Financial advisors help clients prepare for many of the risks that can disrupt retirement. But one risk can have an especially far-reaching impact: What happens if a client lives a long life but eventually needs help taking care of themselves due to a chronic illness or cognitive impairment?
An extended care event can affect much more than finances. It can put pressure on retirement assets and investment portfolios while also impacting family, legacy goals, independence, and the lifestyle that clients worked years to build.
Financial advisors don’t need to become long-term care insurance experts, but they can play an important role in making sure the conversation happens.
What Is Long-Term Care?
Long-term care, sometimes called extended care, generally refers to ongoing assistance a person may need when a physical or cognitive impairment makes it difficult to care for themselves independently.
One of the first misconceptions to clear up is that long-term care simply means nursing home care. In reality, care can take place in a variety of settings. Someone may receive care at home from family members or professional caregivers, attend adult day care, or receive support in an assisted living community, memory care setting, or skilled nursing facility.
A common benchmark used in long-term care insurance involves a person's ability to perform the six Activities of Daily Living (ADLs):
| Eating | Bathing | Dressing |
| Transferring | Continence | Toileting |
A severe cognitive impairment can also create a need for ongoing care or supervision.
The key distinction is that long-term care isn’t necessarily about curing an illness. More often, it’s about helping someone function safely and maintain as much independence as possible when they can no longer do everything on their own.
Where to Start with Long-Term Care Planning
A useful principle from the CLTC planning philosophy is to think about an extended-care situation as a life-changing event, rather than approaching it first as an insurance need.
When a client needs care, there are two important questions to consider: Who will provide the care, and how will the client pay for it?
Paying for care may mean using current income, retirement accounts, investment assets, savings, insurance, family resources, or government programs when eligible. But there’s also the question of who will actually step in to help.
For many families, that responsibility falls to a spouse or adult child. A spouse may become the primary caregiver, while adult children may help coordinate appointments, manage finances, or take time away from work to provide support.
These are decisions families may not think about until care is actually needed. Planning ahead gives clients and their families an opportunity to decide what they would want and prepare for the financial and personal impact of an extended-care situation.
Putting the Care Plan Into Perspective
To see why the question of who will provide care matters, consider a hypothetical couple, John and Susan. John and Susan are in their early 60s and have done a good job preparing for retirement. They’ve accumulated retirement assets, built additional savings, nearly paid off their mortgage, developed a retirement income strategy, and put their estate planning documents in place.
In their quarterly meeting, their advisor asks Susan a simple question:
“If John had a stroke or a chronic illness that created a situation where he needed home healthcare for a few years, how would you handle this? How would you coordinate his care or fund it? Who would help you take care of him?”
Susan might immediately answer, “I would.”
But then the advisor asks, “Is that what the two of you want the plan to be? And how would you pay for the care? Where do you want me to pull the money from?”
That question shifts the conversation from an assumption to a decision, giving John and Susan the opportunity to think about what they want care to look like before it’s needed.
| For Financial Advisors: Ask One More Question | |
| YOUR CLIENT SAYS: | “My spouse will take care of me.” |
| THE ADVISOR'S NEXT QUESTION: |
“You’re right. He will. But is that what you want the plan to be? Caregiving is hard – it can be consuming.” Then explore:
|
| Advisor Takeaway: Don't let a client's assumption become the family's LTC plan. | |
The Price of Unplanned Long-Term Care
Even when clients recognize the potential impact of an extended-care event, there are common reasons they may not see a need to plan for it. Two of the most common are the belief that they can simply pay for care themselves or that Medicare will help cover the cost.
Both are worth addressing as part of a broader long-term care planning conversation.
“We'll Just Pay for It Ourselves”
Affluent clients may have sufficient assets to self-fund a long-term care event. However, the ability to cover the cost of care does not address how using those assets could affect the rest of the financial plan.
Funding care could require withdrawals from cash reserves, retirement accounts, investment assets, real estate, or ongoing retirement income. Many of those assets may already be intended to support retirement income, provide for a surviving spouse, fund legacy goals, or meet other financial priorities.
For clients considering self-funding, the conversation should account for both the cost of care and the potential impact on their broader financial plan. This can help determine how much of the long-term care risk they are comfortable retaining and whether transferring some of that risk makes sense.
What About Medicare?
Medicare is another important consideration in long-term care planning, particularly because clients may have misconceptions about the types of care it covers.
Medicare may cover certain skilled nursing or rehabilitative services when applicable requirements are met, but coverage for an ongoing need for custodial care is more limited.
Medicaid serves a different purpose and may cover certain long-term care services for individuals who meet applicable financial, medical, and other eligibility requirements.
