Long-term care insurance helps pay for the care you need when you can no longer care for yourself, or if your spouse is no longer able to provide the level of care you need. For many people, long-term care insurance helps to preserve both independence and dignity, and may allow you to remain in your home while receiving the quality and level of care you require. It may also help protect your family’s financial future and your legacy. 

Health insurance, whether provided by a private company or through Medicare, does not pay for long-term care. Coverage is limited to acute care associated with a short-term illness or injury, such as recovery or rehabilitation. Medicaid will cover long-term care costs, but only for people of extremely low means who meet eligibility requirements. People who qualify for Medicaid assistance do not typically get to select the facility that provides their care. This is why you should consider creating a specific funding plan for the likelihood that one or both spouses will need long-term care. For a true long-term care plan, you need an insurance plan that offers coverage for years – not months. Today, there are different ways to plan for long-term care. Therefore, it is important to work with your financial advisor to develop a plan for your situation.

One of the ways that you can prepare for your future is to buy a long-term care insurance policy. This covers costs that Medicare and other health insurance policies may not cover, such as in-home care, assisted living, adult daycare and nursing home care. Many experts recommend the "sweet spot" age to buy a policy at lower rates is mid-50s. For business funded plans, long-term care premiums may be tax deductible.

An alternative to the traditional long-term care policy is to purchase a universal life policy that offers a long-term care or chronic illness rider.

This allows you to cover two potential needs. Life insurance provides cash proceeds to beneficiaries tax-free when you pass away. When you add a long-term care or chronic illness rider, should you ever need to pay for long-term care, the policy will pay accelerated death benefits to help cover those costs. For example, you can purchase a $300,000 life insurance policy with a long-term care rider. If you need to file a long-term care claim, the policy will pay 2% per month of the life insurance amount, $6,000, in benefits. Note that these benefit payments will reduce the life insurance amount on a dollar-for-dollar basis.

Asset-based long-term care contracts use the structure of either life insurance or annuities to provide long-term care benefits as needed. Historically, asset-based policies were purchased with single premiums; however, today they provide multiple payment options such as 10 years or pay to age 65. They provide long-term care benefits for typically five to seven years, and the residual death benefit will be paid to beneficiaries upon your death.