Long Term Care

"Over the years the need for long term care planning has not changed. People are living longer and the cost of care continues to rise." - Barbara Franklin.

Long Term Care


As people live longer healthier lives, there is a good chance that you or a loved one may need some form of long-term care. The cost of care can be very expensive and even overwhelming. When it comes to paying for long-term care, there are numerous financing options. Although there are several forms of government legislation that have impact long-term care, none cover the full cost unless you’re completely impoverished. Long-term care insurance in all of its various forms continues to be one of the best solutions for protecting yourself.

About 70 percent of people over age 65 will require some type of long-term care services during their lifetime. More than 40 percent will need care in a nursing home.

Cost of Care

The cost of Long Term Care can be very expensive. Click on the map below to find out what the cost of care is in your area.

National Averages (median) for 2017*

Nursing Home Care

  • $267/day for a private room
  • $235/day for a semi-private room

Home Care Services

  • $135/day for a Home Health Aide (“hands-on” care with bathing, dressing etc…)
  • $131/dayfor Homemaker services (“hands-off” care such as cooking and cleaning)

Assisted Living Facility

  • $3,750/month for a one bedroom unit
  • $70/day for Adult Day Care
*according to the Genworth.com Cost of Care

Types of Policies

Long-term care insurance is now available to individuals in many forms. There are policies that function to only provide benefits for long-term care purposes and there are also policies that blend long-term care insurance with another form of insurance such as life insurance or annuities. Some policies require you to pay continuous premiums and others may require only limited payments or even a “one time” single payment. Each type of policy provides its own unique set of opportunities in the planning process.

Click on the chart below to learn about the specific features of each.

Long Term Care Insurance

Traditional long-term care insurance works similarly to homeowner’s, health, and auto insurance. Payment of premiums provides for access to a specified pool of money to pay for your care. If this type of policy is never used, premiums are typically not refunded. Traditional long-term care insurance is sold most often in daily or monthly increments, so you would purchase a policy that would pay anywhere from $100-$500 per day or $3,000-$15,000 per month for a stated number of years. For example: a $3,000 per month benefit for 5 years would equate to a $180,000 pool of money.

When it comes to traditional long-term care insurance, here are the most important features to understand:

  • Daily or monthly benefit is the cost per day or per month that the policy will cover. It is a good idea to ask for quotes based on a policy that would cover you for $100 per day or $3,000 per month, because then you can easily determine a higher or lower multiple of that policy rate based on the round number.
  • Total benefit period is the length of time over which the policy will pay out. The average stay in a long-term care facility is already low—around two years—but most people utilize care at home first. Unless there’s a family history of dementia or Alzheimer’s, a five-year benefit is usually adequate.
  • Inflation protectionhelps the value of your coverage keep up with the rising cost of care, providing for annual increases in your monthly or daily amount for as long as your coverage remains in force. It is very important to strongly consider compound inflation protection.
  • Elimination period is like a deductible, but it’s a deductible of time. It’s the initial time frame in which the policy will not pay. Because Medicare will typically pay for the first 100 days, consider an elimination period of 90 days or more.
  • Benefits for couples such as discounts and shared benefits are available with many companies.
  • State Partnership programs promote the purchase of private LTC insurance by offering consumers access to Medicaid under special eligibility rules should additional LTC coverage (beyond what the policies provide) be needed. Only properly structured traditional long-term care insurance policies can be partnership qualified.

Linked Benefit Life Insurance

Linked Benefit Life Insurance is a life insurance policy with a rider that allows the insured access to the death benefit while living, if the need for long-term care arises.

Many life insurance companies offer a long-term care rider. When purchasing life insurance, for an additional cost you can add this rider to your policy. Depending on the company, this rider is available with term insurance, whole life, universal life and variable universal life. This rider gives you the flexibility to use your one life insurance policy in two important ways:

  1. As a death benefit for your beneficiaries
  2. To pay for your qualified long-term care expenses

This rider is simply an acceleration of your life insurance death benefit. As such the LTC rider payout will reduce both the death benefit and cash surrender values.

