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Understanding the difference between long-term care and long-term disability

A person turning 65 today has a nearly 70%1 chance of needing some type of long-term care in their retirement years.

 If you’re among the 15 million people who will turn 65 by 20242, it’s imperative to understand the different ways to preserve your assets and retirement income and protect your loved ones.

Yet more than half of respondents to a recent survey conducted by Nationwide Retirement Institute® and LIMRA confused long-term care (LTC) and long-term disability (LTD) insurance3.

It’s not hard to understand why. Both are protections from financial consequences of illness or injury, but LTC and LTD insurance serve two distinct purposes. These differences are outlined below:  

Long-term care insurance

Long-term care encompasses a range of support and services that aren’t covered by health insurance – specifically, for help with activities of daily living (ADLs). These can include:

  • Bathing
  • Dressing
  • Eating
  • Transferring (i.e., getting out of a bed or chair)
  • Toileting

LTC insurance helps you cover the cost of this care whether you receive it in your home, an assisted living facility, a nursing home, or an adult day care center. It may be needed at any age, but it often isn’t considered until later in life. Under most policies, people are eligible for LTC benefits when they are unable to manage two ADLs on their own.

Among people surveyed, 29% confused LTC insurance with traditional health insurance3. Health insurance does not cover long-term care. Neither does Medicare, unless you are also receiving skilled services or rehabilitative care. Medicare does not pay for non-skilled aid with ADLs, which make up the majority of long-term care services.

The costs associated with long-term care can drain your retirement savings quickly: According to Genworth’s 2022 Cost of Care Survey, the median annual cost of a semiprivate nursing home room is $94,9004. An LTC policy can assist with these costs by reimbursing you a daily or monthly amount up to a preselected limit.

Long-term care generally takes place in three settings: at home, in a residential facility, or out in the community. It can comprise everything from light housekeeping to around-the-clock nursing care – all  of which have associated costs that can alter your financial outlook over time.

A long-term care plan enables you to make your own decisions while you still can and better enjoy your retirement and quality of life and take the burden off your family’s shoulders. Working with your financial advisor to develop a strategy for funding long-term care can help prevent a costly scenario from depleting your retirement income.  

Despite the importance of LTC insurance, only 3.1% of people have it5.

Long-term disability

Long-term disability (LTD) insurance, by contrast, helps replace your income if you’re unable to work for an extended period. More people are familiar with this type of insurance as it’s sometimes offered through their employers.

An LTD policy can help you continue to financially support yourself and your family without depleting your savings, and maintain a higher standard of living than you could by relying solely on government assistance.

However, most employer-sponsored policies are structured to replace only about 60% of your income6. Personal LTD coverage can replace the remaining 40% of your gross monthly income that’s not covered by employers.

Now that you know the difference between LTC and LTD insurance, talk to your advisor about whether one – or both – is right for you.


1) Plansponsor

2) Protected Lifetime Income

3) Nationwide Retirement Institute® 2023 Long-Term Care Survey

4) Genworth Cost of Care Survey


6) U.S. Bank

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.

These policies have exclusions and/or limitations. The cost and availability of long-term care insurance depend on factors such as age, health, and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of long-term care insurance. Guarantees are based on the claims paying ability of the insurance company.