Long-term care (LTC) insurance isn’t a household phrase in Australia—yet. But as the nation’s population ages and pressure mounts on both public and private aged care systems, more Australians are weighing up how to protect their future lifestyle and finances. In 2025, aged care reform, ballooning costs, and evolving family structures have put LTC insurance in the spotlight. Here’s what you need to know if you’re considering whether this cover makes sense for you or your loved ones.
Why LTC Insurance Is Suddenly on the Radar
Australia’s median age continues to rise, and the latest Intergenerational Report predicts that the over-65 population will double by 2060. With more Australians living longer, the demand for quality aged care is surging. Recent data shows that residential aged care costs now average $60,000–$80,000 per year, with in-home support also carrying significant ongoing expenses.
- Government reforms: 2024 saw the introduction of stricter means testing for aged care subsidies, shifting more financial responsibility to individuals and families.
- Rising out-of-pocket costs: Daily care fees, accommodation payments, and extras like physiotherapy are increasingly out of reach for many retirees.
- Family dynamics: Fewer multi-generational households and a higher proportion of singles mean less informal care support at home.
Against this backdrop, LTC insurance is being marketed as a way to help Australians preserve their savings and maintain choice over their care arrangements.
How LTC Insurance Works in Australia (2025 Update)
Unlike the U.S., where LTC insurance is a mature industry, Australia’s market is still developing. However, several major insurers now offer products that pay a benefit if you need help with basic daily activities due to illness, injury, or cognitive decline. Here’s how typical policies work in 2025:
- Benefit triggers: Usually, you must be unable to perform at least two ‘activities of daily living’ (such as bathing or dressing) or be diagnosed with severe cognitive impairment (like dementia).
- Payment type: Most policies provide a regular monthly income for a set period (e.g., 2–5 years) or a lump sum to spend as you choose—on home care, residential care, or other supports.
- Entry age: New policies are typically available to applicants aged 45–70, though premiums are far lower if you start younger and in good health.
- Premium structure: 2025 products are moving toward ‘level premiums’—fixed payments over time to avoid steep cost increases as you age.
One standout example: InsureCo’s new ‘Aged Care Choice’ policy, launched in late 2024, pays $3,000/month for up to 5 years if you lose independence, with optional inflation protection built in. Several super funds have also begun offering LTC riders as a member benefit.
Is LTC Insurance Worth It? Pros, Cons, and Considerations
Deciding whether LTC insurance is a smart investment depends on your personal circumstances. Here are the key factors to weigh:
- Pros:
- Helps protect your retirement nest egg from being eroded by care costs
- Gives you more control over your care options, including staying at home longer
- Reduces potential financial burden on adult children or other family members
- Premiums may be tax-deductible for some self-funded retirees (check 2025 ATO guidelines)
- Cons:
- Premiums can be costly, especially if you start later in life
- Strict eligibility criteria and waiting periods may apply
- Not all policies cover every type of care or pre-existing conditions
- Some may prefer to ‘self-insure’ by investing or earmarking assets for aged care
In 2025, one trend is clear: demand for flexible, hybrid insurance products is growing. Some insurers now bundle LTC cover with life or trauma policies, offering discounts and more seamless claims processes.
Making the Decision: Who Should Consider LTC Insurance?
LTC insurance isn’t for everyone. It tends to offer the most value if you:
- Don’t want to rely solely on family or government support for aged care
- Have significant assets to protect and want to avoid a fire sale in later life
- Are in good health and able to lock in lower premiums while younger
- Value the peace of mind of knowing you can access quality care if needed
On the other hand, Australians with low assets who will qualify for the maximum government support may not benefit as much from private LTC cover.
The Bottom Line
As aged care costs rise and public funding becomes less generous, long-term care insurance is likely to become a bigger part of Australia’s retirement planning conversation. It’s not a one-size-fits-all solution, but for many, it offers a layer of financial protection and choice that can make a real difference in later life. Before making a decision, compare policy features, check for exclusions, and consider seeking tailored advice.