| Medicare Myth vs. Reality | |
| MYTH | “Medicare will take care of my long-term care needs.” |
| REALITY |
Clients need to understand what Medicare is designed to cover and develop a separate strategy for a potential extended need for custodial care. (Medicare.gov) |
| Advisor Takeaway: Healthcare planning and long-term care planning aren't the same thing. | |
Four Ways Clients Can Think About Funding Care
Once clients understand the potential impact of an extended-care event, the next question is how they would fund it. Generally, the available resources fall into four categories:
| Type of Fund | Opportunity Cost | Pros | Cons |
| Personal Assets | Investment growth, retirement income, or assets intended for other financial goals | Flexible; no premiums or policy restrictions | Client retains the full financial risk; care costs may reduce assets available for other goals |
| Private Insurance | Premiums and the alternative uses for those dollars | Transfers a portion of the financial risk; helps preserve other assets for their intended purposes | Premium costs; benefits are subject to policy terms and eligibility |
| Government Programs | Limited choice or flexibility depending on program requirements | May help cover certain qualifying care needs | Eligibility and coverage requirements may limit when and how benefits are available |
| Family | Caregiver time, income, career opportunities, and responsibilities | Care may be provided or coordinated by someone the client knows and trusts | Can create financial, physical, and personal demands on family members |
Traditional LTC Insurance vs. Hybrid Life + LTC
When insurance is part of a client’s long-term care strategy, advisors will generally encounter two broad approaches: traditional long-term care insurance and hybrid life insurance with long-term care benefits. Both can help address the financial risk of an extended-care event, but they are designed differently and may suit different planning objectives.
Traditional Long-Term Care Insurance
Primary purpose: Long-term care protection
Traditional LTC insurance is designed specifically to provide benefits for qualifying long-term care needs. Depending on the policy, benefits may be available for eligible care received at home or in other care settings.
It may appeal to clients who:
Want coverage specifically focused on extended care
Want to transfer a defined portion of their LTC risk
Don't necessarily need a life insurance component
Are comfortable evaluating the insurance primarily around its LTC benefits
Hybrid Life + LTC Insurance
Primary purpose: Long-term care protection with additional Life Insurance
Hybrid, or linked-benefit, policies combine life insurance with long-term care benefits. Depending on the policy and how benefits are used, the coverage may provide funds for qualifying long-term care needs during the insured’s lifetime while also providing a death benefit.
Hybrid solutions may appeal to clients who:
Want LTC protection combined with life insurance
Are concerned about never needing substantial LTC benefits
Value the potential for remaining benefits to pass to beneficiaries
Prefer certain guarantees available with some policy designs
Neither approach is appropriate for every client. The choice between traditional and hybrid coverage should reflect the client’s age and health, available assets and liquidity, cash flow, desired level of long-term care protection, legacy goals, and comfort with retaining financial risk.
Ultimately, the insurance should support the long-term care plan rather than drive it.
Best Tips for Long-Term Care Insurance Conversation
Long-term care insurance can quickly become complicated with terms like monthly benefit, benefit period, elimination period, inflation protection, and more.
The conversation becomes much easier when it starts with the client’s needs and goals before moving into policy details.
| Three Simple Questions | |
| Before discussing riders, elimination periods and policy features, start with three questions: | |
| 1. HOW MUCH? |
How much benefit does the client want available if care is needed? |
| 2. SHOULD IT GROW? |
Should the benefit have the ability to increase over time to help address potentially higher future care costs? |
| 3. WHAT IF I DON'T NEED CARE? |
How important is it to the client that unused policy value potentially benefits their family? |
| Start with outcomes. Then design the coverage. | |
Timing Matters: Insurance Requires Underwriting
Long-term care insurance is medically underwritten, which means a client’s health history can affect their eligibility for coverage and the options available to them.
Unfortunately, many clients don’t begin thinking seriously about long-term care until a parent needs care, a spouse develops a health condition, or their own health changes. By that point, their insurance options may be more limited.
For advisors, the takeaway is simple: the best time to discuss long-term care planning is while clients still have choices. Making it part of the broader retirement planning process can help clients consider their options before a health event creates urgency.
Five LTC Questions Every Financial Advisor Should Ask
A productive LTC conversation can start with just a few questions:
1. WHERE?
If you needed extended care, where would you want to receive it?
2. WHO?
Who would you expect to help provide or coordinate that care?
3. IS THAT THE PLAN YOU WANT?
Is that actually the role you want your spouse, partner or children to have?
4. HOW WILL YOU PAY FOR IT?
Which income or assets would you use without unnecessarily disrupting the rest of your financial plan?
5. HOW MUCH RISK DO YOU WANT TO KEEP?
How much of the potential financial risk would you prefer to retain, and how much would you consider transferring through insurance?
Notice what's missing: “Would you like to look at some proposals for coverage?"
Planning first. Product second.
Additional Resources for the LTC Conversation
Advisors don’t have to navigate every aspect of long-term care planning on their own. Just as they may work with estate-planning attorneys, CPAs, and other professionals, they can bring in an LTC specialist when additional expertise is needed.
The Advisor’s Role
The advisor starts the conversation, identifies the client’s goals and concerns, and considers how an extended-care need could affect the broader financial plan. When appropriate, an LTC specialist can then help explore potential solutions.
The LTC Specialist’s Role
An LTC specialist can assist with funding strategies, traditional and hybrid insurance options, medical underwriting, policy comparisons, client education, and assistance in completing applications.
Together, the advisor and LTC specialist can address the details of long-term care planning while keeping the client’s overall financial goals at the center of the conversation.
Ready to Start the LTC Conversation?
Your clients have spent years building their retirement plans. Planning for long-term care helps protect the choices they’ve worked hard to create, including how they receive care, who is involved, and how that care could affect their family and finances.
LTCI Partners works alongside financial advisors to help clients:
Identify and understand their extended-care risk
Consider how care could affect their family and financial plan
Evaluate potential funding strategies
Explore traditional LTC and hybrid Life + LTC insurance solutions when appropriate
Navigate medical underwriting and the insurance process
The goal is simple: help clients have a plan in place before care is needed. Start with the plan, then determine how insurance can help support it.