Maybe you've heard the old joke about the retiree who bought some newlong-term care insurance.

"Last week I bought a retirement insurance policy," he said. "All I've got to do is keep up the payments for 15 years and my agent can retire."

The fact is, when it comes to insurance there is myth and there is reality, and the benefits of long-term care insurance fall closer to the latter than they do the former.

So what islong-term care insuranceand do you really need it? Here are the facts:

What is long-term care insurance?

Long-term care doesn't have one hard or fast definition. In general, any chronic or disabling condition that requires nursing care or constant supervision can trigger the need for long-term care services.Long-term care insurancewas introduced 30 years ago to supplement Medicare's limited coverage for nursing home care. Today it covers a multitude of services for elders whose longevity outstrips their ability to care for themselves. A typical policy covers nursing home services, but also home health care services, assisted living facilities, respite care, hospice care, adult day care, care advisory services and medical equipment and home modifications.

How do I know if I need long-term care insurance?

Studies show that nearly one out of every two persons age 65 and older will probably spend some time in a nursing home. If you think your chances of living 25 or 30 years into retirement (or more), that increases the likelihood that you might need sustainable long-term medical care in your 80's and 90's.

How much does it cost?

Long-term care, in its various forms, isn't cheap. Nursing home care, for example, costs on average $70,000 annually across the United States and in major metropolitan areas the average escalates to $100,000 per year and higher. In New York State alone, nursing home care in 2007 averaged between $264 per day and $340 per day - or between $96,000 and $124,000 per year. Home health care can be pricey, as well. New York State estimates that the average cost of home health care in New York State in 2006 was between $16 per hour and $22 per hour.

Because of the high costs of long term care,long term care insurancedoesn't come cheap. According to the American Association for Long-Term Care's 2009 Sourcebook, individuals seeking long-term care insurance between the ages of 50 and 54 paid as little as $989-per-year; for those between 60 and 64 the lowest amount paid was $1,125. The Association pegs the average cost of long-term care insurance at between $1,800 and $2,000 a year, although annual costs of $3,000 or so are not uncommon the higher you go up the wealth ladder.

What's my best move in buying long-term care insurance?

In a word or two, buy early and be creative. The sooner you buy long term care insurance, the healthier you usually are. And that means a steep discount from insurance companies (who are less likely to give you a good deal - or any deal - the higher your age.)

Also, aim for a policy that costs between $2,000 and $3,000 annually - that should be plenty to cover nursing home and other long term care costs, and it won't break the bank, assuming you have some money set aside for long-term retirement needs.

Ask your insurance provider about inflation protection. The value of money erodes over time and so will the value of your coverage if you don't have any inflation guardrails up on your path to retirement.

Make no mistake, long-term care is a personal choice. But if you believe you're aging demographics are on the long side, and you worry about taking care of health care needs in your later years,long term care insurancemay just be what the doctor ordered.