There Is More Than One Way to Plan for Long-Term Care

The right strategy depends on your retirement readiness, your risk tolerance, and what matters most to you — not a single product category.

The question is not whether long-term care risk exists. The data on that is clear: roughly seven in ten adults who reach age 65 will develop a need for long-term services and supports at some point in their lifetime.¹

The real planning question is how you want to address that risk — and what trade-offs you are willing to make to do it.

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What Is the Real Cost of Not Planning for Long-Term Care?

Long-term care is one of the most significant and least planned-for financial risks in retirement. According to the 2025 CareScout Cost of Care Survey, the national median annual cost of a semi-private nursing home room is $114,975.² Assisted living community costs increased 10% year-over-year in 2024.² Home health aide care — the most common preference — runs approximately $80,000 per year at 44 hours of weekly coverage.³

The duration of need compounds the cost. According to the American Association for Long-Term Care Insurance (July 2024), women who require paid long-term care will need it for an average of 3.2 years; men for an average of 2.3 years.⁴ Nearly 7% will need care for five years or longer.⁴

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Which Covers Long-Term Care, Medicare or Medicaid?

Medicare does not cover custodial long-term care. Medicaid does — but only after you have spent down your assets to program eligibility thresholds. For most families, the gap between those two realities is where the planning problem lives.

A protection review is not about predicting whether you will need care. It is about deciding, in advance, how you want to respond if you do — and who pays for it.

How Do You Choose the Right Long-Term Care Strategy?

There is no single answer that fits every client. Long-term care planning begins with two foundational questions: Are you on track for retirement? And how much of this risk are you willing to live with?

The first question matters because protecting a retirement that you cannot yet afford to fund may not be the right priority. That said, for some clients, the desire to have choices in care — to not be limited to what Medicaid covers — is a personal priority worth making room for even when retirement savings are still a work in progress. Personal values belong in this conversation alongside the numbers.

The second question — risk tolerance — typically points toward one of three approaches.

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What Are The Three Approaches to Long-Term Care?

Minimal risk / maximum asset protection → Traditional Long-Term Care Insurance
For clients who want the highest coverage certainty and the most robust asset protection, particularly in partnership states.

Risk-tolerant but opposed to "use it or lose it" → Hybrid Life with LTC Benefits
For clients who want permanent life insurance with access to long-term care benefits — someone always benefits from the premium paid, either the policyholder or their beneficiaries.

Asset-based solution or underwriting limitations → Long-Term Care Annuity
For clients who prefer to leverage an existing asset, or who cannot qualify for traditional or hybrid underwriting. The annuity multiplies the value of the deposited asset to fund a qualifying long-term care need.

Each approach has meaningful trade-offs. The goal of our process is to match the right strategy to the right client — not to lead with a product.

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What Is Traditional Long-Term Care Insurance, and Who Is It Best For?

Traditional long-term care insurance provides a defined daily or monthly benefit for qualifying long-term care services — including in-home care, assisted living, adult day care, and nursing home care. Benefits are triggered when you cannot perform two of the six activities of daily living (ADLs): bathing, continence, dressing, eating, toileting, and transferring — or when cognitive impairment is documented.

Traditional LTCi offers the most straightforward coverage structure: you pay a premium, and if a qualifying need arises, the policy pays a benefit toward the cost of care. For clients who want the clearest, most direct path to benefit eligibility, this structure is often the most efficient use of premium dollars.

A note on use it or lose it: Traditional long-term care insurance is structured as a pure insurance product — if you never need care, there is no residual benefit returned to you or your beneficiaries. This is the most common objection to traditional LTCi, and it is a legitimate one. For clients who are comfortable with this trade-off — understanding that they are purchasing coverage in exchange for defined protection — it is not disqualifying. For those who are not comfortable with it, hybrid life is typically the better fit.

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Long-Term Care Partnership Programs

One of the most compelling features of traditional LTCi — particularly for clients focused on asset protection — is access to long-term care partnership programs. All six states in which we are licensed (New Jersey, Pennsylvania, Delaware, Florida, Texas, and Virginia) participate in the Long-Term Care Partnership Program.

