There's really no such thing as nursing home insurance. What you're probably referring to is long-term care insurance (LTCI), which typically provides coverage for several different types of long-term care, including nursing home care. For example, home health care, adult day care, and assisted-living care will also be covered under a typical LTCI policy.

Although LTCI policy types vary, they usually work something like this: You pay a premium, and when you need it, the policy pays a selected dollar amount each day (for a set period of time) for the type of care outlined in the policy. Because the probability is high that a policyholder might file a claim, LTCI can be relatively expensive. The cost depends on many factors, including the type of policy that you purchase (e.g., size of benefit, length of benefit period, optional riders), your health, and your age at the time you purchase the policy.