Your Guide to Long-Term Care Insurance

When you’re caring for yourself, a spouse, or a parent, you have several options when it comes to insurance for long-term care.

As you get older, you can expect certain expenses to increase, and health care is often the chief culprit. Unfortunately, the cost of long-term care can be overwhelming for many families. However, with a bit of planning and consideration, you can help protect your financial well-being in the form of long-term care insurance.

Understanding Long-Term Care Insurance

A long-term care insurance plan can help counter those costs and protect your family’s financial well-being. Based on projections from the U.S. Department of Health and Human Services, 52 percent of people alive past the age of 65 will need some version of long-term care. Of those, 19 percent are expected to need long-term care for under a year, and 14 percent are expected to need long-term care for over five years.

“The best advice I can give someone is to prepare for long-term care before you need it,” says Mark Gartman, Financial Advisor, Regions Investment Solutions. “I realized early on I needed to make sure my mother would be taken care of — not only for herself but also for me. If she ever got to a point in her life where she could no longer take care of herself, that could become a burden on me financially and physically.”

What does long-term care insurance cover?
Long-term care insurance can help cover the cost of care associated with a disability or severe medical condition, such as Alzheimer’s disease. Typically, it will cover both long- and short-term care services, including support for everyday personal care needs such as eating, dressing, and bathing, and can include assistance with housework and grocery shopping. Some policies even cover services provided by assisted living centers, nursing homes, and home-based professional care.

When should I buy long-term care insurance?
The best time to buy a long-term care policy is when you don’t need it. It’s generally more difficult and expensive to get long-term care coverage once health issues begin, so the ideal time to secure a policy is between the ages of 45 and 60. If you’re not in immediate need of long-term care, you’ll be able to start planning before your health changes.

Is long-term care insurance worth it?
Many people mistakenly assume that Medicare will handle long-term care. Oftentimes, Medicare only covers 100 days of long-term skilled care. After that, you’ll need to cover the expenses on your own. Depending on your long-term care needs, it may make sense to have specialized insurance coverage.

Buying Long-Term Care Insurance

When it comes to long-term care insurance, there are two main options: stand-alone long-term care insurance and a long-term care rider. High-income earners might look at a stand-alone long-term care insurance policy, but there are other options if you’re concerned about the cost.

When shopping for a long-term care insurance policy, you’ll also want to consider the following factors:

Where you plan to retire
Cost of living can vary widely by location, and so can the cost of long-term care. Knowing where you'll live and how much you’d pay each month for your desired care will help you determine how much coverage you need.

Your current financial situation
Your net worth and what you want to be able to leave to loved ones will affect how much long-term care coverage you should get. Consider all available assets — including money market accounts, investment accounts, and retirement accounts — and then decide which ones you are willing to tap into if necessary.

Nearby support
Many people rely on family members to provide long-term care when they need it. If this isn’t a realistic option, you may need more insurance coverage.

Paying for Long-Term Care

Ultimately, it’s a good idea to start thinking about your long-term care plan as early as possible. The number of Americans using paid long-term care services is expected to double to 27 million in 2050 from 13 million in 2000, according to the nonprofit Family Caregiver Alliance. And with the national median ranging from $17,904 annually for adult day health care to $91,250 per year for full-time nursing-home care in a private room, that care will come with significant costs. Unfortunately, funding care with personal assets could quickly deplete your estate.

If you or your loved one — perhaps an aging spouse or parent — doesn’t qualify for long-term care insurance, you may consider one of the following alternatives.

Annuity with income rider
An annuity is a financial product you pay into for a period of time in exchange for a fixed annual payout in the future for a predetermined duration. A hybrid annuity typically includes a long-term care rider that allows the policyholder to access tax-deferred funds from the annuity for long-term care provisions — and ensures double or triple the annual payout for a set number of years to cover long-term care.

Although the medical underwriting is usually less stringent than typical insurance, the initial premium is typically high: Annuities can require a minimum upfront investment of $50,000 or more.

Additional ways to fund long-term care:

  • A money market account, which offers a higher interest rate than a typical savings account and the security of a FDIC-backed bank — without the market volatility of a traditional investment vehicle
  • Life insurance, if the policy allows you to receive a tax-free advance on you death benefit
  • A charitable remainder trust, which can be used to fund your own or a loved one’s long-term care while you’re alive, with the rest of the funds going to a designated charity upon death

When it comes to long-term care for yourself or loved ones, it pays to start planning as soon as possible. “You don’t want to wait until the last second,” Gartman says. “If you do, and something catastrophic happens, you’re both going to pay the consequences.”

For more on long-term care insurance, listen to Episode 34 of Regions Wealth Podcast. This episode covers tips on how to incorporate healthcare expenses and long-term care into your retirement plan.


Regions Investment Solutions is a marketing name of Cetera Investment Services. Securities and insurance products are offered through Cetera Investment Services LLC, member FINRA/SIPC. Advisory services are offered through Cetera Investment Advisers LLC. Neither Cetera Investment Services nor Cetera Investment Advisers is an affiliate of Regions Bank or its related companies. Check the background of investment professionals on FINRA's BrokerCheck.

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