Help Clients Understand the Often-Overlooked Necessity of LTC Insurance

• By: Olivia Overman
• September 22, 2025

Over half (56%) of Americans turning 65 today will develop a disability serious enough to require long-term service and support, according to the Department of Health and Human Services. And with the national median cost of a private nursing home room reaching $10,000 per month in 2024 and around $9,000 for a semi-private room, according to SeniorSite, planning for LTC demands close attention and smart strategy. Also, most people start receiving care in their home and never use nursing home facilities, but if. If a long-term plan is not in place, the costs of care and the impact on carriers families can be significant.

While LTC is considered an essential part of retirement planning, the LTC market is facing a multitude of challenges, including rising premiums, carrier solvency, regulatory changes and consumer awareness. Yet, “the carriers that remain in the industry are strong and committed to the market,” says Kelly Augspurger, long-term care insurance specialist and certified senior advisor, Steadfast Insurance. “They can meet the evolving needs of consumers.”

“When insurers introduced LTC insurance in the late 1970s and early 1980s, they made wrong assumptions when pricing their products,” Augspurger says. “Many insurers assumed the lapse ratio would be about 7% when it’s actually less than 1%, and they wrongly assumed what percentage they would get in interest on the reserves they were required to save.”

“Companies also made errors on claims assumptions because they didn’t think people would be on [a] claim for as long as they were,” Augspurger says. “Due to these wrong assumptions, carriers underpriced their LTC insurance solutions, and many had to increase premiums substantially.”

“However, currently sold traditional policies are priced very conservatively with those pricing mistakes baked into them,” Augspurger explains. Yet, rising premiums have been one of the most pressing issues for the LTC industry. For legacy policyholders, premium increases of 80%, and sometimes even more than 100%, were not uncommon, according to a report by the National Association of Insurance Commissioners (NAIC). Some policyholders received multiple premium increase notices or notices that indicated both a current and future increase, the report said.

This has led to a decline in the sales of traditional LTC insurance over the past two decades, according to data from LIMRA, with 27% of consumers saying that standalone LTC coverage is too expensive.

“Back then the long-term care (LTC) industry faced significant headwinds, with a number of carriers exiting the market and leaving consumers with fewer choices,” says Holly Snyder, president of life insurance at Nationwide. “One notable example was the collapse of Penn Treaty American Corp. in 2017, which left insurers across the country on the hook for hundreds of millions in losses.” This created uncertainty and eroded trust in traditional LTC offerings.

However, “the good news is that we’ve come out of that tough period of historically low interest rates, which had significantly limited investment returns,” Snyder says. “It was challenging to deliver strong value into any fixed insurance products—either life insurance or LTC—as we would have liked. But in the past two years, rising interest rates have allowed us to enhance the benefits built into these solutions—ultimately delivering more value to our customers and their families.”

“In response to the volatility in the traditional LTC market, Nationwide and other forward-thinking insurers developed innovative alternatives like linked-benefit or hybrid LTC products,” Snyder explains. “These solutions combine life insurance with long-term care coverage, creating a natural synergy. If a policyholder needs care, the LTC benefits are there. If not, the life insurance benefit is paid to their loved ones. It’s a built-in safeguard that ensures value is delivered no matter what the future holds.” Nevertheless, it is worth noting that “hybrid products are not better than traditional and traditional are not better than hybrid products; they’re just different,” Augspurger says.

The LTC market is an increasingly evolving and complex market, and independent agents can play a significant role in ensuring their clients understand and effectively manage the intricacies of an LTC policy.

Educating consumers about the ben­efits of an LTC plan—whether that plan is to rely on government-funded care, buy insurance or cover LTC expenses with personal assets—is key.

“Selling LTC insurance is not like selling other life and health solutions,” Augspurger says. “To effectively sell it, you need to provide a good bit of education to clients about planning for care, LTC, and how Medicare, Medicaid and VA benefits work, because most are unfamiliar with it or have misinformation.”

Agents that act proactively can help families save money in the long term and ensure that they are aware of the benefits and the limitations of LTC coverage. This is essential, particularly given the reality that 14% of consumers believe they have LTC insurance, and 10% think their life policy includes it, yet only 2% actually do, according to LIMRA.

Meanwhile, a Nationwide survey carried out in March found that 66% of consumers working with advisers say they haven’t discussed LTC because their advisor has not brought it up to them.

“If I could offer one key piece of advice to financial professionals, it would be this: start the conversation,” Snyder says. “Long-term care isn’t an easy topic—it’s emotional and often uncomfortable—but it’s essential. Research shows that most people will live to age 65, and of those who do, 70% will require some form of long-term care. The statistics are clear, and the need is real. Helping clients plan ahead can make all the difference for them and their loved ones.”

Olivia Overman is IA content editor.