There is a question I ask every client who has not yet addressed long-term care planning, and it goes something like this: If you needed help with daily activities tomorrow, such as bathing, dressing, or managing medications, where would the money come from?
I recently worked through this question with Sam and Mary*. longtime clients who are married, in their mid-to-late fifties, and in good health. For many people, this is an ideal time to explore long-term care planning options. They had done all the right things financially: maxed retirement accounts, built a strong investment portfolio, and paid down their mortgage. On paper, they were in great shape.
But their financial plan had a gap: if either of them needed extended care, the cost would fall entirely on their savings. For a couple with longevity in their families, that exposure was a significant risk. Just as important, they wanted to avoid placing the financial and caregiving burden on their children and other family members.
To address this risk, we evaluated several options together, including traditional long-term care insurance, hybrid linked-benefit policies that combine life insurance with an LTC rider, and simply self-insuring, which means setting aside a dedicated pool of assets for this purpose. Each of these approaches has merit depending on the client’s health, income, assets, and appetite for risk.
One of the most important considerations was inflation protection. This is the piece that surprises most of my clients. When comparing policies, most clients naturally focus on the initial monthly benefit figure. But for a couple in their fifties like Sam and Mary, the initial benefit amount mattered far less than how that benefit would grow over time. What mattered most was how much that benefit could provide 25 or 30 years later, when care is more likely to be needed.
A policy that starts at $10,000 per month and grows at 3% compound inflation for life will be worth nearly $21,000 per month by the time the insured reaches their mid-eighties. A policy that starts at $15,000 per month with no inflation protection will still be paying $15,000, while care costs have potentially doubled.
For this couple, that distinction was decisive. We ultimately recommended a linked-benefit policy with lifetime compound inflation protection, guaranteed level premiums, and a cash indemnity structure, meaning that once a claim is approved, the monthly benefit is paid directly to them, with no receipts required. The policy also carries a death benefit, so if neither of them ever needs care, their heirs receive a meaningful legacy rather than a series of paid premiums with nothing to show for it.
The Problem With Waiting
Long-term care is not a fringe issue. According to the U.S. Department of Health and Human Services, nearly 70% of people turning 65 today will need some form of long-term care during their lifetime. And in high cost-of-living areas like the San Francisco Bay Area, the price of that care is staggering. Assisted living currently runs over $8,000 per month, and a private nursing home room can exceed $20,000 per month. And over time, those costs are likely to continue rising.
The challenge is that long-term care insurance is one of those decisions that gets easier to defer the longer you wait, until one day, you may no longer qualify for it at all. By the time most clients feel ready to have the conversation, their health has changed, and the conversation is no longer optional.
Integrating Long-Term Care Into the Financial Plan
For my clients, we did not simply select a policy and move on. We integrated the premium into their broader cash flow plan, confirmed the coverage worked in concert with their existing assets, and made sure both individuals understood the claims process so there would be no surprises down the road.
Finding this type of solution is what I find most rewarding about my work. It can be difficult to bring up topics that no one wants to think about and plan for. But when a family has a clear plan in place, they gain confidence knowing they are prepared for whatever the future may bring.
*Sam and Mary are actual clients; their names and certain identifying details have been modified to preserve confidentiality.
