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 Dalbey 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.

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