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.