- Enter both annual premiums. Use the full yearly premium for each policy option so the comparison uses the same time period.
- Add each deductible. Enter the amount you would pay before the applicable policy benefit begins for the modeled claim.
- Estimate claim probability. Use a 0%–100% annual probability that reflects the scenario you want to test, not a guaranteed forecast.
- Set an expected covered claim cost. This caps the deductible exposure when the modeled claim would cost less than the deductible.
- Compare the outputs. Review expected annual cost for each option, the dollar gap, and the break-even probability.
Long Term Care Insurance Deductible Tradeoff Calculator
Compare two long-term care insurance deductible structures by estimating the annual cost of premiums plus the deductible amount you would expect to pay when a covered claim occurs. The calculator is useful when one policy option charges a higher premium in exchange for a lower deductible or cost-sharing threshold, while another lowers the premium but leaves more claim cost with you. The comparison is driven by your own estimate of claim probability and covered care cost, so it is a planning model rather than a forecast of an insurer’s actual claim decision. Use the expected annual cost and break-even probability together: they show which option is cheaper under the assumptions entered and how much the claim likelihood would need to change before the preference flips.
Enter your assumptions
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Result
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Estimated annual cost of the cheaper option
Lower-deductible expected cost—
Higher-deductible expected cost—
Estimated annual difference—
Break-even claim probability—
Expected annual cost = Annual premium + p × min(Deductible, Covered claim cost)Break-even p = (Premium_low-deductible − Premium_high-deductible) ÷ (Out-of-pocket_high − Out-of-pocket_low)
Where:
- p = annual claim probability expressed as a decimal
- Deductible = the deductible for the policy option, in dollars
- Covered claim cost = the modeled covered cost if a claim occurs, in dollars
- Out-of-pocket = min(deductible, covered claim cost) for the option
Assumptions: The model treats the entered claim probability as a one-year probability and considers one representative covered claim. It does not model waiting periods, benefit caps, exclusions, inflation riders, coinsurance, taxes, or premium changes unless those effects are already reflected in your inputs.
What the result means
A lower expected annual cost means that option is cheaper on average under the entered assumptions; it does not mean it will be cheaper in every individual year.
The break-even probability is shown only when it falls between 0% and 100%. Policy definitions of deductibles and covered services vary, so compare the model with the actual contract terms.
Given: A lower-deductible policy costs $3,600 per year with a $1,500 deductible. A higher-deductible option costs $3,000 with a $3,000 deductible. Estimated annual claim probability is 12%, and the modeled covered claim cost is $25,000.
Calculation: Lower-deductible expected cost = $3,600 + 0.12 × $1,500 = $3,780. Higher-deductible expected cost = $3,000 + 0.12 × $3,000 = $3,360. Difference = $420. Break-even probability = ($3,600 − $3,000) ÷ ($3,000 − $1,500) = 40%.
Result: The higher-deductible option has the lower modeled annual cost by $420 at a 12% claim probability.
Interpretation: Under these assumptions, the premium savings outweigh the additional deductible exposure. The lower-deductible option becomes cheaper only when the modeled annual claim probability rises above 40%.
Why is the deductible capped by the expected claim cost?
You cannot pay a deductible amount larger than the modeled covered cost for that single claim in this simplified comparison. The cap prevents a small claim from being treated as if the full deductible were paid.
What claim probability should I enter?
Enter the annual probability you want to test. If you are unsure, try several scenarios rather than treating one percentage as certain.
Does this include an elimination period or daily benefit limit?
No. This calculator isolates the premium-versus-deductible tradeoff. Other long-term care policy features can materially change actual out-of-pocket cost.
What if the break-even probability is outside 0% to 100%?
That means one option remains cheaper throughout the feasible probability range under the current premium, deductible, and claim-cost assumptions.
Is expected annual cost the same as the amount I will actually spend?
No. It is a probability-weighted planning value. In a specific year, actual spending may be just the premium or may include claim-related costs.