1. Gets you the care you need in the setting of your choice
  2. Helps you maintain your independence
  3. Can help protect your retirement assets
  4. Helps relieve financial and caregiving pressure on your family



Chances are, the day will come when you won't be able to manage on your own.  In fact, almost 70 percent of those over the age 65 will require some form of long-term care during their lives.

Long-term care includes all the assistance you would need with the daily living tasks if a cronic illness or disability leaves you unable to care for yourself for an extended period of time.  It could be care in your own home or in a specialized facility.

Care options that may be available to you

Many people think that their private health insurance or Medicare will pay, but that's typically not true. Health insurance really only pays for doctor and hospital bills.  Medicare will cover skilled care for up to 100 days, but only if certain requirements are met.  If you need care over an extended period of time, you'd have to spend down your assets before Medicaid would kick in, and then, you'd have less choice about the care you receive. 

Others assume their loved ones will provide the care they may someday need, but that's an imperfect plan.  Many don't recognize the significant negative impact caregiving could have on the caregiver, who often suffers emotionally and financially as a direct result of their caregiving responsibilities.  If your plan is to turn to your family, is that what's really best for you and them?

Long-term care insurance puts you in control

Long-term care insurance helps make sure that you'll have access to high-quality care should you ever need it.  Using insurance to pay for care also means that you won't need to choose between getting the assistance you need and spending down your life's savings.

In short, long-term care insurance puts you in control.  But are you the right age to consider it?  Can you afford it?  And if so, what kind of benefit features should your policy include?  The following will answer these questions and help determine if long-term care insurance is right for you.


Professional care can be delivered in a variety of settings, and many long-term care insurance policies give you the option to receive care in the setting of your choosing.

  • Home Health Care: Services provided at home
  • Assisted Living Facility:  Residential care setting that provides housing and support services for people wanting or needing assistance with daily living tasks.
  • Memory Loss Units:  Often located as a seperate wing of an assisted living facility, these units provide 24-hour support, and locked premises to assure that no one wanders off.
  • Nursing Home:  Full-time care in a dedicated facility.
  • Adult Day Care:  Community-based, daytime supervision providing social, recreational or health assistance off-site during working hours.

There's no place like home

Most long-term care services are provided in the home.  Below is a breakdown of the typical claims paid out for various points of care for individual long-term care policies:

  • Home Care 50%
  • Nursing Home 31%
  • Assisted Living 19%


Generally long-term care insurance policies begin to pay benefits when one of two different criteria is met and you have met the elimination period.

You are unable to perform two of the six following activities of daily living (ADLs) without assistance or supervision:

  • Continence:  Control of one's bladder and bowel movements
  • Dressing:  Clothe oneself
  • Toileting:  Use a toilet and perform associated personal hygiene
  • Eating:  Feed oneself
  • Bathing:  Bathe oneself
  • Transference:  Move oneself into or out of a bed or a chair.


You have severe cognative impairement, such as Alzheimer's disease or other forms of dementia, which make it impossible for you to live independently in a safe manner.


A long-term care insurance policy can pay for all or some of the cost of assistance required with activities of daily living (such as walking, eating, dressing, bathing, continence and/or toileting), or directional reminding assistance required due to cognitive impairement from dementia or Alzheimer's.  You can select where you want to receive services and the maximum value of your long-term care protection.

The cost of your long-term care policy is based on:

  • Your age when you buy the protection
  • The lifetime maximum a policy will pay is the maximum amount per day times the maximum number of days
  • The maximum number of days/years the policy will pay for care
  • The maximum amount the policy will pay per day
  • Good health and spousal discounts can lower premiums significantly.  Other plan design options can also lower premiums.

If you have health issues, you may not qualify to purchase long-term care protection because most policies require medical underwriting.  Poor health may limit the amount of coverage you can purchase or you may only be able to purchase a policy at a non-standard rate.

The types and amount of benefits you need will depend on your budget, your geographic region, and what kind of care you think you'd want.  It also may depend on whether you have any loved ones who want to play some role in your care.

Here are some important questions to ask yourself to determine the amount of coverage that's right for you:

  • What is the average cost of care in my area or the area where I plan to retire?
  • Do I want my policy to cover the entire cost of care, or can I afford to supplement the expenses from my retirement income and assets?
  • Do long-term illnesses, such as dementia, run in my family?
  • Has anyone in my family ever needed long-term care?
  • What assets do I want to preserve and pass along to my spouse, partner or heirs?
  • How much of my care, if any, will be provided for by my family members?


It's true that most long-term care insurance claims are made when people reach their golden years, but there's a misconception that you should wait until you're approaching retirement to buy a policy.  Waiting too long to purchase a policy can be very costly.  Because rates are based on age and health, it's best to start shopping for a policy when you're young and healthy.


Hybrid long-term care plans are a variation on traditional long-term care insurance and fall into two categories:

  1. Life Insurance with a Long-Term Care Benefit
  2. Annuities with a Long-Term Care Benefit

Long-term care hybrid products are also called linked benefit or asset based long-term care policies.  These long-term care hybrid products can offer several advantages:

  • Guaranteed Benefits - The guarantee benefits will always be paid, in one form or another.
  • Guaranteed Premiums - Most policies guarantee that premiums will never change.
  • 1035 Exchanges - Some asset-based long-term care insurers permit 1035 exchanges.  The tax advantage of utilizing a 1035 exchange is to defer the internal build-up of gains associated with your existing annuity or cash value life insurance policy.

Long-Term Care Life Insurance

A life insurance policy with long-term care benefits works by accelerating the life insurance death benefit to pay for your long-term care. In effect, you are tapping into the death benefit while you are still alive. If you never need long-term care, your estate receives a tax-free death benefit payout from the life insurance policy.

  • Depending on the policy, you can choose to pay one lump-sum premium, pay over several years, or continuous pay premiums.
  • The policy provides a pool of money for long-term care that's equal to several times your premium payment.  
  • If you use your policy for long-term care, the death benefit is decreased by the amount of long-term care benefits used.
  • Requires health underwriting

Long-Term Care Annuity

A long-term care annuity functions like a fixed annuity, but it has a long-term care multiplier built into the policy.  If you need long-term care, a part of the contract pays the long-term care benefit.

Long-term care benefits are calculated on the amount of coverage selected when the policy is purchased.  For example, the insurance offers a long-term care payout of 200% or 300% of the total policy value.  A policy holder with a $100,000 annuity who had selected a total benefit limit of 300% would have and additional $200,000 available for long-term care expenses, after the initial $100,000 policy is used.  If long-term care is never needed, the annuity value is paid to the beneficiary.

  • A long-term care annuity may allow you to access cash value during your lifetime - even if you never need care.
  • When the annuity contract matures, your contract's remaining cash value may be passed on to your beneficiaries.
  • Health underwriting is usually less stringent than long-term care life insurance and traditional long-term care insurance.  This can make the long-term care annuity a valuable option if you have pre-existing health conditions, or if you have been turned down for long-term care insurance.


Long-term care insurance policies contain exclusions, limitations, reductions of benefits, and
terms for keeping them in force. Your financial professional can provide you with costs and
complete details. All policy guarantees are based upon the claims paying ability of the issuer.

Fixed annuities are long-term investment vehicles designed for retirement purposes. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.

The opinions voiced in this material are for general information only and are not intended to provide
specific advice or recommendations for any individual. To determine which investment(s) may be
appropriate for you, consult your financial advisor prior to investing.