Why Nobody Asks for Long-Term Care Insurance — Until It’s Too Late
In nearly 50 years of offering long-term care insurance (LTCI), one truth has remained constant: there’s almost zero demand for it—until a family is in crisis.
Most people don’t wake up one day thinking, “Let’s go buy a long-term care policy today.” The reality is, LTCI is typically purchased after a person or family member experiences the stress, cost, and confusion of caregiving firsthand. It’s emotional. It’s expensive. And it often leads to burnout—financially and personally—for the family left trying to manage care.
Our job as financial planners isn’t just to sell policies. It’s to prepare you for life’s biggest risks, and long-term care is one of the most overlooked.
The Real Purpose of Long-Term Care Insurance
Long-term care isn’t just about your health—it’s about the consequences that fall on your spouse, adult children, and your financial legacy.
If you experience a stroke, develop dementia, or slowly lose mobility, someone else is going to step in to care for you. That person will either spend your money or sacrifice their own time, income, and well-being.
And if you haven’t made a plan? They’ll have to make decisions under stress, possibly leading to regret, family conflict, or financial strain.
“Planning for long-term care is less about protecting yourself—and more about protecting your loved ones from making impossible decisions.”
Understanding the Two Options: Traditional vs. Hybrid Policies
1. Traditional Long-Term Care Insurance
- Offers pure coverage: you pay a premium, and if care is needed, you receive benefits.
- No benefit is paid if you never use the care.
- Lower premiums than hybrid options, but premiums are not guaranteed—they can rise with state approval.
- Shared care riders are available for couples (e.g., one spouse uses the other’s unused benefits).
2. Hybrid Life Insurance with LTC Benefits
- Combines life insurance and LTC coverage into one policy.
- Pays out if long-term care is needed—or returns a death benefit to your heirs if not.
- Offers fixed, guaranteed premiums (no future rate increases).
- Can be funded with a single premium, 10-year payments, or even via IRA distributions.
Why people choose hybrid: It guarantees a benefit—either care or a payout—and removes the “use it or lose it” concern that deters many from traditional LTC policies.
Policy Example: The Power of Inflation Protection
Let’s say a couple purchases either a traditional or hybrid LTC policy at age 65, starting with $6,000/month in coverage.
Both policies include a 3% compound inflation rider—a feature we believe is essential.
Here’s how that grows over time:
| Age | Monthly Benefit | Annual Equivalent | Lifetime Max (Couple) |
|---|---|---|---|
| 65 | $6,000 | $72,000 | $576,000 (x2 = $1.15M) |
| 85 | $10,837 | $130,044 | $1M+ combined |
| 95 | $14,000+ | $175,000 | $1.4M+ combined |
Without inflation protection, your coverage could be seriously outpaced by rising care costs.
Premium Comparisons: What Will It Cost?
Traditional LTC Premiums (Lifetime Pay):
- Couple: $14,611/year (shared care included)
- Single Female (65): $9,491/year
- Single Male (65): $5,328/year
Note: Female premiums are higher due to statistically longer claim periods.
Hybrid LTC (One-Time or 10-Pay):
| Client | Single Premium | 10-Year Payment |
|---|---|---|
| Couple | $220,000 | $26,000/year |
| Single Female | $137,000 | $17,526/year |
| Single Male | $122,000 | $15,000/year |
All benefits from both policy types are tax-free. That’s crucial if someone else is managing your care and trying to avoid triggering extra tax bills from IRA withdrawals or investment liquidations.
What About the Death Benefit?
Traditional LTCI:
- No payout if unused. Just like fire or auto insurance.
Hybrid Life LTC:
- Pays a death benefit to heirs if care is never used (or only partially used).
- Example: a hybrid policy with a $216,000 death benefit may still pay $21,000 even if all LTC benefits are used.
The Real Cost of Not Planning
Tom shared his personal story about becoming suddenly disabled with an autoimmune disease in his 20s. His wife tried to care for him while managing their infant child and ultimately became sick herself from the stress.
Hans shared how his own mother experienced burnout caring for his father.
These stories aren’t unique. They’re the rule, not the exception.
Families think they’ll “figure it out.” But without planning, caregiving becomes a full-time, unpaid, and emotionally draining job. It can derail lives—just when people should be enjoying their retirement or focusing on their own families.
Can I Just Pay Out-of-Pocket Instead?
Yes, if you’re wealthy enough. But ask yourself:
- Will your spouse or child be willing to spend your savings?
- Will it be easy for them to liquidate assets or move money in a crisis?
- Will that derail your tax, Medicare, or estate planning?
More importantly, self-insuring doesn’t remove the emotional burden—it just shifts it to someone else.
How Long-Term Care Affects Your Whole Retirement Plan
A long-term care event doesn’t exist in isolation. It touches every part of your financial life:
- Social Security: Benefits get redirected to care expenses.
- Medicare: Covers short-term skilled nursing, but not long-term care.
- IRA/401(k): Large withdrawals for care can trigger major tax consequences.
- Estate planning: Legacy goals may vanish as assets are spent on care.
- Spousal security: Surviving spouses often face financial instability.
How We Help at Cardinal Advisors
We don’t just sell policies. We build plans.
When you meet with us, we’ll:
- Review your current financial picture
- Project LTC costs based on your situation
- Recommend coverage amounts that balance protection and affordability
- Explore whether to fund premiums via cash, IRA, or phased payments
- Integrate LTC into your retirement income, tax, and estate plans
