Protecting Your Future Starts with a Plan for Care
Key Insights
- Extended care planning is an essential but often overlooked part of financial planning, and many people will eventually need some form of care.
- Planning ahead protects assets, reduces family stress, and preserves independence by allowing individuals to make informed choices before a crisis occurs.
- There are multiple funding strategies for long-term care, including traditional LTCI, hybrid policies, short-term care coverage, self-funding, and limited government programs.
- Each funding option has pros and cons, and the right solution depends on an individual’s age, health, financial situation, and goals.
- The best time to plan is early, and advisors play a critical role in evaluating risks, educating clients, and creating customized solutions that safeguard finances and peace of mind.
As an insurance advisor, one of the most important conversations I have with clients that is often overlooked in traditional financial planning is how to prepare for the potential need for extended care (or long-term care).
We all hope to remain healthy and independent throughout retirement, but the reality is that many of us will need some form of assistance at some point. Whether it’s help at home after surgery, ongoing care for a chronic condition, or full-time support in a facility, having a plan in place can make all the difference—for your finances, your family, and your peace of mind.
Why Extended Care Planning Matters
- Protect your assets and income. Extended care can be expensive. Nationally, a private room in a nursing facility can cost over $100,000 per year, and even in-home care can add up quickly. Without a plan, these costs often come directly out of pocket, potentially disrupting retirement income or forcing the liquidation of retirement assets.
- Preserve family relationships. When care is needed, families can be faced with emotional and financial decisions under pressure. A well-thought-out plan reduces that stress and ensures your loved ones can focus on providing support and not scrambling to coordinate logistics or finances.
- Maintain control and independence. Planning ahead allows you to make choices about the type and setting of care you prefer. It’s your opportunity to design a care plan that aligns with your wishes and values.
Read More: What Clients Wish They Knew Sooner About Long-Term Care
Funding Options for a Long-Term Care Plan
There’s no one-size-fits-all solution to funding extended care. The right approach depends on your health, age, financial situation, and overall goals. Here are several ways to build a plan that fits your needs and budget.
1. Long-Term Care Insurance (LTCI)
Traditional LTCI helps cover the cost of extended care services at home, in assisted living, or in a nursing facility.
- Advantages: Comprehensive coverage, protection of income and assets, and flexibility in choosing care providers
- Consideration: Premiums are based on age and health at the time of application, so it’s generally best to explore this option while you’re healthy.
2. Hybrid or Linked-Benefit Policies
These policies combine life insurance or an annuity with long-term care benefits.
- Advantages: If you never need extended care or just need a little bit of care, your beneficiaries still receive a death benefit. If you do, the policy provides funds for care expenses. Premiums are often guaranteed, providing predictable costs.
- Consideration: These policies typically cost a higher premium than traditional LTCI but can be an efficient way to cover multiple goals.
3. Short-Term Care Insurance
Short-term care insurance provides coverage for up to 3-48 months of care depending on how you structure your policy and is a good alternative for those who may not qualify for traditional long-term care insurance.
- Advantages: Easier underwriting, lower premiums, and immediate benefits once care begins
- Consideration: Coverage duration is limited, so it’s often used as a supplement to other strategies or to cover shorter recovery periods.
4. Self-Funding (Personal Savings)
Some individuals prefer to set aside personal funds to cover potential care costs.
- Advantages: Full flexibility and control over how funds are used
- Consideration: Requires disciplined planning and sufficient liquidity to avoid disrupting other financial goals
5. Government Programs
Programs like Medicare and Medicaid may play a limited role, but they shouldn’t be a substitute for a personal care plan.
- Medicare covers only short-term skilled care under specific conditions.
- Medicaid may help with long-term care expenses but is typically available only after spending down most personal assets.
Read More: Planning for Long-Term Care Before You Need It: Smart Moves for Aging Well
The best time to plan for extended care is before you need it. The earlier you start, the more options you’ll have and the more affordable they tend to be. As an insurance advisor, my role is to help clients:
- Evaluate their potential exposure to care costs
- Understand how different insurance solutions fit into their overall financial strategy
- Design a customized plan that protects income, preserves assets, and provides peace of mind
Extended care planning isn’t just about insurance. It’s about protection, independence, and choice. By addressing this part of your plan now, you ensure that you and your family are prepared for whatever the future brings.
Don is a Certified in Long-Term Care (CLTC) professional and licensed to offer long-term care partnership policies across multiple states, giving clients access to dollar-for-dollar asset protection when planning for future care needs. As an independent agent, he provides thorough analysis and comparisons of top LTCI options to ensure the right fit for each client. Inspired by his own family’s experience with the financial and emotional challenges of long-term care, Don is passionate about helping others protect their assets and avoid the same hardships.
