Is Long-Term Care Insurance On Its Death Bed?

When I started my business in 2000, there were about 140 insurance companies marketing long-term care insurance products. Today, just a handful. About seven offering standalone products if you count the federal program for government employees. More if you include insurers offering hybrid designs that include a life insurance or annuity component.

Collective premiums in 2000 were estimated at $1,500,000,000. There was a slight uptick around 2012 and the industry did $600,000,000. Yes. You read it correctly. A slight uptick. 

The 2021 Milliman LTCI Survey has just been published by Broker World. The annualized sales in 2020 are estimated to be $150,000,000, down nearly 13% from 2019. No way to know the impact of COVID-19 on sales. The number of inforce policies decreased by .9% in 2020, continuing the trend first observed in 2014.

Other survey details:

  • Claims are up. Combined claims paid were $1,490,297,672 up 1.6% over 2019.
  • Issue age remained 57.7 years.
  • The average benefit period 3.75 years
  • The average benefit amount was $4888 with 32.3% ranging between $4500 and $5999.
  • Most policies, 31.7%, included 3% compound inflation.

Extensive data and survey assumptions are available at

We are living longer, not necessarily healthier. The risk of needing long-term care is high. Once we turn age 65, the predictions are that most of us will experience a long-term care event in our remaining years. The cost of formal (paid) care is high.

The annual national cost for home care is $54,912, assisted living $51,600 and nursing home $105,850. Now consider that 60% of claims last longer than one year and the average duration of those claims including care received in all venues is 4.3 years. Check out costs where you live here: Cost of Long Term Care by State.

Industry pundits have called long-term care insurance an expense transfer strategy rather than a risk management strategy because the likelihood of needing care is so high.  So, why does long-term care insurance need long-term care?