nursing, social and rehabilitative services for those who need assistance due to chronic illness or a disability. If you develop a debilitating disease such as dementia, for example, this insurance pays for the basic care you need daily.

Why Consider Long-Term Care Insurance?

According to the Department of Health and Human Services (HHS), 64% of women and 49% of men will someday need long-term care. Some will get that help directly from family members, but at least half will need professional paid services like nursing or memory care.

HHS estimates the average cost of this care is around $120,900. The care is not paid for by Medicare or Medicare Advantage plans but by the individual or their family. It will eat into or even exceed most people’s retirement funds.

Is Long-Term Care the Same as Disability?

Long-term disability insurance pays a portion of your income if you get hurt or sick while you are still working. It ends once you retire. Long-term insurance pays for care if, for some reason, you can’t care for yourself.

What Should You Look for in a Long-Term Care Insurance Plan?

There are key factors you want to consider before purchasing a long-term care insurance policy.

What is the Benefit Duration?

Most policies will cover your care for anywhere from 1 to five years only. The benefit duration impacts the cost of the package and the premium you pay.

What are the Triggers for Benefits?

Determine the point at which the insurance kicks in to pay for expenses. Most base this on activities of daily living or ADL. The insurance will pay for care when you can’t handle your basic daily needs, such as getting dressed, eating, and bathing.

It may also trigger when you show signs of cognitive impairment from dementia. Someone with dementia might be able to dress themselves, but they need constant monitoring or supervision.

Does It Have a Waiting Period?

In long-term care insurance, the waiting period, which some companies call the deductible period, is the amount the individual must pay for their care before the insurance company takes over.

The waiting period depends on the policy and provider, the same way deductibles on health insurance do. There are policies with no waiting period that may have higher premiums.

The typical waiting period can last from 30 to 90 days, however. Choosing a longer wait can bring down the cost of the policy.

What is the Maximum Daily Benefit Amount?

The maximum daily benefit amount is what the insurance will pay for a single day of care. You will have to cover the difference if your care exceeds this amount. Some states have laws regulating the maximum benefit amount to ensure it pays a set percentage of the costs.

What is the Maximum Policy Benefit?

The maximum policy benefit is the maximum daily benefit amount multiplied by the number of years the policy covers. It starts as soon as you use the policy.

Does it Have Inflation Protection?

Inflation protection means the insurance will pay a percentage more over a set number of years to account for rising costs. In other words, the daily and maximum benefit amounts are adjusted to account for inflation.

This is a critical consideration when shopping for insurance since most people get these policies decades before they use them. Some states, such as California, require insurance providers to have it.

When Might a Long-Term Insurance Policy Not Be Worth It?

Not everyone needs a long-term insurance policy. If you have plenty of money going into retirement or assets, buying long-term insurance might not be necessary.

It also might be impractical after a certain age. The premiums for coverage will increase the older you buy the policy. If you start looking when you are 69, the policy cost will be too high.

If you have pre-existing conditions, you might also not get an affordable policy. If you find an insurance provider that will cover you, the premiums might be so high it's not worth it.

If you are creating a retirement financial plan, now is a practical time to consider whether long-term insurance is appropriate. The potential cost of care might mean it is worth paying the premium for the right policy.