Insurance & Risk Management

Long-term Care Insurance

Long-term care insurance can play a critical role in ensuring you maintain the lifestyle you desire through all of life’s phases. Long-term care insurance helps individuals control their own care and decide between home health care and staying in a facility, if and when the situation should arise. High-net-worth individuals have a few options when it comes to long-term care planning. They may purchase long-term care insurance, self-insure, or blend these two strategies together. Below is more information on long-term care insurance. 

Asset Protection Through Long-term Care Insurance

Long-term care insurance may help protect your assets. If the long-term care policy’s daily benefit amount and term are high enough to cover the full expense of home health care or nursing home care, an individual’s assets can be preserved for the next generation. If the long-term care policy does not cover the full cost of care, what it does cover will prevent the assets from being spent down as quickly (this blended approach is common among high-net-worth individuals). In addition to asset protection, long-term care insurance may also provide some peace of mind that, as a patient, an individual will receive a  high level of care. 

When Should I Buy Long-term Care Insurance

An individual must be in good health to obtain coverage and many carriers will not issue a new policy to individuals over a certain age. Since the risk for needing long-term care is typically lower for younger individuals,  individuals should generally consider obtaining long-term care insurance between ages 55 and 65.  

How Does Long-term Care Insurance Work?

Most long-term care policies have an elimination period of 60 to 90 days before benefits are payable to the insured. Once the elimination period is met, benefits generally will begin if the insured needs assistance with two or more activities of daily living: eating, toileting, transferring, bathing, dressing, and continence. Policies also have daily benefit maximums and lifetime benefit maximums, which could be measured by dollar or time limits.  

LCI Death Benefit

Some life insurance policies have a rider that allows for a portion of the death benefit or cash value to be used to fund long-term care expenses. With this type of policy, the insured is guaranteed a death benefit even if the long-term care benefits are never used. In addition, the policy’s cash value builds up tax-free and provides the insured with additional benefits. 

Negatives of LCI

Two of the drawbacks to long-term care insurance are that the policies are generally expensive and that the daily benefit maximums may mean that the full cost of care is not covered.

Long-term care policies offer a number of provisions and options that should be examined before selecting a policy. We recommend you consult with your financial advisor to ascertain the best long-term care strategy that will suit your unique situation. 

Alyssa Yocom is a Wealth Manager with Schultz Financial Group Inc.

Schultz Financial Group Inc. (SFG) is a wealth management firm located in Reno, NV. Our approach to wealth management is different from many other wealth managers, financial advisors, and financial planners. Our team of fee-only fiduciaries strives to help our clients build their wealth across four capitals: Financial Matters, Physical Well-being, Psychological Space, and Intellectual Engagement. We provide family office and wealth management services to clients located in Nevada, California, and other states. If you’d like more information, please check out our website or reach out to us via our contact page.

  • Schultz Financial Group, Inc. (“SFG”) which is a registered investment adviser, drafted this blog post for its website and for the use of its clients or potential clients. Any other distribution of this blog post is strictly prohibited. Registration as an investment adviser is not an endorsement by securities regulators and does not imply that SFG has attained a certain level of skill, training, or ability. While the content presented is believed to be factual and up to date, it is based on information obtained from a variety of sources. SFG believes this information is reliable, however, it has not necessarily been independently verified. SFG does not guarantee the complete accuracy of all data in this blog post, and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of SFG as of the date of publication and are subject to change. This blog post does not constitute personalized advice from SFG or its affiliated investment professionals, or a solicitation to execute specific securities transactions. SFG is not a law firm and does not intend for any content to be construed as legal advice. Readers should not use any of this content as the sole basis for any investment, financial planning, tax, legal or other decisions. Rather, SFG recommends that readers consult SFG and their other professional advisers (including their lawyers and accountants) and consider independent due diligence before implementing any of the options directly or indirectly referenced in this blog post. Past performance does not guarantee future results. All investment strategies have the potential for profit or loss, and different investments and types of investments involve varying degrees of risk. There can be no assurance that the future performance of any specific investment or investment strategy, including those undertaken or recommended by SFG, will be profitable or equal any historical performance level. Any index performance data directly or indirectly referenced in this blog post is based on data from the respective copyright holders, trademark holders, or publication/distribution right owners of each index. The indexes do not reflect the deduction of transaction fees, custodial charges, or management fees, which would decrease historical performance results. Indexes are unmanaged, and investors cannot invest directly in an index. Additional information about SFG, including its Form ADV Part 2A describing its services, fees, and applicable conflicts of interest and Form CRS is available upon request and at https://adviserinfo.sec.gov/firm/summary/108724.

  • More Insights from SFG