Broker Check

Should You Purchase Long-Term Care Insurance?

February 18, 2021

Have you built long-term care costs into your retirement plan? According to the U.S. Department of Health and Human Services, people turning 65 in 2020 have a 70% chance of needing some type of long-term care as they age. (1)

Longer life expectancies are a good thing: we have access to better healthcare and medical treatments that allow us to spend more time with our loved ones and watch our families flourish.

But long-term care is expensive, costing anywhere from $20 to over $250 a day depending on the type of care needed. (2) Planning for long-term care is an increasingly important component of the retirement planning process, and many people are turning to long-term care insurance as an affordable way to build anticipated long-term care expenses into their plans.


Standalone Long-Term Care Policies

Long-term care insurance isn’t usually provided by employers, so it’s a type of insurance that most people have to search out and learn about on their own. Long-term care policies have traditionally been expensive, ranging from about $3,000 to over $8,000 per year in premiums for a couple aged 55. (3) These premiums can be in addition to life insurance premiums you already pay.

Standalone long-term care policies are also notoriously complex. Some companies, such as New York Life, are beginning to offer simplified policies. Standalone policies may be good options for those who can afford them, but there are drawbacks to standalone policies, including the risk that you will pay a lifetime of expensive premiums for insurance you may never use.


Long-Term Care Riders

To accommodate some of these drawbacks, some life insurance policies offer a policy add-on called a long-term care rider, also known as a hybrid policy. Hybrid policies are more likely to maintain stable premiums and often come with a death benefit, so the premiums don’t go completely unused if you pass away without ever needing long-term care.

Long-term care riders are also typically more affordable than standalone policies. However, adding a long-term care rider to a life insurance policy may require you to pay a large lump-sum premium up front when purchasing the policy.


Annuities With Long-Term Care Benefits

Finally, some fixed and indexed annuities offer contracts that will pay more per month if you ever need long-term care. For example, if you own an annuity that pays you $2,000 per month and then start needing long-term care assistance, your annuity would begin paying an additional amount per month to help cover the long-term care costs.

Annuities usually come with lower returns than other types of investments, but some people prefer the security of knowing they will always receive a monthly payment for the duration of their life. If you are considering purchasing an annuity or already own one, it may be worth looking into options to add long-term care benefits to the contract.


Which Is Right For You? We Can Help You Decide

Your life and your family’s security are far too important to leave the long-term care question to chance. With the national median cost of a nursing home’s private room totaling at $8,517 per month, (4) the consequences of failing to plan for long-term care can be severe. A monthly bill of that size can quickly drain the average person’s retirement savings.

Choosing the right long-term care insurance—or another planning strategy entirely—depends on your unique circumstances and projected needs for your retirement. But the worst thing you can do is to do nothing at all. Strategizing for long-term care needs is complex, and it’s a decision you shouldn’t have to make alone.

To objectively weigh your options and make a decision with more confidence, partner with financial experts like our team at Pathway Financial Planning. We take an enlightened approach to financial planning that aligns all components of your plan to help you focus on what matters most. Schedule a complimentary consultation with us today by calling 765-698-5121 or emailing


About Ben

Ben Harvey is president and senior financial planner at Pathway Financial Planning, Inc., an independent, comprehensive financial planning firm that prioritizes the client, each and every time. Ben spends his days staying on top of what’s going on in his clients lives, coordinating the financial planning process, helping people identify their goals, and evaluating whether they are on track. He designs and implements customized strategies all as part of the proprietary process, The Path to Purpose FORMula™. Ben has 15 years of experience in the financial industry, including years as a loan officer, trust officer, and financial advisor, and provides a unique skill set of business management, retail lending, estate and trust administration and planning, comprehensive financial planning, and wealth management.

Outside of work, Ben enjoys spending time with his wife, Mandy, and their children, Cooper and Claire. They are active in their church, and especially love traveling, hosting friends and family, going to amateur sporting events (especially high school basketball and swimming), and experiencing different cultures. On occasion, you can find Ben playing golf, sometimes in amateur tournaments, which he credits for teaching him patience. He will also tackle the occasional home improvement project, read non-fiction, and watch documentaries. Through experience and “honey-do lists,” Ben has learned to never start a project he’s not ready to finish. To learn more about Ben, connect with him on LinkedIn. You can also register for his recent webinar, Retire with Purpose: An Easy Strategy to Simplify Your Distributions.