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Long Term Care

What is long term care?

Long term care is the medical and social services term for helping people who develop disabilities or chronic care needs. Services may be brief with full recovery, or they can continue for years. Most long term care is by definition custodial care which is non medical assistance with activities of daily living such as walking, bathing, dressing, eating or using the toilet.

Care may be required due to physical impairment or cognitive impairment. The effects of Alzheimer’s, strokes, diabetes, auto accidents, sporting accidents and dementia commonly trigger the need for long term care services.

Long term care can be received at home, in an assisted living facility or skilled nursing facility.

Who needs long term care?

As we age, it becomes more likely we will need long term care services. The U.S. Department of Health and Human Services reports that 70% of people turning age 65 can expect to use some form of long term care during their lives. The risk is also significant for working age adults as 42% of the 13 million people receiving long term care services are between the ages of 18 and 64.

How long will you need care?

By gender, women need care for 3.7 years while men average 2.2 years of long term care. Consider that one-third of today’s 65 year olds may never need long term care services, but 20 percent will need it for longer than 5 years.

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Hybrid Long-Term Care Insurance

Hybrid long-term care plans are a variation on traditional long-term care (LTC) insurance and fall under two categories:

1) Life Insurance with a Long-Term Care Benefit
2) Annuities with a Long-Term Care Benefit

Long-term care hybrid products are also called linked benefit or asset based long-term care policies. These LTC hybrid products can offer several advantages:1

Guaranteed Benefits - They guarantee benefits will always be paid, in one form or another.

Guaranteed Premiums - Most policies guarantee that premiums will never change.

1035 Exchanges - Some asset based long-term care insurers permit 1035 exchanges. The tax advantage of utilizing a 1035 exchange is to defer the internal build up of gains associated with your existing annuity or cash value life insurance policy. 

Long-Term Care Life Insurance

A life insurance policy with long-term care benefits works by accelerating the life insurance death benefit to pay for your long-term care. If you never need long-term care, your estate receives a tax-free death benefit.

  • Depending on the policy, you can choose to pay one lump-sum premium, pay it up in 5 or 10 years, and some policies offer continuous pay premiums.
  • The policy provides a pool of money for long-term care that’s equal to several times your premium payment. Some policies offer an unlimited pool of money.
  • If you use your policy for long-term care, the death benefit is decreased by the amount of long-term care benefits used.
  • Requires health underwriting

Long-Term Care Annuity

A long-term care annuity functions like a fixed annuity, but it has a long-term care multiplier built into the policy. If you need long-term care, a part of the contract pays the long-term care benefit.

Long-term care benefits are calculated on the amount of coverage selected when the policy is purchased. For example, the insurance company offers an LTC payout of 200% or 300% of the total policy value. A policyholder with a $100,000 annuity who had selected a total benefit limit of 300% would have an extra $200,000 available for long-term care expenses, after the initial $100,000 policy value is used. If long-term care is never needed, the annuity value is paid to the beneficiary.

  • A long-term care annuity may allow you to access cash value during your lifetime -- even if you never need care.
  • When the annuity contract matures, your contract’s remaining cash value may be passed on to your beneficiaries.
  • Health qualification (health underwriting) is often less stringent than long-term-care life insurance and traditional long-term care insurance. This can make the long-term care annuity a valuable option if you have a pre-existing health condition, or if you've been turned down for long-term care insurance.

1The scenarios above are basic examples of how hybrid long-term care insurance works. Policies available will vary by state and coverage may differ depending on age, health, gender, premiums and benefits requested. For an accurate proposal, please contact us for an illustration specific to your situation.


Taking steps now to understand and prepare for your future can help you maintain control over your care options.


Specifying your preferences for future needs can ensure you get the kind of care you want, remain independent as long as possible and preserve your dignity.


Planning for care now allows your family and friends to care about you - instead of caring for you.


Knowing that you've planned for the future, you can ensure that long-term care won't impact your ability to leave a lasting legacy to your family, favorite charity or place of worship.

1 IN 7

People who will require care for 5 years or longer *

$ 48,048

Average annual cost of a full-time home health aide**


Long-term care provided by family members***