You’re planning for retirement. You’ve got visions of what you want it to be—the traveling you’ll do, playing with that hobby you’ve never had time for, volunteering with a cause that’s dear to your heart. You’ve got a comprehensive plan that accounts for retirement income, taxes, and even things on your bucket list. But have you planned for the one thing that could wipe it all out? What happens if you need long-term care?

It’s a scary proposition! Almost 70% of people age 65 and older will require long-term care. It’s estimated that 24 million Americans will need long-term care by 2034. The cost of that care will be overwhelming with the cost of long-term care increasing by an average of 2-3% every year.  Genworth, a leading provider of long-term care insurance, publishes an annual cost-of-care study. The most recent figures show the median monthly cost of an assisted-living facility in the U.S. was $4500. The median monthly cost of a private room in a nursing home was $9034. That’s $54,000-$108,000 a year.

For years, the basic answer to paying for long-term care (LTC) was buying a long-term care policy. That option has become much less popular as the cost of premiums on both new and existing policies has increased so dramatically that LTC insurance has become unaffordable for many people. It happened because the data available for pricing earlier policies was limited, insurers didn’t price them accurately, and insurers substantially underestimated how many people would use long-term care insurance and how long they would use it. As a result, many companies that provided long-term care insurance stopped selling it, leaving a handful of companies to pick up the slack and assume the risk.

There are alternative options to help pay for long-term care.



Many annuities have long-term care riders that will pay some expenses at nursing homes and assisted-living facilities. Underwriting requirements are not necessary to add the rider, which is great for people with pre-existing health conditions. Unlike a stand-alone LTC policy, premiums won’t increase unexpectedly.


Asset-based long-term care insurance

Unlike traditional long-term care insurance, this is a life insurance policy designed so you can use the death benefit while you are still alive to pay for long-term care. But if you never need long-term care, the death benefit goes to your heirs tax-free when you die. That’s a big advantage over traditional long-term care insurance, which is a use-it-or-lose-it proposition.


Life insurance with a long-term care rider.

With the asset-based policy, the long-term care benefit is primary and the death benefit is secondary. But another option is a linked policy, where you buy life insurance and add a long-term care rider as a secondary benefit. This allows you to accelerate the use of the death benefit while you are alive to pay for long-term care.


With any of these options, always check the financial strength of the insurance carriers you’re considering. If you’re part of the 70% of retirees who end up needing long-term care, you want to make sure the option you’ve chosen to pay for that care is there when you need it.