Many financial planners strongly recommend that their clients purchase private long term care insurance (LTCI) as part of their overall retirement strategy. This paper provides a critical assessment of the argument for LTCI.The main conclusions: •Many households have insufficient levels of liquid asset and insufficient savings in their retirement accounts. These households need to focus on increasing their saving rate rather than divert savings towards an illiquid asset.•Even most individuals who purchase LTCI must depend on Medicaid if they require long term care for many years.•LTCI almost always costs more than anticipated at the time the LTCI policy is purchased. It is now commonplace for insurance firms to request and receive substantial increases in LTCI premiums after the policy is issued. •Premium increases on LTCI policies tend to occur most frequently when interest rates are low and investment returns poor, factors which also reduce household wealth and the ability of retired households to afford higher premiums.•Many of the major insurance firms that sell LTCI use derivatives to hedge financial risks. Risks associated with the use of derivatives are very difficult for consumers to evaluate.•Many major insurance firms are leaving the LTCI industry. Most recently, MetLife left both the group and individual market and Prudential left the individual market.
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