A Lesson on Long-Term Care Insurance

For years, Diane and I have had the privilege of guiding hundreds of people through Financial Peace University (FPU) at Sunridge. The lesson on insurance is always particularly stressful because of its importance in establishing a solid financial foundation; as life evolves, so do our insurance needs. FPU covers the types of insurance coverage needed, such as life, home, auto, disability, and more, as well as the levels of coverage. The course even covers an insurance I didn’t want to think about. Per the class, when someone turns sixty, it’s time to consider Long Term Care (LTC) insurance. About a year ago (2024), I reached that milestone but hesitated to look for LTC coverage. Perhaps I didn’t believe we’d need it, or I wanted to avoid the expense. However, a real-world event soon shifted my perspective.

The Event

On a very ordinary Saturday, my wife, Diane, and I just finished lunch, and as we were driving to the church to check on a possible internet issue, my sister called. I could hear the concern in her voice as she told me our father, who was living alone and about to turn 90, had fallen in his kitchen. He didn’t have his phone with him, and our best guess is that he was lying on the floor for four hours all alone, unable to get up or call for help. Thankfully, my niece was on her way to visit and found him on the kitchen floor. Anyone who has aging parents knows what happened next. The ambulance showed up and took him to the hospital emergency room. From the ER to a hospital room, where a battery of tests follows. Then, he was discharged to a skilled nursing facility for rehab. Next, he went home with in-home care and eventually to an assisted living facility. What I just described in a few sentences took about three months to accomplish. It’s a lot for him and for us. We had to worry not only about his health but also navigate the complexities of insurance, including co-pays, deductibles, finding mobile notaries, getting power of attorney, and identifying medical directives. It’s overwhelming.

The Reality

My dad, like so many others today, lacked the necessary financial resources for care, like LTC insurance, a robust retirement, and substantial savings. For those unfamiliar with the current cost of assisted living in Southern California, it’s expensive. Assisted living starts around $4,000 a month, and the cost increases with the level of care a person requires. For those thinking Social Security is enough – you’re wrong. Very wrong. According to a Kiplinger post, the average Social Security check in 2025 totals $2,008 per month. That barely covers half of the amount needed for the most basic assisted living, leaving a deficit of almost $2,000 per month. For those hoping to tap into government assistance, such as an assisted living waiver (ALW) through Medi-Cal, there is a two-year waiting period to get approved. If this all sounds overwhelming, it is – for everyone involved. The bottom line is that everyone needs a plan to care for themselves, especially as we age. That’s why getting the right kind of insurance is so important. Insurance is the best vehicle to offset the cost of major expenses and protect assets like savings, retirement, and real estate.

What Is Long-Term Care Insurance

Long-term care refers to care that lasts more than three months and covers assistance with the necessities of daily life. Ask yourself: Can you cook meals, safely bathe, get dressed, and go to the bathroom without assistance? While most think of long-term care as requiring moving into a facility, long-term care can also include in-home care. Regardless of whether it’s in-home care or at a facility, many lack the financial resources to cover these costs. When that happens, it often puts an enormous financial burden on the family. That’s what makes LTC insurance so essential – it helps to offset these costs. There are several different products and carriers out there to provide LTC insurance. It’s essential to understand your specific financial situation to determine the necessary amount of coverage and its duration. Consider these averages:

• Average Annual Cost of Assisted Living per person: $54,000.
• Average Annual Cost of Nursing Home per person: $95,000 ($110,000 for a private room).
• Most individuals spend 2-5 years in a care facility.

These are only averages; costs vary by location and facility. In California, prices are often higher. Needing care for three years could require $162,000 to $330,000 per person. If you can’t cover that, you can’t self-insure, so consider LTC insurance for yourself and your family.

Where To Begin

Like any other type of insurance, long-term care insurance is a way to offset the potential for a large expense that could ruin your financial plan. Proverbs 27:12 says, “The prudent person foresees danger and takes refuge, but the simple keep going and suffer for it.” For example, we all pay for automobile insurance even though we may never get into an accident and make a claim. We are willing to pay the insurance premiums to protect our financial assets in the event of an accident. You determine the amount of coverage you need based on how much of the financial risk you need to transfer to the insurance company. Based on the averages listed above, how much coverage do you need to ensure you (and your spouse) can get the care needed in your most vulnerable time?

What’s the Cost

Let’s be honest; everyone wants amazing coverage for the least amount possible. Several factors contribute to the cost, including age, sex (with insurance being less for men than for women), marital status, health, type of policy, and the amount of coverage purchased. According to the American Association for Long-term Care Insurance, the 2025 rates for a $165,000 policy have an average annual premium of $1,200 for men, $1,900 for women, and $2,600 for couples. In my personal experience, the cost was much higher.

What’s Next

If you are approaching your sixtieth birthday, take the proactive step of contacting a reputable broker who can provide objective advice, rather than being limited to a single provider. Ramsey Solution recommends Zander Insurance, which can help you review your financial situation, health, and goals to ensure you get the right long-term care insurance. Start this process before the need arises to protect yourself and your family. Make a plan now; don’t wait until it’s too late.