What Is Long Term Care Insurance?

By Jonathan Bales , last updated September 16, 2011

Long term care insurance is a type of insurance that provides help with finances needed over a period of time that is not predetermined. Long term care insurance is flexible and, technically speaking, is not a type of health insurance. It is not covered by most health insurance companies, including Medicare and Medicaid. It is insurance for people who require help with regular daily activities, such as bathing, eating and so on. Age is not a factor in determining who is eligible for long term care insurance, although the majority of those who receive it are elderly. Still, long term care insurance can be revoked at any time if the client suffers a decline in health. In this way, insurance providers who offer long term care insurance are mitigating their downside risk.

Many people who purchase long term care insurance opt for in-home care. This pays for a caregiver to help with the daily activities of the person who cannot perform them by themselves. The people who require help often opt for caregivers because they do not feel comfortable receiving help from friends or family. Thus, the caregiver can aid more than just the person for whom they are providing help. Premiums paid on long term care insurance are often tax deductible.

Some of the services provided by Medicaid are similar to long term care insurance, but the former does not provide the same in-home care of the latter. This is an important difference, as those who require care generally prefer the privacy of their own home. Plus, almost all long term care insurance policies are guaranteed for life. Once the wording is determined and the policy is signed, however, it cannot be changed. Thus, improvements in health do not result in a reduction of premiums for long term care insurance policies.

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