LTCi proves its value beyond peace of mind

Long-term care insurance continues to play a vital role in supporting aging Americans, despite lingering misconceptions about its value. While some question its relevance or assume the industry is in decline, new research from Milliman tells a different story — one of significant financial protection, with billions of dollars flowing to policyholders at the time they need it most.

According to the National Association of Insurance Commissioners, LTCi claims totaled approximately $14 billion in 2023. And that’s just for one year. Milliman projects that the total amount paid out annually will continue to increase, peaking at $42 billion by 2041, before gradually declining as policyholders age and pass on.

This isn’t pocket change. This is real money going to real people who bought policies decades ago. And despite changes in the industry, it’s still doing exactly what it promised —paying out when long-term care is needed.

“We know that LTC insurers will pay increasing benefits to their policyholders in the coming decades, and these future claims are anticipated in the reserves the insurers hold,” said Robert Eaton, product manager for Milliman’s LTC Advanced Risk Analytics product.

The LTCi industry looks different than it did 30 years ago. Back in the 1990s, more than 100 insurance companies were selling these traditional policies. Today, fewer than 15 carriers remain. New sales took a sharp downturn after 2003, dropping 9% each year between 2003 and 2009.

But even with fewer new policies being sold, roughly 6 million policies are still in force as of the end of 2023. That’s a large population of insured individuals — and as they age, more of them are turning to their policies for support.

Milliman’s work offers an impression of today’s LTCi policyholder:

• The average policyholder is 71 years old.
• Nearly two-thirds of policyholders are women.
• Most LTCi policies were issued between 2000 and 2010.
• Half of the policies include inflation protection.
• 70% of LTCi policies offer a three-year benefit period; the rest offer lifetime benefits.

“These are not just numbers. Behind every claim is a person – often a spouse, parent or grandparent – using their policy to cover the cost of care at home, in assisted living or in a skilled nursing facility,” Eaton said. “It’s about preserving dignity, easing the burden on loved ones and allowing families to focus on what truly matters – being there for one another during life’s most vulnerable moments.”

According to Milliman, a number of factors contribute to the growing claims volume.

• Age: The bulk of LTCi policyholders are now entering or already in their 70s and 80s — the prime time for needing long-term care.
• Inflation-protected policies: Half of all LTCi policies include 5% compound inflation protection, meaning the benefit amount keeps growing over time.
• Comprehensive coverage: Most policies cover a wide range of care settings and services, allowing flexibility in how benefits are used.

Milliman didn’t account for any future LTCi sales in its forecast, nor did it include hybrid life-LTCi products. That means the $42 billion peak is based only on existing policies. If newer products gain traction, the amount paid out could climb even higher.

New products also are entering the market, according to Milliman, some of which are new standalone LTCi products filed in 2025 from insurers that had previously ceased most sales. This suggests that even with past challenges, some insurers are finding ways to re-engage in the market — likely in response to rising demand and increased awareness of long-term care needs.

The takeaway here is simple: LTCi is paying claims — and it's doing so at a significant level.

For policyholders, this study is a reminder that their policies still hold real value. And for financial service professionals, this study shows it’s worth re-evaluating how they speak about LTCi  because it is proving to be a lifeline for millions of Americans.

As with all insurance, results will vary depending on policy features and personal circumstances. But Milliman’s analysis reinforces what many families already know: when long-term care needs arise, having a policy in place can make all the difference.

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Carroll Golden, CLU, ChFC, LTCP, CASL, FLMI, CLTC, LACP, is executive director of NAIFA’s Limited and Extended Care Planning Center. She is the author of How Not to Tear Your Family Apart: A Practical Guide to Caregiving and Financial Stability. She may be contacted at [email protected].