Long-term care insurance is insurance that will pay costs associated with long-term care if an individual is unable to perform two or three activities of daily living (ADL).  These ADL's are bathing, dressing, toileting, transferring (mobility), eating and continence.  Or for a cognitive impairment such as Alzheimer's disease.

Types of insurance plans:

• Accelerated benefit riders on life insurance policies.  These will pay a portion of the face amount, usually 50 to 75 percent in the event that certain conditions are met.  For example, benefits could be paid when you are diagnosed with a terminal illness, when you have a major organ transplant or if your are expected to be in a nursing home the rest of your life.  The balance of the policy face amount is then paid at death.
  

• Specially designed life insurance policies.  There are life insurance policies that are specially designed to offer benefits for long-term care in combination with the benefits of life insurance to make use of the tax advantages of life insurance while attempting to preserve one's assets.  These policies are usually sold based on a lump-sum deposit.  The initial cash value is approximately equal to the premium.  The death benefit is about twice the premium while the long-term care benefit payable is about three times the premium.  While a plan like this is not for everyone, there are many situations where this can be a viable option.
  

• Traditional long-term care insurance.  These types of policies are designed to pay a premium over a period of time and provide coverage for nursing home facilities, home health care, assisted living care facilities and the like.  They can be offered with various features, including a return of premium rider, to enhance the basic coverage.
  

Three types of long-term care insurance policies

• Nursing facility only  ---  These only pay for care in a nursing home or similar facility, including an assisted living facility.
  

• Home care only  ---  These policies pay for care in your home.  They include benefits for home health care, adult day care, personal care, homemaker services, hospice and respite care.  Some may also include care management services and equipment prescribed for medical purposes.  A few companies also pay for modifications to your home if necessary to allow you to continue living in your home.
  

• Comprehensive long-term care.  ---  These types of policies pay for long-term care at home or in the community as well as in a nursing home.
  

Some of the factors that can influence the cost of long-term care insurance are:

• Your age and your health at the time you apply for coverage.
  

• The waiting period you choose before the policy begins paying benefits.
  

• The combination of benefits you want included in the policy.
  

• The daily or monthly benefit amount you choose.
  

• The number of years you want the company to pay benefits.
  

If you decide that you may need long-term care insurance, you probably need to do so as soon as possible for two reasons. 

• First, our health can change at any time and prevent us from being able to purchase the coverage.
  

• Second, the premium for the coverage goes up significantly over the years.  The cost of coverage at age 65 is double what it is at age 55, three times as much at age 70 and almost 5 times as much at age 75.
  

For someone age 55, if they paid premiums for 20 years, it would only take a nursing home stay of about 152 days to equal what they had paid in premium over that 20 years.  And it would only take about a 182 days to recover the premiums that would be paid in over 30 years. 

It is generally always wiser to place the financial responsibility on an insurance company rather than pay the full cost ourselves.