What does Dave Ramsey say about long-term care insurance?

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Dave Ramsey strongly advocates for buying long-term care insurance once you turn 60 to protect your retirement savings from high medical costs.

When to Buy

  • Age 60: Ramsey says you should wait until you turn 60 to purchase a policy.
  • Low early risk: The chance of needing long-term care before age 60 is under 1%.
  • Avoid early sales: He advises against buying policies when you are 40 or 50 because you pay for unneeded years of coverage.

Who Needs It

  • Asset range: He recommends policies for people with a net worth or assets between $200,000 and $5 million.
  • Self-insuring: People with very high wealth can pay out of pocket and do not need a policy.
  • Low assets: People with few assets will eventually qualify for Medicaid after spending down their money.

What to Look For and Avoid

  • Standalone policies: Buy a dedicated long-term care insurance policy.
  • No bundling: Never bundle long-term care with a life insurance policy, which Ramsey calls a rip-off loaded with extra fees.
  • Coverage scope: Ensure the plan covers in-home care, assisted living, and nursing home facilities.

Does Dave Ramsey still recommend long-term care insurance?

Yes, Dave Ramsey still recommends long-term care insurance for people nearing retirement age.

His Current Guidelines

  • Target Age: He advises buying a policy around age 60. He notes that the statistical risk of needing long-term care before 60 is low, making it unnecessary to buy earlier.
  • Who Needs It: He views it as a smart financial tool for people with a net worth or nest egg roughly between $200,000 and $5 million. It protects accumulated wealth from being completely wiped out by nursing home or assisted living costs.
  • Who Might Skip It: Individuals with a very large fortune can choose to self-insure (pay out of pocket), while those with few assets might rely on Medicaid after spending down their savings.
  • Policy Structure: He recommends looking for 3-to-5-year benefit periods and warns against combining long-term care with life insurance riders, which he considers a bad deal.

Opinions on his exact target age differ among online communities and industry experts; for instance, discussions on Reddit r/DaveRamsey show that some people prefer buying earlier to lock in health eligibility, while others agree with waiting until 60. You can read more about his official stance directly on the Ramsey Solutions Long-Term Care Guide.

What is the biggest drawback of long-term care insurance?

The biggest drawback of long-term care insurance is its prohibitive and unpredictable cost, compounded by the risk of paying high premiums for years only to receive no return if you never need care.

📊 Major Drawbacks of Long-Term Care Insurance

  • ✅ High Initial Costs
    • Premiums scale dramatically as you age.
    • Buying a policy later in life becomes unaffordable.
  • ⚠️ Unpredictable Rate Hikes
    • Insurers can raise group rates significantly over time.
    • Sudden 20% to 40% hikes break fixed retirement budgets.
  • 📉 The "Use It or Lose It" Risk
    • Traditional policies offer no cash back if unused.
    • Many policyholders pay for decades and collect nothing.
  • 🔎 Strict Underwriting & Qualification
    • Pre-existing health conditions lead to high denial rates.
    • Approval becomes difficult or impossible past age 65 or 70.
  • 📌 Coverage Caps and Gaps
    • Lifetime maximums can exhaust during extended multiyear care.
    • Specific types of custodial or family-provided care may be excluded.

What does Suze Orman think of long-term care insurance?

Suze Orman strongly advocates for long-term care insurance (LTCI), viewing it as an essential tool to protect retirement savings from the devastating costs of extended late-life care.

Key Aspects of Her Advice

  • The Personal Motivation: Orman frequently shares her personal experience with her late mother, who required round-the-clock professional nursing care costing tens of thousands of dollars a month—totaling over $2 million out of pocket. She considers failing to plan for these costs a massive financial mistake.
  • When to Buy: She recommends looking into and purchasing policies during your mid-to-late 50s (or early 60s) when you are still healthy and premiums are relatively affordable.
  • Affordability Rule: You should only buy a policy if you can comfortably afford the premiums for the long haul (potentially 20 to 30 years). Crucially, she warns buyers to plan for potential premium hikes of 40% to 50% down the road. If a future rate spike would force you to drop the policy, she advises against buying it.
  • Alternatives: For those who cannot qualify for traditional standalone coverage or prefer different options, she suggests exploring hybrid products (which combine life insurance or annuities with care riders) or fixed index annuities equipped with long-term care provisions.

What insurance does Dave Ramsey say not to get?

Dave Ramsey advises people to avoid cash-value life insurance and any coverage that blends insurance with an investment or savings program.

Life Insurance Policies to Avoid

  • Whole Life Insurance: Combines coverage with a savings account, which Ramsey considers expensive and a poor investment.
  • Universal and Variable Life: Other forms of permanent life insurance featuring cash-value accumulation.
  • Return-of-Premium Policies: Costs extra money for a refund of payments if you do not die during the term; Ramsey says you should just invest the difference instead.
  • Life Insurance Riders: Rejects add-ons like accidental death or return-of-premium riders as costly marketing gimmicks.

