USAA Long-Term Care Insurance
Is it right for you: Understanding the Pros and Cons
This article reviews the USAA Long-Term Care Insurance offering and compares it to other highly rated options.
For over 30 years, ACACIA Insurance has specialized in long-term care planning. We are independent advisors, representing numerous highly rated insurance companies and plan types.
Multiple Highly Rated Companies
Does USAA offer long-term care insurance?
- USAA does carry a form of hybrid long-term care insurance
- The coverage is a life insurance policy with a long-term care rider
- USAA does NOT currently offer a stand-alone long-term care insurance policy
The USAA coverage is a universal life insurance policy with a long-term care rider underwritten by John Hancock Life Insurance Company. This type of policy has more focus on the death benefit than the long-term care benefit.
Note: Stand-alone long-term care (LTC) insurance policies are also referred to as traditional long-term care insurance.
Is the USAA long-term care plan right for you?
Key points to consider:
- This Universal Life Insurance policy uses an accelerated death benefit rider.
- The death benefit of the life insurance policy is also the long-term care benefit amount. If the death benefit is accelerated for long-term care expenses, the death benefit is reduced dollar for dollar, and the cash value is reduced proportionally.
- There is NO extension of benefits like most hybrid long-term care insurance policies. The accelerated death benefit rider only uses the death benefit to pay for long-term care expenses.
- There is NO benefit increase rider (inflation protection) to keep your long-term care benefit in pace with rising long-term care costs.
How to compare USAA long-term care insurance
A useful comparison to the USAA long-term care insurance offering is the Nationwide Insurance universal life policy, as both are built on universal life insurance.
One notable distinction between these two plans is that the Nationwide policy includes a Cash Indemnity Benefit, which provides additional flexibility in how benefits are received.
How The Nationwide Cash Indemnity Benefit Works
The Cash Indemnity benefit works like this:
- Nationwide Insurance pays the entire long-term care benefit each month
- You have no restrictions on how you use your LTC benefits
- Even your family and friends can be paid to provide care
- The policy will pay 100% of benefits internationally
How Cash Indemnity differs from Reimbursement – Most long-term care insurance policies provide reimbursement benefits. With reimbursement benefits, bills and receipts must be submitted to the insurance carrier for approval. The insurance company then reviews the claim and reimburses the exact amount of approved expenses, up to the amount of the monthly benefit.
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Who Needs Long-Term Care
Almost 70% of people turning age 65 today will need some type of long-term care in the future. The average length of time people need care is 3 years.1
One-third of people may never need long-term care, but 20% will need it for longer than 5 years. On average women need 3.7 years of care while men need 2.2 years.2
In 2025, the national average cost for 3 years of long-term care is $328,884 ($109,628 per year). That cost is projected to be $654,411 ($218,137 per year) in 2045.3
Does Medicare Cover Long-Term Care?
Medicare 
can cover up to 100 days in a skilled nursing facility. But, you must first be in the hospital for at least three days, and you might have to pay part of the cost after the first 20 days. It can also pay for some home health care, like a visiting nurse, if a doctor says you need it. So, Medicare helps with short-term skilled care, not long-term daily help.
Most long-term care services required are custodial care. It makes up more than 90% of all long-term care services. Examples of custodial care are when you need help with activities of daily living (walking, bathing, dressing, eating or using the toilet). This is what people need most when they have a physical impairment from a stroke. Or, due to cognitive impairment from dementia or Alzheimer’s disease. Don’t make the mistake of thinking Medicare covers most long-term care costs. It doesn’t.
Further, about 80% of care at home is from unpaid caregivers 
. And more than half of this care includes intensive help with personal care like bathing or dressing.4 And it’s not only seniors that need long-term care. Over 35 percent of people currently receiving care are between the ages of 18 and 64.5
When To Buy Long-Term Care Insurance
When’s the best age to get long-term care insurance? It depends on your situation, but here are some key factors to consider:
- Experts suggest buying in your fifties or early sixties. Because, long-term care insurance premiums cost less then and you’re usually healthier at that age. You’ll pay for more years, but the total cost might still be lower than waiting.
- Buying earlier, like in your forties, can work too. Premiums are likely to be even lower and you’d lock in coverage and your good health. But you’d pay for a longer period before needing it.
- Waiting until your late sixties might make sense. This can work if you’re healthy and have cash saved up. But premiums are much higher. Plus, there may be health problems by then and you could miss out on discounts or the ability to get coverage. And if you get sick before buying, you’d be on the hook for all long-term care costs.
Types of LTC insurance: Which is best for your situation?
Traditional Long-Term Care Insurance
- Design: Specifically designed to cover long-term care expenses, such as in-home care, assisted living, or nursing home care. Provides the most comprehensive long-term care benefits for your dollar.
- Benefits: The broadest set of options & benefits. Provides a daily or monthly benefit for a set period or the policyholder’s lifetime, depending on the policy terms.
- Premiums: Recurring premiums paid monthly, quarterly, or annually. Possibility of premium increases over time.
- Underwriting: Requires medical underwriting, where health status impacts eligibility and premium costs.
- Tax Advantages: Premiums may be tax-deductible, and benefits are generally tax-free.
- About Traditional Long-Term Care Insurance >
Life Insurance with Long-Term Care Rider
- Design: Combines permanent life insurance with a rider allowing access to benefits you can use for long-term healthcare. If care is not needed, your asset passes to your estate as a tax-free death benefit.
- Benefits: May build cash value and have a Return of Premium option
- Premiums: Premiums will NOT increase. Cost is higher than standard life insurance due to the added rider, but often more cost-effective than separate policies.
- Underwriting: Medical underwriting is usually less strict than traditional long-term care insurance.
- Tax Advantages: 1035 exchanges are possible and can be funded with qualified dollars (IRA, 401k, etc.)
- About Life Insurance with Long-Term Care >
Annuity with Long-Term Care Rider
- Design: A deferred annuity contract with a rider to cover long-term care expenses. Includes a fixed interest rate and possible indexing for asset growth
- Benefits: Long-term care benefits are usually double or triple the value of the annuity. If not exhausted paying for long-term healthcare, the annuity will transfer to your estate at time of death.
- Premiums: No premium increases. Can be purchased using a single premiums payment.
- Underwriting: Health underwriting is simpler than the other plans available.
- Tax Advantages: Tax-Free 1035 exchanges are possible from an existing annuity to a long-term care annuity.
- Long-Term Care Annuity Details >
How Much Does LTC Insurance Cost?
Your long-term care insurance rates will depend on your age, health history, plan design and type of coverage selected. The following choices let you choose how much protection is right for your situation:
- Benefit Period
- Daily Benefit
- Elimination Period (a deductible in days)
- Inflation Protection (if chosen)
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About the Author: Craig Matesky
Reviewed by: Mike Berger