If you have a long-term care insurance policy, the buyer pays a pre-set premium. The policy then pays for the services you need, when you need them (up to its coverage limits). On occasion, if the assumptions used to price the policy prove wrong, the insurance company can increase your premiums beyond the pre-set amount. Typically, you are not expected to pay premiums while you receive long-term care.

The cost of a long-term care policy varies greatly based on:

• Your age at the time of purchase
• The policy type
• The coverage you select

In 2007, the average long-term care insurance policy:

• Cost about $2,207/year
• Covered 4.8 years of benefits, excluding the 20 percent of people who elected lifetime coverage
• Had a daily benefit amount of $160
• Was a comprehensive policy covering both facility and at-home care
• Included some form of automatic inflation protection