Advantages of Linked Benefit Life Insurance:

  • Chances of using the policy are 100%
  • If you never need long-term care, your beneficiaries will still receive an income tax-free death benefit as long as your policy remains in force
  • If you do need long-term care, your beneficiaries will still receive any unused benefits.
  • Premiums for life insurance are often guaranteed for life and can be paid Annually, Semi-Annually, Quarterly, and Monthly.
  • Survivorship policies are available in which both spouses can be insured under one policy. Even when one spouse is otherwise uninsurable.
  • Some companies may offer a long-term care benefit greater than the actual death benefit.
  • Some companies also offer a guaranteed minimum death benefit. Which, if you use your entire death benefit for long-term care expenses, beneficiaries are still guaranteed to be paid a small percentage (usually 5-10%) of your original death benefit, less any policy indebtedness.
  • Conversion opportunities

Long-term care riders vary significantly between different carriers. It’s important to compare the cost of the rider, payout structure, benefit triggers, policy guarantees etc… Many carriers offer a “Chronic Illness” rider. This is NOT a long-term care rider! They can be very similar but typically chronic illness riders are much more restrictive. ALWAYS consult with a long-term care specialist before purchasing any form of long-term care coverage.

Hybrid Life Insurance

Hybrid life insurance is a combination of life insurance and long-term care insurance. Unlike linked benefit life insurance, hybrid policies typically provide a long-term care benefit amount that is greater than the actual death benefit of the policy. These policies are most often funded with a “one time” single “lump-sum” payment.

Advantages of Hybrid Life Insurance:

  • A “one time” single “lump-sum” payment creates a “paid up” policy guaranteed for life
  • Most companies offer a “Return of Premium” rider in which the initial lump-sum payment can be refunded without penalty at any time during the life of the contract
  • Chances of using the policy are 100%
  • If you never need long-term care, your beneficiaries will still receive an income tax-free death benefit as long as your policy remains in force
  • If you do need long-term care, your beneficiaries will still receive any unused benefits.
  • Survivorship policies are available in which both spouses can be insured under one policy. Even when one spouse is otherwise uninsurable.
  • Most companies also offer a guaranteed minimum death benefit. Which, if you use your entire death benefit for long-term care expenses, beneficiaries are still guaranteed to be paid a small percentage (usually 5-10%) of your original death benefit, less any policy indebtedness.

Hybrid Annuities

A “Hybrid” annuity product features an annuity combined with a qualified long-term care insurance rider. It provides financial protection for retirement assets by offering benefits for a potential long-term care event. The long-term care benefits are typically a multiple of your initial investment. In other words a $100K investment in to the annuity can almost immediately be worth up to $300K in long-term care benefits.

Under this combination design, the insured can simply reposition assets into an annuity and receive growth on principal as well as long-term care protection. In accordance with the Pension Protection Act, amounts including investment gains can be paid out as tax-free LTC benefits. The insured maintains the account value and death benefit within the annuity to the extent that these amounts are not used for LTC benefits. Any withdrawals taken for purposes other than for qualified long-term expenses will naturally reduce the account value and thus the total LTC guaranteed benefit as well.

Advantages of Hybrid Annuities:

  • If you need long-term care you can receive up to three times the annuity value to pay for your care
  • In many cases underwriting is limited
  • In some case there is no underwriting
  • If you don’t need long-term care, you still receive the benefits of the annuity
  • Can have a guaranteed interest rate
  • Tax-deferred growth
  • Access to your principal through penalty-free partial withdrawals (typically 10% of account value)
  • Ability to create a guaranteed lifetime income stream
  • Provides a death benefit to your beneficiaries that is designed to avoid probate
  • Usually paid with a one- time lump-sum premium payment
  • Conversion opportunities
  • Can be guaranteed benefits for life