Wealthy and Healthy: Adding LTC to Your Financial Plan
Financial planning isn’t just about growing or preserving wealth; it’s also a tool to ensure quality of life, regardless of what variables change down the road. A typical financial plan might prioritize retirement income or estate planning, but it’s important not to overlook the unexpected, like the possibility of needing long-term care.
If you allocate nothing for long-term care, you run the risk of sacrificing your retirement assets down the road, whether due to aging, illness, or accident. With a financial plan that includes LTC Insurance, we work with you and your family to create a plan ensuring you can afford care for yourself and your loved ones in the future.
What is LTC Insurance?
LTC stands for Long-Term Care. Long-term care refers to any and all assistance you may need in case of chronic illness or disability that leaves you unable to care for yourself for longer than 90 days. Common reasons for requiring LTC are dementia/Alzheimer’s, complications due to diabetes, stroke, cognitive impairment, and other chronic conditions. Older people generally rely more on long-term care services than young and middle-aged people, but anyone may require care due to an accident or serious illness.
Why Plan for LTC?
The single greatest benefit of LTC Insurance is that it allows your loved ones to supervise your care, without having to provide it themselves. Without a plan, caregiving responsibilities often fall on family members who have full-time jobs and other obligations. Putting a proactive plan in place reduces the emotional and physical strain of long-term care on your loved ones, often by shifting the burden to a trained professional. This way your family can be present, help guide decisions about your care, and act as advocates rather than full-time caregivers. It also helps ensure you can afford the coverage you need down the road. The earlier you begin planning, the more options you will have available when you need them.
What About Healthcare Insurance, Medicaid, or Medicare?
Healthcare insurance, like Medicare, pays for skilled or rehabilitative services only. It doesn’t cover custodial care. In certain cases, Medicare may cover a portion of the first 100 days of care received at a nursing facility, but you would be required to cover the remaining costs.
Medicaid is the joint federal and state welfare program for individuals and families with limited financial resources. Due to eligibility restrictions, which include gifting money to loved ones, transferring assets into trusts, and creating promissory notes, the program is increasingly difficult to qualify for.
This creates a financial burden that typically falls upon caregivers:
- Nearly half of all caregivers report facing out-of-pocket financial impacts as a result of providing care for loved ones1
- 22% of these caregivers used up their short-term savings 1
- 12% went through their entire long-term savings 1
Caring for loved ones also entails a time commitment and often impacts the health of the caregiver:
- Family caregivers who live with their senior relative(s) spend an average of 37 hours/week on caregiving duties1
- More than 56% of caregivers find it difficult to care for their own mental health2
- 40% of caregivers state emotional stress as their biggest challenge2
- 53% of caregivers have been diagnosed with two or more chronic conditions2
1.“Caregiver Statistics: A Data Portrait of Family Caregiving,” Claire Samuels, aplaceformom.com (Dec. 2, 2022).
2.Raimondi, Alessandra. A Look At U.S. Caregivers’ Mental Health. Washington, DC: AARP Research, August 2023.
Types of LTC Insurance
In addition to traditional LTC Insurance products, many insurance companies offer long-term care riders that act as added benefits to permanent Life Insurance products or hybrid annuity/insurance policies that may offer dual benefits.
Traditional LTC Insurance
- Flexible policies designed to help you address your specific needs
- May limit out-of-pocket expenses
- Often offer good health and partner discounts
- Typically paid via annual premiums, which carriers can increase with state approval
Life Insurance with LTC Riders
- Secures two forms of insurance in one package
- Allows you to use a portion of your death benefit should you need long-term care instead
Hybrid Products with LTC Benefits
- Sometimes provide dual benefits (e.g. LTC protection plus a death benefit or cash value benefit if the LTC is never used)
- Sometimes require larger premiums than standalone LTC policies
Should You Start LTC Planning?
If you’re considering whether adding LTC Insurance to your financial plan is right for you, ask yourself the following questions:
If you were no longer able to care for yourself, who would you want to care for you?
- Your children? Your spouse? A qualified professional?
If you were no longer able to live independently, where would you most want to live?
- An assisted living facility? An intentional community? Your child’s home? Your home with a caregiver?
If something unexpected happened to you, how would you pay for care?
- Would Long-Term Care Insurance help reduce this financial burden?
How We Can Help
Long-term care planning is about making intentional, informed decisions that protect you and your family. By integrating LTC Insurance into your financial plan, you can support your goals today while safeguarding your future. As financial advisors, we can help you evaluate options, align coverage plans, and build the right plan before your needs become urgent, which can save stress, time, and money. Whether you’re unsure if LTC Insurance compliments your wealth planning strategy or ready to start integrating it, a conversation today can provide clarity and open the door to more choices down the line.