Partnership policies coordinate with Medicaid in a specific way: for every dollar of LTC insurance benefits paid out, you can protect an equal dollar of assets from Medicaid's spend-down requirements if and when you apply for Medicaid coverage. A policy that pays $200,000 in benefits allows you to protect $200,000 more in assets than you otherwise could under standard Medicaid eligibility rules. For clients whose primary goal is maximum asset preservation — including passing assets to heirs — partnership policies offer a level of protection that other strategies do not replicate.

Who it is for: Individuals in their 50s and early 60s who are in good health and qualify for underwriting; those with a low tolerance for residual risk and a primary goal of protecting accumulated assets; clients in partnership states who want coordination with Medicaid as a backstop.

What Is Hybrid Life Insurance with Long-Term Care Benefits, and How Does It Work?

Hybrid life insurance with long-term care benefits combines a permanent life insurance policy with access to long-term care or chronic illness benefits during your lifetime. The structure addresses the single most common objection to traditional LTCi: the concern that if you never need care, the premiums you paid disappear. With a hybrid policy, someone always benefits — either you access the long-term care benefits while living, or your beneficiaries receive the death benefit.

Benefits are triggered by the same standard as traditional LTCi: the inability to perform two of the six activities of daily living, or documented cognitive impairment.

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What Kind of Policy Structures Are Offered?

Lifetime pay — premiums paid over your lifetime, keeping the annual outlay lower
Pay to a target age — premiums are accelerated to a defined endpoint based on your planning horizon and cash flow
Single premium — a lump sum deposit funds the policy; includes options with non-medical, streamlined underwriting (some with a 90-second approval process) and a return of premium rider built in

The single premium non-medical option is particularly relevant for clients who have health history that might complicate traditional underwriting, or who want a straightforward, predictable solution funded from an existing asset.

Cash value consideration: Some hybrid life structures carry a cash value component that accumulates on a tax-deferred basis and may be accessible through policy loans or withdrawals depending on the policy design. When appropriate, this can serve as an additional planning layer. (See tax advisor for details on potential tax treatment of cash value accumulation and distributions.)

The convertibility connection: For clients who previously purchased term life insurance with a conversion option, hybrid life is often the destination that conversion was designed to preserve access to — a permanent policy with long-term care or chronic illness provisions, accessible without a new medical exam. For more on convertible term policies and the convertibility strategy, see our Life and Disability Insurance page.

As independents, we are not tied to any single carrier. We evaluate hybrid life options across multiple insurance companies to find the structure that best fits each client's specific situation — in terms of benefit design, premium structure, and overall planning fit.

Who it is for: Individuals in their 40s through 60s who want permanent life insurance protection with built-in access to long-term care benefits; those opposed to the "use it or lose it" structure of traditional LTCi; clients holding convertible term policies who are evaluating the conversion option; those for whom a cash value component aligns with broader accumulation goals.

What Is a Long-Term Care Annuity, and When Does It Make Sense?

A long-term care annuity is an asset-based solution that converts a lump sum deposit into a pool of long-term care benefits. Rather than paying ongoing premiums for coverage, you reposition an existing asset — typically cash, savings, or an existing annuity — into a specialized annuity contract. If a qualifying long-term care need arises, the annuity leverages that deposit, typically doubling or tripling its value, and pays a monthly benefit toward the cost of care. If you never need care, the account value remains available to you or your beneficiaries.

This approach is often described as a strategy to self-insure by leveraging the insurance company. The annuity itself provides lower cash value growth than other accumulation vehicles, but the long-term care multiplier is where the planning value lies — using the insurance company's leverage to turn one dollar of deposit into two or three dollars of benefit coverage.

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When Is A Long Term Care Annuity Relevant?

Clients who cannot qualify for the underwriting requirements of traditional or hybrid life policies
Those who prefer an asset-based solution and want their deposit to retain some accessible value
Individuals who have an existing annuity or cash holding that is not optimally positioned and could be repositioned to serve a long-term care planning purpose
Clients who want a simpler, single-transaction approach rather than ongoing premium commitments

The long-term care annuity typically involves the most straightforward qualification process of the three approaches, making it accessible to a broader range of health profiles.

Who it is for: Individuals who cannot qualify for traditional or hybrid life underwriting; those who prefer to use an existing asset rather than fund new premiums; clients who want a less complex path to long-term care coverage with retained asset value.

