What is long-term care insurance?

A long-term care insurance policy doles out money to help cover the costs of nursing-home care, an assisted-living facility or at-home assistance if you are no longer able to take care of yourself.

The allure of long-term care is obvious: It's the rare bird (or baby boomer) who doesn't worry about how he or she will afford care later on. And if you're counting on Medicare, you're out of luck. Medicare doesn't offer extended long-term care coverage. (Medicaid does, but only very low-income retirees are eligible.)

Long-term care insurance is very expensive - the annual premium can easily be $2,500 or more a year - and many insurers have jacked up initial premiums by 20% or more over the past decade. (For more, see How much will a policy cost me?)

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