Most long-term care insurance policies pay benefits when long-term care is prescribed by a physician as necessary or medically necessary or when someone can no longer take care of basic needs. For example, a person who is disoriented or is unable to get dressed and eat without help on a consistent basis might qualify for long-term care insurance benefits. Usually, policies cover all levels of care in state-licensed nursing homes. Many policies also cover assisted living and home health care.
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Home health care services typically covered by long-term care insurance include nursing care, therapy, personal care and homemaking. Generally, home health care agencies and providers must be state-licensed or certified.
Most policies contain a waiting period, during which no benefits are paid. After you have satisfied the waiting period, your policy pays up to a maximum dollar amount for each day you receive approved care in a nursing home or at home. For example, a policy may cover $120 a day in a nursing home. If the total cost of a day in the nursing home is $160, you would have to pay the difference. A policy may not cover all expenses.

Many policies now offer an inflation adjustment feature that increases your per-day benefit to cover higher costs. For example, the daily benefit amount might increase each year at a compounded or simple rate of 5%.

Premiums for long-term care insurance can vary widely, depending upon your age and the level of benefits you buy. Policies that cover a substantial portion of the daily cost of a nursing home or a policy with an inflation adjustment feature will tend to be more expensive.

The older you are when you first buy a long-term care policy, the higher the premiums probably will be, because the chances of your needing long-term care increase with age. A policy purchased in your early 50s may be relatively inexpensive, compared to one purchased at age 70. In general, premiums remain fixed each year, unless they are increased for a class of policyholders at once.