As a senior, planning for the extra help you might need for your daily care can feel overwhelming. But figuring out what your future long-term care needs might be, along with the potential costs and what you can afford to pay, can benefit you now and over the long run. And, it can also help you find ways to cut down on the costs tied to your long-term care, like securing a long-term care insurance policy. This type of coverage can be critical as you age, as it helps cover the costs of your long-term care, whether that’s in a nursing home, an adult day care facility or via a home health aid.  

But while this type of coverage can be crucial, it also comes at a cost. For example, the price of a long-term care insurance policy with $165,000 in benefits averages about $950 per year for a single, healthy 55 year-old man. The same policy and benefits average about $1,500 for a healthy woman of the same age. But the average price for the same policy for a 60 year-old man jumps to about $1,175 a year and increases to about $1,900 annually for a 60 year-old woman. 

That’s just the average, though. And, depending on your age, health and other factors, the cost of long-term care insurance can be much higher or lower than the average. So what’s the most that experts say you should pay for this type of coverage? 

Find out how much a long-term care insurance policy could cost you today.

What’s the maximum you should spend on long-term care insurance? What experts say

What long-term care insurance will cost you can fluctuate based on your age, the type of insurance you choose, where you live and more. But Alex Cruz, the owner of Matrix Insurance, says the maximum that you should spend on your long-term care insurance policy is not necessarily tied to a dollar amount, but rather, a percentage.

“There is no maximum amount [but] you shouldn’t spend more than 5 to 6 percent of your annual income [on] premiums,” Cruz says. “If you go beyond that, it will become a financial burden.”

When it comes to the maximum amount you should spend on a policy, the answer depends on each person’s circumstances, says Peter J. Landry, managing director of insurance and annuities at Wells Fargo. 

“You’ll want to consider the average monthly amount of care, as well as the typical amount of time that care will be needed, which is approximately four to six years in most situations,” Landry says. “Sometimes care is needed for a longer period of time as well, so family history plays a role too in determining a suitable amount of coverage.”

With multiple factors impacting the cost, a good place to start is to figure out how much coverage you need from your policy. To determine this, you may want to utilize calculators online or talk with a financial advisor who can help you decide what the right amount is for you and your family.

Explore your top long-term care insurance options and compare the costs now.

When should you purchase long-term care insurance?

Many people wait to purchase a long-term care insurance policy until they get older. But waiting too long can have a big impact on the cost of your long-term care insurance.

According to Wilson Coffman, president of Coffman Retirement Group, says the best time to buy this type of insurance is when you hit middle age.

“The best time to purchase long-term care insurance is early in your adult life, between the ages of 45 and 55,” Coffman says. 

And not everyone needs to purchase a policy, Coffman says. For example, high earners who have the assets available to pay for the cost of long-term care may not need this type of coverage. 

Both Coffman and Landry also note that if you’re going to purchase this type of policy, it’s important to read your contracts carefully.

“One important factor to consider when purchasing a long-term care policy is whether or not payments from the contract, when needed, are reimbursement or indemnity based,” Landry says. “Indemnity [means] that receipts for care do not need to be submitted. Rather, the insurance company pays a specified amount each month to the policy owner, once they have qualified to receive policy benefits.”

The bottom line

Ultimately, the maximum amount you should spend on a long-term care insurance policy depends on a wide range of factors, so the answer to this question will vary based on your unique circumstances and who you ask. For many, it doesn’t make sense to spend more than 5% to 6% of your annual income on a long-term care insurance policy, but in some cases, you may need to spend a bit more to get the right coverage amount — and in some cases, you may not need coverage at all. So, as you weigh your options, be sure to take all of the factors into account to determine how much you should spend and how much coverage you need to ensure that you and your finances are protected.