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Is buying long-term care insurance for your parents a good idea?

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As your parents get older, you may notice them slowing down quite a bit. They may have more trouble getting up and down stairs and strain to see while driving. They may also start to struggle with simple daily tasks.

Even if your parents still get around pretty well and have continued to maintain good health, you may not have to think too far into the future to consider the potential need for long-term care services. There may come a day when your parents need to live in assisted living or a nursing home, or get access to home health care.

You only have to look at nursing home costs to feel a little winded. Genworth's Cost of Care Survey showed that a private room in a nursing home costs $290 per day, or $8,821 per month. Semi-private rooms average $255 per day or $7,756 per month.

Can you or your parents tap into your existing financial resources to pay for this astronomical expense? If not, you may need to consider long-term care insurance for your parents.

Can you buy long-term care insurance for your parents?

Long-term care insurance helps pay for the costs of care facilities, such as nursing homes or assisted living facilities. Long-term care insurance could also cover the costs of a home health aide if you become unable to care for yourself.

And yes, you can purchase long-term care insurance for your parents. Your policy would name your parents as the insured and you'd be considered the "payor." The bills can go directly to you or you can arrange for the insurance company to withdraw the premiums from your checking or savings account. Your parents would need to sign the application and health care releases themselves, however.

The insurance benefit would go to your parents when and if they needed to use the long-term care insurance benefits outlined in your policy.

How would you approach buying a policy?

Talk to a local independent insurance agent. Independent insurance agents can walk you through all the possibilities and share a variety of premium prices for each long-term insurance policy.

Advantages & disadvantages of long-term care insurance

Still on the fence about getting long-term care insurance for your parents? Take a look at the pros and cons of getting a policy.

Advantages of long-term care insurance

First, let's look at the bright side of getting long-term care insurance:

  • Decreases the overall financial burden: The biggest pro to getting long-term care insurance means not having to shoulder extreme costs. If you live too far away from your parents or don't have the resources or skills to take care of them yourself, you may have to dip into your home equity or other debt to fund your parents' long-term care facility expenses. Ten years of nursing home care can cost a staggering $1 million.
  • Protects relationships: Financial strain can lead to infighting between family members, particularly if several siblings try to pay for their parents' care without insurance. Income disparities can make it especially difficult for certain siblings to pay their part. Long-term care insurance helps maintain a more level "playing field."
  • Gives you peace of mind: You may never need long-term care insurance for your parents. However, just in case you do, long-term care insurance may mean you can opt for a better quality nursing home facility. Knowing your parents will be in good hands and taking care of the financial burden as well can offer a double benefit.
  • Offers flexibility: You may find that you don't need full nursing home care for your parents, especially if they can still manage general day-to-day tasks. You may only need home health care for a few hours per day to help with tasks like bathing and dressing.
  • Covers where regular insurance leaves off: Neither Medicare nor regular health insurance will cover the long-term costs. Therefore, long-term care insurance takes care of the void when you need it.

Disadvantages of long-term care insurance

On the other hand, you certainly can point to a few downsides to long-term care insurance, including the following:

  • Pricey policies: You'll still pay a lot for long-term care insurance premiums, particularly if you wait till your parents are older to purchase. You'd pay just $2,500 per year in annual premiums if your parents are 55. You might pay $3,500 per year for your 60-year-old parents. The costs may jump to $7,000 if they are 65. You may pay $14,000 or more per year for your 70-year-old parents. The American Association for Long-Term Care Insurance (AALTCI) says the average cost amounts to roughly $1,700 per year.
  • Premium rates and policies could change: Many carriers have opted out of offering long-term care insurance over the last few years. Insurance companies might also raise your premiums. Make sure you've chosen a reputable company.
  • Rigorous screening process: Your parents may need to take cognitive assessments, undergo medical exams, and report the medication that they take. Many individuals do not make it through the underwriting qualifications.

Learn More: Pros & Cons of Long-Term Care Insurance

Buying long-term care insurance for your parents

Check with your chosen insurance company to detail the facts about the policy you've chosen and read the fine print on your policy. However, in general, you can expect the following when you buy coverage for your parents:

  • You can purchase a whole life insurance policy with a long-term care benefit rider. This means you could receive a death benefit from life insurance and a long-term care benefit because of the rider. However, your parents must approve you as the beneficiary. These hybrid policies could offer a specific benefit: You won't run into a rate spike because you lock in your premium upfront, but these policies usually cost more than traditional long-term care insurance.
  • You should ideally buy long-term care insurance for your parents when they are between the ages of 50 and 60.
  • You can save money by asking an independent agent who sells policies from multiple companies for a variety of quotes.

But that's not all you need to consider before purchasing.

Remember this: Your parents' stay in a nursing home or assisted living facility statistically won't last long. The average stay goes up to 17 months for women and 11 months for men, so you could consider purchasing a less expensive, smaller policy instead of a more robust, more expensive policy.

Also, keep in mind that most people who choose to buy a policy for their parents wait too long — they wait until their parents' health has deteriorated so much that they won't qualify for coverage. Don't let this happen to you. If you're contemplating long-term care insurance, get it now.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

— Published June 8, 2021
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How much does long-term care insurance cost in 2024?

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According to the American Association for Long-term Care Insurance, the average annual premium for a 55-year-old couple was $3,050 in 2019. Premiums increase as you get older, and those with chronic medical conditions might not qualify for coverage.

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