How Do We Determine Which Long-Term Care Strategy Is Right for You?

Long-term care planning does not start with a product recommendation. It starts with context.

The first conversation is about retirement readiness. Long-term care planning that redirects resources away from retirement funding can create a different problem than the one it solves. That said, this is not a one-size-fits-all calculation — for some clients, the desire to maintain choices in care and not be limited to what Medicaid covers is a deeply personal priority. Some are willing to make deliberate trade-offs in their retirement savings plan to have that flexibility. When that is the case, we factor personal values into the analysis alongside the financial sequencing. Both are valid.

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The Second Conversation

The next topic of conversation is risk tolerance. Part of our job as planners is to account for the certainty of uncertainty. There are any number of things that can go wrong in the course of a financial plan. Part of what we do is help you identify what those risks actually are — and then decide together which risks are worth addressing through coverage and which are acceptable risks to live with. Long-term care is one of the larger and more unpredictable variables in a retirement plan. How you feel about living with that exposure is relevant to which solution fits.

Most people set their assets and plans and do not revisit this specific risk in a structured way. A long-term care review — regardless of which strategy it leads to — is simply an honest look at whether the plan accounts for what is, statistically, a more than even chance of needing care.

What Makes Our Approach to Long-Term Care Planning Different?

We do not lead with products. We lead with an honest assessment of where the risk sits relative to the rest of your plan.

As independents, we are not tied to any single carrier. We evaluate traditional LTCi, hybrid life, and annuity products across multiple insurance companies to find the option that best fits each client's unique circumstances — in terms of health profile, benefit design, premium structure, and planning goals.

We also do not believe in being insurance-poor. Through proper analysis, we determine what is appropriate for each client's specific situation — not a maximum amount. We regularly help clients who may already have coverage in place evaluate whether they have the right type, the right benefit amount, and the right structure for where they are today. Coverage that made sense at 55 may not be optimally structured at 65. That is the kind of review we do.

A general framework for how we work through this:

Retirement readiness review — Understand where you are relative to retirement funding before adding a new planning layer
Risk tolerance conversation — Identify how much long-term care risk you want to live with and what matters most to you in a care scenario (choice of provider, staying home, asset preservation, leaving a legacy)
Health profile assessment — Understand what underwriting options are available to you and which products you qualify for
Strategy recommendation — Match the right approach (traditional LTCi, hybrid life, or LTC annuity) to your specific profile, then compare options across carriers

Frequently Asked Questions About Long-Term Care Insurance

What does long-term care insurance actually cover?

Long-term care insurance covers the cost of services that help with activities of daily living — bathing, dressing, eating, toileting, continence, and transferring — when you can no longer perform them independently, or when cognitive impairment requires supervision. Covered services typically include in-home care, adult day care, assisted living, memory care, and nursing home care. Traditional and hybrid policies both use the inability to perform two of the six ADLs as the standard benefit trigger. The specific benefit amount, elimination period (similar to a deductible in time), and benefit duration vary by policy.

What is the difference between traditional long-term care insurance and hybrid life with LTC benefits?

Traditional LTCi is a standalone policy designed specifically for long-term care coverage. If you never need care, the premiums do not return to you or your beneficiaries — it is a pure insurance product. Hybrid life combines permanent life insurance with access to long-term care or chronic illness benefits. If you need care, you can access a portion of the death benefit to cover those costs. If you never need care, the death benefit remains for your beneficiaries. The trade-off: traditional LTCi typically offers more benefit for the premium dollar; hybrid life costs more for the same benefit amount but eliminates the "use it or lose it" concern.

What does "use it or lose it" mean in a long-term care policy?

"Use it or lose it" refers to the structure of traditional long-term care insurance — if you never require qualifying long-term care services, the premiums you paid do not generate a return. This is the most common objection clients raise about traditional LTCi, and it is a legitimate planning consideration. It is not necessarily a disqualifying one — the premium purchases defined coverage, and for clients whose primary concern is asset protection, that trade-off often makes sense. For those who are not comfortable with it, hybrid life insurance resolves the objection: the death benefit ensures that the premiums paid result in a benefit paid to someone, either during the policyholder's lifetime through long-term care benefits, or at death through the life insurance benefit.

