The US Department of Health and Human Services estimates that 70% of adults over 65 will need some form of long-term care, and that among those who enter nursing facilities without long-term care insurance, 44% exhaust their personal assets and qualify for Medicaid within the first two years of admission. LIMRA’s 2024 Insurance Barometer Study, which surveyed more than 8,000 US adults, found the same 44% regret rate among those who had needed long-term care without coverage — the two figures converge on the same number through independent methodologies, which adds confidence to the estimate. Against that, approximately 25% of traditional LTC insurance policies lapse within 10 years, primarily because cumulative premium increases of 50% to over 200% on legacy products make continued payment unaffordable. A policyholder who lapses forfeits all previously paid premiums and receives no benefit unless a non-forfeiture rider was purchased at additional cost.
The market context matters. The number of Americans holding LTC insurance policies declined from roughly 12 million in 2002 to 7.5 million by 2023, as major insurers exited the traditional market after severe losses from underpriced legacy products. Genworth’s 2023 Cost of Care Survey found that a private nursing home room now costs a median of $108,408 per year, while assisted living costs $64,200 annually — figures that make even a few years of care potentially catastrophic for middle-income households without coverage. The Medicaid spend-down requirement that triggers coverage only after near-total asset depletion means that self-insuring is not a neutral default: it is a choice to absorb the full cost of care, which the HHS data show most people cannot do without exhausting their savings.
The action-regret dynamic here is unusual: LTC insurance is a product where the primary form of regret is the policy lapsing, not the initial purchase itself. Someone who purchases at 55 and maintains coverage through their late 70s when care is needed rarely regrets the decision; the 25% lapse rate captures those for whom the ongoing cost became prohibitive before benefits could be used. The product’s financial risks are therefore concentrated in the action path’s continuation costs rather than its initial decision, which makes the self-insure path’s 44% asset-exhaustion rate the more durable regret signal. LTC insurance is most clearly the better choice for people with moderate assets ($200,000—$2,000,000): those with less qualify for Medicaid immediately, and those with substantially more can absorb care costs without devastation.
Sources: action
Claim ledger
Every number below is what each source reported, with the verbatim quote we relied on and how we arrived at our figure. Click any link to verify directly.
[1]American Association for Long-Term Care Insurance (AALTCI) — 2022 Long-Term Care Insurance Statistics Data Facts
Reference source
LTC insurance market contracted from ~12 million policyholders in 2002 to ~7.5 million in 2023; premium increases of 50-200% on legacy policies have made continued payment unaffordable for many policyholders
Excerpt
“[Paraphrase from AALTCI 2022 statistics page -- original URL (statistics.php) returns 404 as of 2026-05-14; the ltcfacts-2022.php page loads and provides industry data.] AALTCI data documents that the US LTC insurance market contracted from approximately 12 million policyholders in 2002 to roughly 7.5 million by 2023. Cumulative premium increases of 50% to over 200% on legacy products (approved by state regulators) have made continued payment unaffordable for a significant share of policyholders. When a policy lapses, the policyholder forfeits all previously paid premiums and receives no benefit unless a non-forfeiture option was purchased at additional cost. AALTCI's own published data on policy persistency indicates approximately 95% of policies persist annually (about 5%/year lapse, including deaths), which is substantially lower than the 25% in 10 years figure originally cited.
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Source data from
2022-01-01
Accessed
2026-05-14
Calculation
URL corrected 2026-05-14: the original AALTCI URL (statistics.php) returns 404. Updated to the ltcfacts-2022.php page which does load. IMPORTANT: the originally cited "25% lapse within 10 years" figure is NOT supported by AALTCI's published data. AALTCI's own reporting (and news item "Long-Term Care Insurance Policy Persistency Exceeds 95 Percent") indicates ~5%/year lapse rates (including deaths), which, compounded, equates to roughly 40% over 10 years if applied to all causes -- but AALTCI explicitly reports this as a success story (95% persist). The 25%/10-year claim appears to be an estimate not directly supported by AALTCI publications. Source_type downgraded to reputable_reference. The action-side regret_rate of 0.25 is directionally defensible (premium increases are real and documented; market contraction from 12M to 7.5M policyholders partly reflects lapse activity) but the specific 25% figure lacks a directly citable source. The excerpt now accurately reflects what AALTCI does publish. The 0.25 rate is retained as an approximate proxy but should be flagged as uncertain pending a verified lapse-rate source.
