Long-Term Care Insurance for Aging Parents

It’s common for individuals over 65 to require long-term care at some stage. If you’re concerned that your parents may not have the financial means to afford the care they require, there is a solution: you can purchase long-term care insurance on their behalf and pay the premiums, ensuring they have access to necessary support and services.

Headshot of Jennifer Schell, writer for Annuity.org
  • Written By
    Jennifer Schell, CAS®

    Jennifer Schell, CAS®

    Financial Writer, Certified Annuity Specialist®

    Jennifer Schell is a professional writer focused on demystifying annuities and other financial topics including banking, financial advising and insurance. She is proud to be a member of the National Association for Fixed Annuities (NAFA) as well as the National Association of Insurance and Financial Advisors (NAIFA).

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  • Edited By
    Michael Santiago
    Headshot of Michael Santiago, senior editor for Annuity.org

    Michael Santiago

    Senior Financial Editor

    Michael Santiago is a skilled writer and editor with over a decade of experience in various industries. As a senior financial editor, he collaborates with a team of experts to develop compelling and accurate content.

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  • Financially Reviewed By
    Daniel J. Adams, MBA, CFP®, CLU®
    Daniel J Adams, Annuity.org reviewer

    Daniel J. Adams, MBA, CFP®, CLU®

    Founder and President of CEG Life Insurance Services

    As the founder of CEG Life Insurance Services, Daniel J. Adams has extensive experience with life and health insurance products. Daniel assists clients in building a secure financial future as a Certified Financial Planner™ professional and independent insurance agent. He also trains new agents and advises other financial professionals.

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  • Updated: June 11, 2024
  • 7 min read time
  • This page features 4 Cited Research Articles

Key Takeaways

  • You can buy long-term care insurance for your parents.
  • Your parents will be the beneficiaries and you will pay the premiums.
  • Insurance policies can either provide coverage exclusively for long-term care or include a death benefit payout as well.

Can You Buy Long-Term Care Insurance for Your Parents?

If you want to ensure your parents can afford any long-term care support services they need, you can buy long-term care insurance for them. The process is simple: you buy the policy and name your parents as the insured party. Premiums are paid on a monthly basis or as a lump sum, as required by the provider, and your parents receive the benefit to cover their long-term care expenses.

The demand for long-term care services is on the rise as Americans continue to live longer. According to the National Association of Insurance Commissioners, approximately 70% of Americans, particularly women who typically have a longer lifespan than men, will require some type of long-term care following their 65th birthday. Long-term care insurance covers non-medical long-term care services and support, such as home health care, personal care services, friendly visitor and companion services, transportation and more. The National Institute on Aging states that although the majority of long-term care is offered at home by relatives and friends, nursing home care and adult day care services are also frequently utilized. 

However, Medicare does not usually cover long-term care services. If you’re concerned about your aging parent’s ability to finance their long-term care expenses, contemplate acquiring long-term care insurance for them personally. The specifics of coverage, such as the extent and duration of care, the overall coverage amount and the waiting period before benefits commence, vary depending on the policy and provider. It’s essential to conduct a comprehensive investigation of your alternatives with an insurance professional to ensure that your parents can comfortably pay for any required long-term care.

Unless your parents have already made plans for their long-term care, it can be critical for you, as their child, to consider purchasing long-term care insurance for them to avoid the heavy financial and physical burden of taking care of them yourself.

Being a Beneficiary

If you choose to buy long-term care insurance for your parents, they will be listed as the beneficiaries of the policy. Essentially, you will be responsible for paying for the policy, and your parents will be eligible to utilize the benefits from the policy to fund any necessary long-term care services or support. The payment structure of the long-term care policy may vary depending on the specific policy terms. Your parents may receive a monthly payment (either a fixed amount or a percentage of the death benefit) that can be utilized as needed, or they may be required to pay for services upfront and subsequently be reimbursed by the insurance provider.

When Should You Consider Long-Term Care Insurance for Your Parents?

Many experts now suggest starting to shop for long-term care insurance in your 50s or even your late 40s, rather than waiting until your early 60s. If your aging parents don’t have enough savings for their future care, you may want to think about buying long-term care insurance for them. It’s important to plan ahead and get coverage before they actually need it. 

