Should you save money with a three-year long-term care policy?

Long-term care insurance is expensive. One way that some people reduce the cost is to buy a policy that will cover care only for a limited period of time (such as three years), as opposed to a policy that covers care indefinitely.

Last year, almost a third of individual buyers purchased a three-year policy, according to the American Association for Long-Term Care Insurance.

But is that sufficient coverage? To answer that question, the Association recently published a report on the statistical likelihood that three years of coverage will be enough.

According to the report, the risk of running out of benefits with a three-year policy is fairly small. Overall, of those people who bought a policy with a benefit period longer than three years and made a claim for long-term care, only 13.1 percent needed that care for longer than three years. Only 7.6 percent of those with a policy longer than four years needed care for more than four years, and only 4.5 percent of those with a policy longer than five years needed care beyond five years.

The risk is lower for men than for women. For instance, among people who filed a claim at age 82, men had a 12.4 percent chance of exhausting their three-year benefits, while women had a 23.5 percent chance.

The savings from buying a three-year policy are significant. According to the report, most people save between 42 and 54 percent on their premiums compared to buying a policy with indefinite coverage. (People who buy a two-year policy save 51 to 64 percent, while people who buy a five-year policy save 30 to 39 percent.)

However, if your need exceeds the length of the policy, you’ll be on your own paying for care. A 55-year-old man who exhausts a three-year policy can expect to need long-term care for another 3.7 years, while a woman of the same age would need an average of 5.3 years of additional care. An 82-year-old man who exhausts a three-year policy will likely need another 1.9 years of care, while an 82-year-old woman will likely need 2.9 years.

Printed copies of the report are available only to Association members, but you can read it for free online at

Email us now
close slider