What is a long-term care partnership policy and why does it matter?

A long-term care partnership policy is a qualifying LTCi policy issued under your state's Long-Term Care Partnership Program — a coordination between private insurance and Medicaid. Every state in which we hold an insurance license (New Jersey, Pennsylvania, Delaware, Florida, Texas, and Virginia) participates in the program. The key benefit: for every dollar of LTC insurance benefits your policy pays out, you can protect an equal dollar of assets if you later apply for Medicaid — above and beyond Medicaid's standard asset eligibility limits. For clients whose primary goal is preserving accumulated assets and not spending down to Medicaid thresholds, partnership policies provide a level of protection that other strategies do not replicate.

Does Medicare cover long-term care costs?

Medicare does not cover custodial long-term care — the kind of ongoing assistance with activities of daily living that most people envision when they think about long-term care. Medicare will cover skilled nursing facility care after a qualifying hospital stay, but only for a limited period and only for skilled care, not custodial care. Medicaid covers long-term care, but only after you have spent down your assets to program eligibility thresholds. For most people, the gap between what Medicare provides and what a long-term care need actually costs is where the planning problem lives.

If I have saved enough for retirement, do I still need long-term care planning?

Not necessarily — but the analysis is worth doing. A well-funded retirement plan may have enough liquidity to self-insure a long-term care need without purchasing coverage. The relevant questions: how much would a multi-year care need at current costs deplete from your plan, what would that do to your spouse's retirement security if applicable, and is the asset exposure you carry comfortable to you? For some clients, the answer is that self-insurance is a deliberate and rational choice. For others, the same math reveals a gap they prefer to address through coverage. The goal is not insurance — the goal is clarity about which risks you are carrying by design and which ones you are carrying by oversight.

What if I cannot qualify for traditional long-term care insurance underwriting?

Underwriting requirements for traditional LTCi and many hybrid life policies are meaningful — a history of certain health conditions can affect eligibility or pricing. If traditional or hybrid underwriting is not available, a long-term care annuity is often the most accessible path. LTC annuities typically have simpler qualification requirements and allow you to reposition an existing asset to create a leveraged benefit pool for long-term care expenses. In some cases, certain hybrid life products with streamlined or non-medical underwriting options may also be available. We review the full range of options based on your specific health profile.

At what age should I start thinking about long-term care planning?

Earlier is generally better — for both cost and health reasons. LTCi premiums are lower when you apply at a younger age and in better health. The ability to qualify for underwriting — particularly for traditional and hybrid policies — also depends on your health at application. Many clients begin the conversation in their 40s and 50s when premiums are most favorable and options are most open. Waiting until your 60s is not too late, but it typically narrows the available options and increases the cost of coverage. The best starting point is a review of where you are today.

What happens to a long-term care annuity if I never need care?

Unlike traditional LTCi, a long-term care annuity retains asset value if care is never needed. The account value — your original deposit plus any growth credited under the annuity contract — remains available to you or passes to your beneficiaries. The annuity is structured to leverage that value significantly if a qualifying long-term care need arises, but the asset is not forfeited if care is never required. This makes the LTC annuity a lower-risk entry point for clients who are not comfortable with "use it or lose it" structures but also do not want the complexity of a hybrid life policy.

The Best Time to Plan for Long-Term Care Is Before the Decision Is Made for You

Long-term care is one of the few financial risks where timing matters on both sides — the cost of coverage and the availability of options both depend on your health at the time you apply. A review today does not commit you to a purchase. It gives you a clear picture of what is available, what it costs, and what the trade-offs are so you can make an informed decision on your timeline.

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¹ U.S. Department of Health and Human Services / Urban Institute, Lifetime Risk of Needing and Receiving Long-Term Services and Supports (ASPE Research Brief, 2019)
² Genworth Financial / CareScout, 2024 Cost of Care Survey (released March 2025).
³ CareScout, 2025 Cost of Care Survey (released March 2026)
⁴ American Association for Long-Term Care Insurance (AALTCI), Long-Term Care Need Statistics, July 2024 Report

Published: April 22, 2026
Date Updated: April 22, 2026