When people think about retirement planning, they often focus on income, investments, and Social Security. But few topics have the potential to cause a true financial and emotional crisis like long-term care. Even for our most financially secure clients, an unexpected care need—especially one that lasts years—can completely change a family’s future.
That’s why in today’s Cardinal Lesson, we’re featuring a real example of a hybrid long-term care policy we frequently recommend for couples age 65. This policy offers flexibility, lifetime coverage, and tax advantages that can help protect both your finances and your loved ones.
Lifetime Long-Term Care Benefits for Couples
The example we reviewed in the video features a husband and wife, both age 65, living in North Carolina. Their policy provides up to $10,000 per month (that’s $120,000 per year) for long-term care expenses. These benefits can be used for:
- Nursing home care
- Assisted living
- Home health care
- Adult day care
- Informal or family-provided care
And the best part? The benefits are unlimited. Whether care lasts two years or twelve, the policy continues paying as long as it’s needed. That kind of protection is rare today—few companies still offer lifetime benefits.
Why Unlimited Benefits Matter
Most long-term care policies limit how long benefits are paid—four, six, or maybe eight years. For a married couple, that can be risky.
Imagine a scenario where one spouse needs care for several years, using up most of the benefits. When the healthy spouse later needs care, there may be nothing left. With an unlimited plan, both spouses are protected for life, no matter how long care is needed.
As we often say, this isn’t just about covering medical expenses—it’s about preserving dignity, protecting income for the surviving spouse, and ensuring your family doesn’t have to shoulder the financial burden.
Flexible Funding Options
This policy can be purchased with:
- A single premium (one payment upfront)
- Five-, ten-, or twenty-year payment plans
- Or even IRA funds, spread out over ten years to manage tax impact
For example, a single premium might be around $243,000, while a 10-year payment plan could be about $34,000 per year. If that seems high, you can scale the policy down—buying half the coverage for half the cost.
Tax-Free, Family-Friendly Benefits
Unlike paying for care out of pocket, these benefits are tax-free. They can also be used flexibly—either through a care agency or by reimbursing family members providing care.
In the early years of care, the policy even offers an indemnity option, meaning it pays cash directly (for example, $7,500/month) without requiring receipts, as long as care is needed. That gives families more control over how care is provided.
How Benefits Are Triggered
To qualify for long-term care benefits, you must either:
- Need help with two of six Activities of Daily Living (ADLs)—bathing, dressing, eating, toileting, transferring, or continence, or
- Have a severe cognitive impairment (such as dementia).
These triggers are standard across all tax-qualified long-term care policies, written directly into the IRS code.
Smart Estate and Tax Planning
This type of hybrid policy is built on a life insurance chassis, meaning if you never need care, your beneficiaries still receive a death benefit. If you do use care, the policy pays out for that first—tax-free—and then reduces or eliminates the death benefit accordingly. Either way, someone benefits from the money you’ve set aside.
It’s also an effective estate planning tool, preventing you from having to spend down your assets to cover care costs.
Why Planning Ahead Matters
Long-term care isn’t just a financial issue—it’s a family issue. Without a plan, decisions often fall to adult children at a time of crisis. With the right coverage, your family will know exactly what resources to use, allowing you to receive care on your terms.
Final Thoughts
As financial planners, we see firsthand how devastating the cost of long-term care can be—and how powerful it is when clients plan ahead. Whether you’re 65 or approaching retirement, now is the time to look at your options.
If you’d like to review how a plan like this could fit into your overall retirement strategy, visit CardinalGuide.com or call 919-535-8261. You can also watch the full video and download the detailed illustration in our show notes below.