Other Specific Coverages to Avoid

  • Short-Term Disability Insurance: Ramsey recommends long-term coverage instead, advising you to use your emergency fund to cover short-term gaps.
  • Low-Deductible Health Plans: Advises against low-deductible or copay-heavy health plans in favor of high-deductible options paired with a Health Savings Account (HSA).
  • Credit-Monitoring-Only ID Theft Plans: Recommends full-restoration identity theft protection rather than basic monitoring services.
  • Extended Warranties and Minor Add-ons: Avoids rental car reimbursement or roadside assistance add-ons on auto policies if you already have an emergency fund or alternative coverage like AAA.

You can review his complete breakdown of required policies on the Ramsey Solutions Insurance Guide.

Do I Really Need Long-Term Care Insurance?

9 related questions found

Who should not get long-term care insurance?

People with very low assets or those who already have disqualifying health conditions should not buy or try to get long-term care insurance.

Low-Income or Low-Asset Individuals

  • Medicaid recipients: If you have few assets and low income, you will likely qualify for Medicaid to cover nursing home or long-term care costs once you spend down your savings, making insurance premiums an unnecessary expense.
  • People living on a tight fixed income: If you cannot comfortably afford current premiums, you should skip traditional policies because insurers can raise rates over time, which frequently leads to policy lapses.

People with Disqualifying Health Conditions

  • Existing daily care needs: Anyone who already needs help with activities of daily living—such as bathing, dressing, eating, or toileting—is automatically denied coverage.
  • Severe cognitive impairment: People diagnosed with Alzheimer's disease, dementia, or related memory decline cannot qualify for new policies.
  • Major chronic or progressive illnesses: Conditions like Parkinson's disease, multiple sclerosis, ALS, untreated substance abuse, or recent active cancer treatments typically result in immediate underwriting disqualification.
  • Heavy mobility aid dependence: Full-time use of a wheelchair, oxygen equipment, or a walker often disqualifies an applicant.

Why does Dave Ramsey say you should take social security at 62?

Dave Ramsey recommends taking Social Security at age 62 if you invest every dollar of those early checks into growth stock mutual funds instead of spending them.

💡 Core Rationale

  • Maximize years: Collects benefits for five extra years starting at 62 instead of waiting.
  • Investment growth: Assumes market returns beat the government's delayed benefit math.
  • Inheritance benefit: Mutual funds pass to heirs; traditional Social Security stops at death.

⚠️ Critical Risks & Flaws

  • Permanent reduction: Locks in a permanent ~30% cut to your monthly base benefit.
  • Behavioral gap: Most retirees spend the checks on bills rather than investing.
  • Working penalties: Earning income past limits at age 62 triggers benefit withholding.

What is better than long-term care insurance?

Hybrid life insurance with a long-term care rider is often considered better than traditional long-term care insurance because it pays out a death benefit to your family if you never need care.

Top Alternatives

  • Hybrid Policies: Combines life insurance or an annuity with long-term care coverage so your money is never wasted if you stay healthy.
  • Self-Funding: Using personal savings and investments gives you total control of your money without strict insurance rules.
  • Home Equity: Using a reverse mortgage or home equity line of credit can turn your property into a cash safety net for in-home care.
  • Short-Term Care Insurance: Covers care for a year or less, offering easier medical qualification and lower prices than traditional policies.
  • Deferred Annuities: Provides a guaranteed income stream later in life with less medical red tape.

What percentage of people actually use their long-term care insurance?

Approximately half (around 50%) of people who buy traditional long-term care insurance eventually file a claim and use their benefits.

Key Utilization Facts

  • Claim Likelihood: Industry data shows that about 50% of policyholders who hold individual long-term care policies use them for claims lasting longer than one year.
  • Claim Duration: About 15% of all claimants require care that lasts for more than five years.
  • Care Starting Point: Most claims begin at home—roughly 71% of initial claims are for home care, while 16% start in a nursing home and 13% in an assisted living facility.

Market Context

  • Low Overall Ownership: Only about 3% to 4% of U.S. adults (and roughly 3% of those over 50) actively hold stand-alone long-term care insurance, even though roughly 70% of adults turning 65 will need some form of long-term care in their lifetimes.
  • Evolving Products: Due to past miscalculations in how many people would use policies, many traditional insurers left the market. Growth has shifted toward hybrid products, such as life insurance policies with chronic illness riders.

What happens if I never use my long-term care insurance?

If you never use your traditional long-term care insurance, you forfeit all the premiums you paid, and your beneficiaries receive no payout.

Traditional Policies ("Use-It-or-Lose-It")

  • No Refunds: Most traditional long-term care plans act like auto or health insurance. If you die without needing care, the money is gone.
  • No Cash Value: These policies do not build cash savings you can borrow against or cash out if you change your mind.
  • Forfeiture on Cancellation: If you stop paying your monthly or annual bills, the policy lapses and you lose everything paid into it unless you have a nonforfeiture rider.

Alternative Policy Types

  • Hybrid Policies: These combine long-term care with life insurance or an annuity. If you never need long-term care, your loved ones receive a tax-free death benefit or a return of premium when you pass away. Learn more about these options with guidance from CBS News.
  • Return-of-Premium Riders: Some traditional policies let you add an optional rider that refunds a portion of your paid premiums to your estate or family if you cancel or die without filing a claim.
  • Shared Benefit Plans: Married couples can sometimes buy a shared pool of coverage where one spouse can use the unused benefits of the other.

Review the details of your specific coverage through the SmartAsset Guide to Unused LTC to see what your plan provides.