Most employees carry some life insurance through work, and most employers assume that checks the box. But two separate coverage gaps quietly overlap in the average benefits package: employees do not have enough life insurance, and almost none have any long-term care coverage. Life insurance with long-term care benefits addresses both problems through a single voluntary benefit, without asking employers to add a new line item to their budget.
How Big Is the Life Insurance Gap Right Now?
The gap is bigger than most HR teams realize. LIMRA’s research found that 42% of U.S. adults, more than 100 million people, say they need more life insurance coverage. Separately, Finseca points out that 102 million Americans carry little or no life insurance, resulting in a $12 trillion protection gap nationwide.
Group life insurance through work makes the problem harder to see. LIMRA’s 2025 Insurance Barometer Study found that 57% of people with only employer-provided life insurance believe they have enough coverage. Most do not. A common financial planning benchmark suggests coverage of about 10 times annual income, while group life plans typically cover only 1 to 2 times salary. For example, for someone earning $100,000 a year, the recommended amount is near $1 million, roughly twice what even a generous $500,000 group policy would provide.
This is the quiet misconception brokers run into constantly: employees see a line item on their pay stub and assume they are protected, when the actual benefit would not replace more than a few months of income.
What About the Long-Term Care Gap?
Long-term care is even less understood and arguably more expensive to overlook. The Administration for Community Living estimates that someone turning 65 today has roughly a 70% chance of needing some form of long-term care in their lifetime.
The cost of that care keeps climbing. CareScout’s 2025 Cost of Care Survey puts the annual median cost of a private nursing home room at $129,575, a semi-private room at $114,975, and assisted living at $74,400. Even in-home, non-medical care adds up to roughly $80,080 a year at 44 hours a week.
Most employer-sponsored benefits packages do not address any of this. Medicare does not cover long-term custodial care, a common misconception employees carry into retirement. Without a dedicated benefit, families are left paying for care largely out of pocket, often at the exact moment when their finances are least able to absorb the cost.
Why Are These Usually Treated as Two Separate Problems?
Historically, life insurance and long-term care insurance have lived in different corners of the benefits world. Standalone long-term care insurance is medically underwritten, often expensive, and has become harder to find as carriers have pulled back from the standalone market. Group life insurance, meanwhile, rarely includes any living benefit beyond a basic accelerated benefit for terminal illness.
The result is that brokers end up quoting two separate products, if long-term care gets quoted at all, and employers are left assuming the gap is someone else’s problem to solve.
How Does Life Insurance with Long-Term Care Solve Both Gaps?
Life with LTC packages a life insurance death benefit and a long-term care benefit into one policy. If the insured never needs long-term care, the policy pays a death benefit like a standard life insurance policy. If the insured does need care, meeting an ADL trigger such as needing help with two or more activities of daily living, the policy can pay out a portion of the death benefit early as an indemnity payment to help cover care costs, whether that care happens in a nursing home, an assisted living community, or at home.
This structure directly answers the objection brokers most often hear about long-term care coverage: what happens if it is never used? With Life with LTC, the benefit is not lost if long-term care is never needed. It converts to the life insurance death benefit instead.
Many of these plans are also offered on a guaranteed issue or simplified issue basis during enrollment windows, meaning employees, and often their spouses through spouse guaranteed issue, can enroll without the medical underwriting that makes standalone LTC coverage difficult to obtain later in life.
What Role Do Benefits Brokers Play in Closing These Gaps?
Brokers are the ones who translate these two coverage gaps into a benefit that employees will actually understand and use. That typically means:
- Explaining the real math behind group life, so employees stop assuming a flat $20,000 benefit is enough
- Positioning Life with LTC as one benefit that solves two problems, rather than pitching life insurance and long-term care as competing budget items
- Structuring enrollment around guaranteed issue, so more employees can qualify without a medical exam
- Timing education around open enrollment and awareness moments like Life Insurance Awareness Month, when employees are already more receptive to the conversation
What Does This Mean for Employers and Retention?
Adding a benefit that employees actually understand and use has a measurable effect on how they feel about their employer. MetLife’s 2025 U.S. Employee Benefit Trends Study found that employees who trust and feel cared for by their employer are 2.4 times more likely to be engaged and 1.9 times more likely to be productive than those who do not feel that way.
Voluntary benefits like Life with LTC are among the most direct ways employers can build that sense of care without adding to their own budget, since employees pay for the coverage through payroll deductions. For employers competing for talent, that combination, meaningful coverage at no direct cost, is difficult to match with a bonus or a one-time perk.
Frequently Asked Questions
Does Medicare cover long-term care?
No. Medicare covers short-term skilled nursing and rehabilitation after a hospital stay, but it does not cover ongoing custodial care, such as help with bathing, dressing, or eating, which is what most long-term care actually involves.
What happens to my life insurance if I never need long-term care?
The policy pays a death benefit to your beneficiaries, just like a standard life insurance policy. The long-term care benefit is used only if needed, and using it does not forfeit coverage entirely, since payouts reduce the remaining death benefit rather than eliminating it.
Is Life with LTC coverage guaranteed issue?
Many employer-sponsored Life with LTC plans offer guaranteed-issue or simplified-issue underwriting during initial enrollment windows, meaning little or no medical exam is required. Exact requirements vary by carrier, plan design, and enrollment period.
Does adding this benefit cost the employer anything?
Typically, no. Life with LTC is usually offered on a voluntary basis, with employees paying premiums through payroll deduction. The employer’s role is primarily to make the benefit available and support enrollment education.
How is this different from standalone long-term care insurance?
Standalone LTC insurance only pays out if long-term care is needed, and premiums are typically based solely on that risk. Life with LTC combines a life insurance death benefit with a long-term care benefit, so the coverage has value whether or not care is ever needed.
Looking Ahead
The life insurance gap and the long-term care gap are usually presented as two separate conversations. They do not have to be. Life insurance with long-term care benefits gives brokers a way to address both at once, with a benefit structure that holds up whether or not it is ever used for care.
For brokers building out open enrollment strategy this fall, Life Insurance Awareness Month is a natural moment to introduce the conversation. For employers, it is a chance to close a gap in the benefits package without opening a new line item in the budget. If you are exploring how Life with LTC could fit into your next enrollment, The VB Shop is happy to talk through the options with you.