Key Points
- Long-term care insurance (LTC insurance) helps cover the cost of care if you cannot perform basic daily living activities such as dressing, feeding, bathing, etc. due to illness, injury, or aging.
- Medicare and traditional health insurance typically do not cover most long-term care costs, leaving many families responsible for significant out-of-pocket caregiving expenses.
- The average stay in a long-term care facility is between two and three years, but some conditions—such as Alzheimer’s disease or Parkinson’s disease, may require care for much longer.¹
- There are two primary types of LTC policies: traditional long-term care insurance and hybrid policies that combine long-term care and life insurance benefits. Other LTC products do exist and may be worth exploring.
- Working with a financial advisor or wealth management firm can help determine whether long-term care insurance fits within your broader retirement and wealth goals.
Why Long-Term Care Insurance Is Often Overlooked
Most people understand the importance of insuring their home or car, purchasing life insurance to protect their family’s financial future, and maintaining comprehensive health insurance to prevent overwhelming medical bills. Insurance serves an important role in financial planning by providing both peace of mind and financial protection when unexpected events occur. Yet one type of insurance is frequently overlooked, despite the significant financial risk it can address: long-term care insurance.
For many individuals and families, long-term care costs can represent one of the largest potential expenses in retirement. Without proper planning, these costs may erode retirement savings, disrupt long-term financial goals, and place additional stress on loved ones.
Because of this, long-term care planning has become an increasingly important topic when individuals meet with a financial advisor to develop a comprehensive retirement or wealth management plan.
What Long-Term Care Insurance Covers
Long-term care insurance is designed to help cover the cost of care if you cannot perform basic daily living activities such as dressing, feeding, bathing, etc. due to illness, injury, or aging.
Care can be delivered in a variety of settings depending on a person’s needs. Some individuals receive support at home from professional caregivers or family members, while others transition to assisted living communities, skilled nursing facilities, or specialized memory care environments.
A common misconception is that Medicare or traditional health insurance will cover most long-term care services. In reality, Medicare generally focuses on short-term rehabilitation following hospitalization and does not typically cover extended custodial care.
As a result, many long-term care services are paid out of pocket, which can create significant financial pressure without proper planning.
The Potential Financial Impact of Long-Term Care
The need for long-term care is more common than many people realize. For individuals who require it, the average stay in a long-term care facility is approximately two to three years. However, conditions such as Alzheimer’s disease or Parkinson’s disease can require care for significantly longer periods.
Because long-term care services can cost well over a hundred thousand dollars per year, these expenses can quickly accumulate.
Without a plan in place, long-term care costs may:
- Reduce retirement savings
- Impact investment portfolios
- Limit the ability to pass wealth to future generations
- Create financial, emotional and lifestyle strain for family members
Additionally, long-term care insurance typically must be purchased before significant health issues arise. Once someone enters a care facility or develops certain medical conditions, obtaining coverage may no longer be possible.
For this reason, many financial professionals recommend evaluating long-term care insurance in your 50s or early 60s as part of your overall financial planning strategy.
Types of Long-Term Care Insurance Policies
When considering coverage, there are generally two main types of long-term care insurance policies. Understanding how each option works can help you determine which approach may best fit your needs and overall financial strategy.
Traditional Long-Term Care Insurance
Traditional policies function similarly to many other types of insurance. Policyholders pay ongoing premiums, and if long-term care services are required, the policy pays benefits to help cover those expenses. However, if long-term care is never needed, the premiums paid do not generate a financial return.
Hybrid Long-Term Care Insurance
Hybrid policies combine long-term care coverage with life insurance or another financial product.
These policies often include:
- Fixed premiums that do not increase over time
- Long-term care benefits if care becomes necessary
- A financial benefit paid to beneficiaries if long-term care coverage is never used
For some individuals, hybrid policies offer additional flexibility because unused benefits may still provide value to heirs.
The cost of either type of policy varies widely based on several factors, including:
- Age at the time of purchase
- Current health and medical history
- Family health history
- Coverage limits and benefit periods
- Inflation protection or cost-of-living adjustments
- Insured’s ability to pay premium
Self-Funded Long-Term Care
Some individuals choose to self-fund all or part of long-term care using personal savings, investments, or other assets instead of purchasing insurance. This approach may be appropriate for those with significant financial resources and a willingness to assume the risk of potentially high and unpredictable care costs, and it can also be combined with insurance to cover part of the long term care needs. Evaluating this option alongside insurance solutions can help determine whether it aligns with your overall financial plan and risk tolerance.