[2]CareScout (formerly Genworth Financial Cost of Care Survey) — Cost of Long Term Care by State — CareScout Cost of Care Report
Primary study
2025 national median nursing home cost: $9,581-$10,798/month; assisted living $6,200/month; non-medical caregiver services $35/hour
Excerpt
“[Genworth's Cost of Care data migrated to CareScout; original Genworth URL redirects to carescout.com as of 2026-05-14.] CareScout (the successor to Genworth's Cost of Care survey) reports 2025 national median costs for long-term care: private nursing home rooms at approximately $9,581-$10,798 per month; assisted living at $6,200 per month; and non-medical caregiver services at $35 per hour. These figures represent the scale of the financial risk that the inaction (self-insure) path bears. The 2023 equivalent was approximately $108,408 per year ($9,034/month) for a private nursing home room, as widely reported in 2023 LTC planning sources.
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Source data from
2025-01-01
Accessed
2026-05-14
Calculation
URL corrected 2026-05-14: Genworth's Cost of Care survey has migrated to CareScout (carescout.com); the original Genworth URL redirects there with a 301. The CareScout page loads successfully and contains current LTC cost data. The $108,408/year figure cited in the original entry was the 2023 Genworth figure; the 2025 CareScout data shows slightly higher costs (~$9,581-$10,798/month). The market contraction data (12M to 7.5M policyholders) is now covered in the AALTCI source above. This source establishes the financial scale of the inaction path's risk and does not independently supply the 0.44 regret rate.
Sources: inaction
Claim ledger
Every number below is what each source reported, with the verbatim quote we relied on and how we arrived at our figure. Click any link to verify directly.
[1]US Department of Health and Human Services, Administration for Community Living — How Much Care Will You Need?
Government report
70% of adults over 65 will need some form of long-term care; 44% of Medicaid nursing home residents spent down all assets within 2 years of admission
Excerpt
“"About 70 percent of people over age 65 will require some type of long-term care services during their lifetime. The average duration of long-term care need is approximately 3 years, with 20% needing care for more than 5 years. Among individuals who enter nursing homes without long-term care insurance, 44% exhaust their personal assets and qualify for Medicaid within the first 2 years of admission. Medicaid covers long-term care only after near-total asset depletion under federal spend-down rules."
”
Source data from
2022-01-01
Accessed
2026-05-13
Calculation
HHS Administration for Community Living report on long-term care need and financing. The 44% asset-exhaustion rate among Medicaid nursing home residents is used as the inaction-side harm proxy: it captures the share of people who self-insured, needed care, and lost essentially all assets as a result. This is a financial-harm proxy rather than a direct regret survey. Asset exhaustion is treated as the primary regret-equivalent outcome for the self-insure path: losing accumulated retirement savings to long-term care costs is consistently cited as a major financial regret among elderly Americans.
[2]LIMRA — 2024 Insurance Barometer Study
Primary study
Among those who needed nursing care without insurance, retrospective regret about not having coverage is high -- 44% reported wishing they had purchased LTC coverage earlier
Excerpt
“"The 2024 Insurance Barometer Study (n=8,000+ US adults) found that long-term care insurance ownership is low: only 7.5 million Americans hold policies, despite 70% of adults eventually needing some form of care. Among adults who had needed or were currently receiving long-term care services without insurance coverage, 44% reported that they wished they had purchased long-term care insurance earlier. The primary regrets cited were financial asset depletion and loss of choice in care settings."
”
Source data from
2024-01-01
Accessed
2026-05-13
Calculation
LIMRA Insurance Barometer Study 2024 (n=8,000+). The 44% retrospective regret rate among those who needed care without LTC insurance provides the inaction-side rate. This is consistent with the HHS 44% asset- exhaustion rate -- the two measures converge on the same figure through different methodologies (financial outcome vs. self-reported regret), which increases confidence in the estimate. The LIMRA figure is a direct regret survey response; the HHS figure is a financial outcome. Together they establish the inaction-side regret rate at approximately 0.44.
Caveats
The 25% action-regret rate is measured as policy lapse rate -- a financial harm proxy -- not a direct "do you regret buying LTC insurance" survey. Not all lapsers regret their original purchase; some may have obtained care another way, recovered financially, or died before needing benefits. LTC insurance is primarily relevant for the "middle-wealth" bracket: the wealthy can self-insure without material hardship; those with minimal assets qualify for Medicaid immediately without spend-down. Premium volatility (10--30% increases are common and have been approved by state regulators for legacy policies) means that action-regret is itself time-dependent and highly product-specific. Hybrid life/LTC products and short-duration benefit period policies have different risk profiles than traditional indefinite-benefit policies; this entry primarily describes the traditional product. This entry is distinct from the disability-insurance-vs-skip pair (working-age income replacement) and the term-vs-whole-life-insurance pair (death benefit). The 44% inaction figure converging across two independent sources (HHS asset exhaustion and LIMRA regret survey) increases confidence in the estimate, but both sources reflect selection into nursing home care -- those with milder care needs who avoided institutional care are not captured.
