Due to the increased longevity of the American population, long-term care insurance has become increasingly important.

While long-term care insurance is gaining in popularity, there is still some controversy as to whether it makes sense to purchase a long-term care policy (LTC policy). We'll help you decide whether you should purchase a policy and how to shop for one, but it is important to first understand what we mean by long-term care.

Long-term care typically begins when you need help with one or more activities of daily living, usually as a result of an illness or disability (for example, a stroke or Alzheimer's disease). Activities of daily living (ADL) include dressing, eating, bathing, walking, transferring from a bed to a chair, and toileting and maintaining continence. Along with assistance in ADL, you may require acute medical care, otherwise known as skilled nursing care, or intermediate nursing care, which requires some skilled nursing care combined with personal care.

But it is the long-term personal care, more commonly referred to as custodial care, that can be quite costly.

While most people may never enter a nursing home or will spend less than three months in one, many elderly people will need some daily assistance at home to care for themselves. This care may be provided by a home health aide or may require a skilled nurse, or a physical, occupational, or speech therapist.

For those who do enter a nursing home, the average length of stay is about two years, and the average nursing home cost for a semi-private room is approximately $69,000 in the U.S. (The actual cost varies by region, and ranges from $45,000 to $186,000). For a private room, the average is just over $77,000*.

Contrary to popular belief, nursing home costs are not eligible for Medicare coverage unless certain qualifications are met. It is Medicaid that pays almost 50% of the total cost of nursing home care in this country, but will you be eligible?

*MetLife Market Survey of Nursing Home & Home Care Costs—October 2007