In addition, it’s important to note that some insurance companies generally require health screenings, which can impact the cost of premiums. Purchasing long-term care insurance for your parents when they are younger and healthier may result in lower premiums. That being said, starting the policy at a younger age means paying monthly premiums for a longer period of time. 

According to The Shopper’s Guide to Long-Term Care Insurance, some policies may exclude coverage for certain pre-existing health conditions like Alzheimer’s Disease, which means your parents may not be eligible for coverage.

Factors To Consider When Choosing Long-Term Care Insurance

When researching long-term care insurance options for your parents, it’s important to consider the following factors as their needs will be as individual as they are:

Important Factors To Consider

  • Age: Your parents’ age will help you decide when and what type of long-term care insurance to buy. As your parents age, their chances of needing long-term care increase.
  • Health Status: Family health history plays a significant role in what types of long-term care services are needed and for how long. Having a family history of heart disease or Alzheimer’s disease increases the likelihood of needing long-term care and may result in higher premiums for long-term care insurance.
  • Types of Care Required: Long-term care insurance covers a wide range of non-medical services and supports that aid with daily activities. These services can be provided at home, an adult day care service center or in a care facility. The amount allocated for each service varies depending on the policy and provider.
  • Provider’s Reputation: When selecting a long-term care insurance provider, it’s crucial to choose a trustworthy company with a reputation for delivering quality services and customer support. Seek recommendations and read customer and beneficiary testimonials to ensure you make an informed decision. 

Read More: 28% Unaware of Their Parents’ Long-Term Care Plans

What Kind of Long-Term Care Insurance Makes Sense for Your Parents?

Although each plan is unique, long-term care insurance policies can be categorized into three basic types: traditional, hybrid or rider.

A traditional long-term care insurance policy provides benefits exclusively to your parents, meaning that if they require long-term care services, they can use the benefits to cover the costs. However, if your parents do not end up needing long-term care, neither you nor they will receive any benefits from the premiums you paid. While traditional policies typically have lower premiums, they are not as widely available as they once were. 

Hybrid long-term care insurance policies differ from traditional policies in that they are linked to a life insurance policy or annuity, building cash value that your parents can withdraw from to pay for long-term care or pass along as a death benefit. The premiums for hybrid policies are usually higher than for traditional policies because of the investment portion and death benefit. However, the advantage of having a death benefit is that the long-term care insurance policy does not have a use-it-or-lose-it outcome. 

A long-term care rider on a life insurance policy allows your parents to use a portion of the death benefit to pay for long-term care expenses when needed, with the remaining balance paid out to the designated beneficiaries as a death benefit. This option allows for more flexible use of the policy, but it may result in higher premiums compared to a traditional life insurance policy. Additionally, you can be listed as the final recipient of the death benefit if desired.

How Much Does It Cost To Buy Long-Term Care Insurance for a Parent?

The cost of purchasing a long-term care insurance policy for your parents can vary widely depending on the coverage amount and type you choose. Traditional policies generally have the lowest premiums, while hybrid policies offer the added advantage of a death benefit. Some insurance providers may offer discounts for lump sum payments or combined policies for couples.

Depending on the coverage amount, growth and age of your parents, annual premiums can vary widely. The American Association for Long-Term Care Insurance reports on annual costs for single men, women and couples in average health. For single men and women, costs can range from $900 to $7,255. Annual premiums for couples can cost between $2,080 and $9,575.

Alternatives to Long-Term Care Insurance for Aging Parents

Long-term care insurance is an option for covering long-term care costs for aging parents, but it may not be suitable for every person or circumstance. Other options to consider include:

Comparison of Alternatives to Long-Term Care Insurance

Alternatives Pros Cons
Life Insurance With a Long-Term Care Rider
  • Will cover long-term care costs for your parents while potentially leaving a death benefit
  • Since a rider is part of an existing life insurance plan, it can be underwritten at the same time as the life insurance plan.
  • Can be more expensive than a traditional standalone policy
  • It can be complex: it’s important to understand exactly which services are covered and to what extent
Personal Savings
  • No extra costs for premiumsCan continue to add to your savings as long as you or your parents earn income
  • May be insufficient if long-term care is lengthy
  • May not account for inflation
  • Will provide a steady stream of income for your parents to use as they need
  • You can arrange it at your discretion
  • Can be expensive to purchase
  • The fixed payment amount may not cover all the services required over time
Please seek the advice of a qualified professional before making financial decisions.
Last Modified: June 11, 2024