There’s a lot of debate surrounding Long-Term Care (LTC) insurance. What if you don’t need it? Would you be throwing away your money? How will you pay for it? Is it worth it? Those are all fair questions that many people have. But here’s the thing: Waiting could cost you more. As you get older, premiums typically increase and changes in your health could make it more difficult to qualify for coverage. It might be hard to imagine now, but the reality is someone turning 65 has a 70% chance of needing some type of long-term care. With those odds, it’s worth taking a closer look.
Understanding LTC Insurance
LTC insurance is designed to help cover services that traditional health insurance and Medicare don’t, like the costs of custodial and personal care. It can help pay for care in a nursing home, assisted living facility, or at home, including light medical and non-medical services. For example, LTC insurance with a home care component may cover things like help with bathing, showering, cooking, eating, and taking medications, or even skilled services like physical therapy, or simple companionship or temporary relief for a family care-giver. Policies and coverages vary.
While Medicaid can cover long-term care, it is typically only available for very low-income seniors or individuals with disabilities who meet strict income and asset requirements. Irrevocable trusts can sometimes help families preserve assets, but Medicaid has a five-year lookback period for those. There are strict rules about asset transfers with or without a trust in place, and a single senior can only have $2,000 in cash assets in order to qualify. Sometimes a married couple will even be forced to divorce if one of them develops Alzheimer’s or needs full-time care so that the healthy spouse won’t be bankrupted. An additional problem when it comes to Medicaid for long-term care is that the program is subject to political changes, and can be defunded.
With all of these challenges, the need for planning for long-term care may be even more critical than before.
Types of Insurance Coverage
There are generally two categories of long-term care insurance coverage: Traditional LTC insurance, which is “use it or lose it,” and hybrid policies that combine long-term care coverage with life insurance benefits. These policies typically allow the policyholder to access the life insurance benefit to help cover long-term care costs. If long-term care is not needed, the policy’s death benefit is generally paid to beneficiaries, although any amounts used for care may reduce the final payout. The specific terms and benefits vary by policy and insurer, and sometimes even annuities have hybrid coverage for long-term care.
You typically become eligible to receive long-term care insurance benefits when you are unable to perform at least two Activities of Daily Living (ADLs). This could be needing assistance with eating, bathing, or dressing. Most policies include a waiting period, also referred to as an elimination period or deductible period, which must be satisfied before benefits can begin.
Things To Consider And Keep In Mind
Depending on your financial situation you may be able to self-fund to pay for long-term care expenses if you need them. But keep in mind that a 2024 Fidelity study estimates that a 65-year-old couple retiring today could need up to $315,000 just for medical expenses alone, a figure which includes Medicare premiums, deductibles and co-pays, but not vision, hearing, dental or long-term care expenses. And the average cost for a shared room in a nursing care facility is more than $9,000 per month.
Two of the biggest barriers to getting LTC insurance can be eligibility and cost. Both can be influenced by factors such as age, health history, pre-existing conditions, and even gender. Because women tend to live longer, they are statistically more likely to need extended care, which can result in higher premiums.
When choosing an LTC policy, think carefully about when to buy and about what features make the most sense for you. Consider your personal and family health history. Has anyone in your family had Alzheimer’s, a stroke, or another serious health condition? Does your family have a history of longevity? Most people who need long-term care do so because of cognitive decline, physical disability, or both.
Your financial advisor will be able to help you look at your overall picture to help you see whether or not you can self-fund to pay for long-term care. They can also help you analyze and compare between the features and costs of many different types of insurance or annuity policies that are currently available.
So, Is It Worth It?
At the end of the day, it all comes down to your individual risk level and personal financial situation. Like other financial decisions, it’s important to remember that LTC insurance is not a universal solution. Every financial situation is unique; for some, the premiums may outweigh the potential benefits, while for others, like affluent individuals and retirees seeking to protect their wealth and legacy, the case for coverage has grown stronger. The key is to start thinking and planning now, long before the need arises and to consult a financial professional who focuses on retirement and long-term care planning. Planning proactively may provide you with more options than waiting until a critical moment.
Give us a call today and understand your options before you need them! You can set up a wealth alignment call with Wealth Sync Partners by clicking here.
This content is for informational purposes only and does not constitute financial, legal, or tax advice. Consult a qualified professional before making any decisions regarding long-term care insurance.
Sources:
https://www.aaltci.org/long-term-care-insurance/learning-center/ltcfacts-2025.php
https://www.aaltci.org/news/long-term-care-insurance-news/need-paid-ltc
https://www.nerdwallet.com/article/insurance/long-term-care-insurance
https://www.fidelity.com/viewpoints/personal-finance/long-term-care-costs-options
https://www.reviewjournal.com/livewell/is-long-term-care-insurance-worth-the-investment-3508530/
https://insights.smartasset.com/7-ways-financial-advisor-can-help-plan-long-term-care
https://smartasset.com/insurance/what-does-long-term-care-insurance-cover
https://www.carescout.com/cost-of-care
https://smartasset.com/insurance/should-i-buy-long-term-care-insurance
United Advisor Group (“UAG”), d/b/a “Wealth Sync Partners”, is a registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply any level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. For more information please visit: https://adviserinfo.sec.gov and search for our firm name. This article has been provided for informational purposes only and is not intended as legal or investment advice or a recommendation of any particular security or strategy. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation. Information obtained from third-party sources is believed to be reliable though its accuracy is not guaranteed. Opinions expressed in this commentary reflect subjective judgments of the author based on conditions at the time of publication and are subject to change without notice. Past performance is not indicative of future results.
Any references to protection benefit or lifetime income generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims paying ability of the issuing insurance company. An annuity is intended to be a long-term, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax qualified plan, the tax deferral feature offers no additional value. Qualified distributions from a Roth IRA are generally excluded from gross income, but taxes and penalties may apply to non-qualified distributions. Consult a tax advisor for specific information. This is not a recommendation to surrender or otherwise purchase an insurance product. You should review your specific policy and financial situation with your advisor.
8170 Corporate Park Drive, Suite 300
