An LTC policy is a way to protect your assets in retirement from the risk of needing extended care outside of a hospital, i.e. a nursing home, assisted living, or home health care situation.
The risk is that you need extended care in some form or fashion for some period of time in retirement. When faced with a risk, one has three choices - ignore it, fund it, or transfer it.
In CA, the average annual cost of care runs from $50k for unskilled care (think cooking, cleaning, and the like) to $98k for a private room in a skilled nursing facility.
LTC is insurance that takes on that risk so that you don't have to deplete your assets or be forced into a state funded facility.
But wait, you say, the insurance is $6k a year for both of us, what of we never use it? Fine, but how many years of premium would you have to pay before you would equal one year in ahome's cost? The answer, btw, is 16. Even if you paid premiums for 30 years, two years in a home and you break even.
LTC is an incredibly complicated product and you should visit with an insurance agent who specializes in it, so not the guy who does your car and home insurance either, or a CFP who is able to fold it into our overall retirement plan.