Ultimately, comparing these factors in the context of your overall financial plan can help determine which type of policy, or combination of approaches, may be most appropriate for your situation.
Long-Term Care Planning Is About Strategy, Not Just Insurance
The most important aspect of long-term care planning is recognizing that it goes beyond simply purchasing insurance. While long-term care insurance can be a valuable tool, it is only one component of a broader financial strategy.
The primary objective is to develop a plan that aligns with your overall financial goals, retirement strategy, and asset protection priorities. Integrating long-term care planning into your larger financial picture allows you to better prepare for potential care costs while preserving your financial future.
There is no one-size-fits-all approach. For some individuals, long-term care insurance plays an important role, particularly for those who want to protect retirement assets, manage the risk of extended care costs, or leave a financial legacy. It may be especially worth considering if you have a family history of dementia or chronic illness, prefer more predictable cash flows, or are focused on preserving assets for future generations.
For others with substantial assets, self-funding long-term care may be a viable alternative, particularly if insurance premiums could limit long-term growth.
In the end, the key is evaluating all options within the context of your overall financial plan. Even though the need for extended care is uncertain, preparing for it can help safeguard the financial future you’ve worked hard to build. A thoughtful strategy, whether it includes insurance, self-funding, or a combination of both, can help manage one of the most significant risks to long-term financial security. Start the conversation with a Curi Capital financial advisor to explore how long-term care planning can help protect your financial future.
Frequently Asked Questions (FAQ)
What is long-term care insurance?
Long-term care insurance helps cover the cost of services needed when someone can no longer perform everyday activities independently. These services may include assistance at home, assisted living care, or skilled nursing care.
Does Medicare pay for long-term care?
In most cases, Medicare does not cover extended long-term care services. It may pay for short-term rehabilitation after a hospital stay, but ongoing custodial care is typically not covered.
When should you consider buying long-term care insurance?
Many financial professionals suggest evaluating long-term care insurance in your 50s or early 60s, when premiums are generally lower and individuals are more likely to qualify medically.
What is the difference between traditional and hybrid long-term care insurance?
Traditional policies provide benefits only if long-term care is needed, while hybrid policies combine long-term care coverage with life insurance, allowing unused benefits to be paid to beneficiaries.
Can you pay for long-term care without insurance?
Yes. Some individuals choose to self-fund long-term care expenses using personal savings or investments. A financial advisor can help determine whether this approach is feasible without jeopardizing retirement security.
How can a financial advisor help with long-term care planning?
A Curi Capital financial advisor can evaluate your financial situation, retirement goals, family history, and risk tolerance to determine whether long-term care insurance fits within your overall wealth management and retirement strategy.
Citation
Average stay in memory care and long-term care facilities: https://www.aplaceformom.com/caregiver-resources/articles/average-stay-in-memory-care
Disclaimers
This article was originally written in October 2022 and most recently revised for accuracy as of March 2026.
The opinions and analyses expressed in this newsletter are based on Curi Capital, LLC’s (“Curi Capital”) research and professional experience are expressed as of the date of our mailing of this newsletter. Certain information expressed represents an assessment at a specific point in time and is not intended to be a forecast or guarantee of future results, nor is it intended to speak to any future time periods. Curi makes no warranty or representation, express or implied, nor does Curi accept any liability, with respect to the information and data set forth herein, and Curi specifically disclaims any duty to update any of the information and data contained in this newsletter. The information and data in this newsletter does not constitute legal, tax, accounting, investment or other professional advice. Returns are presented net of fees. An investment cannot be made directly in an index. The index data assumes reinvestment of all income and does not bear fees, taxes, or transaction costs. The investment strategy and types of securities held by the comparison index may be substantially different from the investment strategy and types of securities held by your account.
The content contained herein was generated by Curi Capital with the assistance of an AI-based system to augment the effort.
Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
CIMA® and CERTIFIED INVESTMENT MANAGEMENT ANALYST® are certification marks of Investment Management Consultants Association Inc., doing business as Investments & Wealth Institute.
