While long-term care insurance can be a good way to pay for a stay in a nursing home or for a home health aide, it doesn’t come cheap. Annual premiums can vary significantly, depending on your age, health, and the type of policy, but policies can run as high as $5,000 or more per year.

The good news is there are ways to reduce your costs, if you cannot otherwise afford the policy.

Shorter benefit period

Likely the most significant cost-saving step you can take is to not purchase a lifetime policy. Unless you have a family history of a chronic illness, you aren’t likely to need coverage for more than five years.

By purchasing coverage for three, four, or five years instead of lifetime, you can save significant dollars in premiums. If you do have a history off a chronic disease in your family, you may want to purchase coverage for, say, 10 years, which would still be less costly than purchasing a lifetime policy.

Buy younger

Premiums rise as you age, so basically the younger you buy, the cheaper your premiums. Be careful though, because insurance premiums can, and often do, increase considerably from your initial purchase price. Even if you have a policy that is “guaranteed renewable,” your premiums can still increase.

Shared Care Policy

If you are married, and both you and your spouse are purchasing long-term care insurance, a shared care policy might be able to give you more coverage for less money. With a shared care policy, you buy a five-year policy, you will have a total of 10 years between you and your spouse.

A shared care policy may cost more than separate policies with the same benefit period, but it will allow you to buy a shorter policy, knowing that you have a pool of benefits to work with.

Longer Elimination period

Most policies have a waiting (elimination) period before coverage begins, typically 30-90 days. The longer you make this waiting period, the cheaper your premiums. Keep in mind, however, that you will have to pay for your care out of pocket until the waiting period is over (unless covered by other insurance, such as Medicare and a Medicare supplement) and the long term care insurance begins its coverage.

Reduce the daily benefit

Instead of purchasing the maximum daily benefit you might need in a nursing home, you can consider paying for a portion of the daily benefit yourself. Take into consideration your fixed monthly income, like Social Security or a pension, as well as your assets.  You can then insure for the maximum daily benefit minus the amount you plan to pay. A lower daily benefit will mean lower premiums.

Inflation protection

Inflation protection increases the value of your benefit to keep up with inflation and is almost always recommended. But you can save on premiums by which method of protection you choose. Ask your long term care insurance specialist which plan is better for you.

Now, that you have considered how to reduce the cost of long term care insurance, don’t be penny wise and pound foolish.  If you have the funds, you may want to pay more and get more from your long term care insurance policy.

Also, don’t forget your premiums may be tax-deductible! 

 The best approach is to explore long term care insurance with an experienced long term care insurance agent.