Long Term Care

Middle aged couple walking their dogAlternatives to traditional long-term care protection

A Worry-Free Retirement

Enjoy yourself knowing you’re protected

In retirement, your assets generate your income. And to have the kind of retirement you’ve always wanted — spending time with your family, traveling and more — you have to ensure that your retirement income is protected.

To enjoy retirement without having to make any drastic lifestyle changes, without having to rely on help from your friends or family, and without having to accept substandard levels of care as you age, your retirement income strategy has to account for three important factors:

  • How long you will live
  • How your investments will perform over time
  • How much you will spend each year in retirement

Wade Pfau, Ph.D., CFA, and Michael Finke, Ph.D., CFP®, of The American College of Financial Services have shown how these risks can be effectively managed. In recent studies, Dr. Pfau and Dr. Finke illustrated how an integrated approach to your retirement income strategy can optimize retirement income, and how long-term care benefits can protect you from extreme health care expenses in your later years.

70%

of all individuals ages 65 and older will require some type of long-term care services

76/81

Average lifespan in the U.S. today for males/females

91/92

Life expectancy of an 85-year-old male/female

Protect Yourself and Your Family From the Unknown Costs of Health Care

Middle-aged couple taking a selfieThe unknown cost of health care is among the most significant risks to any retirement plan. Unlike most spending in retirement, health care spending increases with age on average and is far more volatile. And 70% of people turning 65 today will eventually need some form of long-term care in their lifetimes.

With traditional health-based long-term care insurance, you pay insurance premiums to help protect yourself in the event that you require long-term care. As history shows5, the premiums will likely increase over time, and if you never need it, this form of long-term care insurance offers no benefit.

A different generation of protection, such as life insurance or annuities combined with long-term care, creates a hybrid or asset-based product consideration. This approach protects against long-term care expenditures while also providing a guaranteed death benefit, which guards against the possibility of lost premiums.

Long-term care includes a range of services and support for people coping with physical and cognitive decline or who need assistance with daily living, from in-home care to nursing home and hospice care.

Funding Long-Term Care at 65

Severe long-term care event averages

Severe long-term care event averages

A 65 year-old couple is starting their retirement and considering their options for long-term care protection. They decide to focus on a severe event because it will have the largest effect on their retirement income. Their choices include:

  • Self-funding from investments
  • Traditional health-based longterm care insurance
  • Asset-based long-term care benefits combined with whole life insurance

Potential Long-Term Care Event Outcomes

With no protection they will:

  • Have the highest risk for out-of-pocket costs associated with a mild or severe LTC event
  • Receive no death benefit

With health-based protection they will:

  • Have premiums that may increase over time
  • Need to purchase two policies to ensure they are both covered
  • Receive no death benefit

With asset-based protection they will:

  • Face the lowest risk for out-of-pocket costs associated with a mild or severe LTC event
  • Have premiums guaranteed never to increase
  • Have the option to cover both spouses with one policy
  • Receive a death benefit
    Note: Potential death benefit reduced if long-term care benefits are received.

Funding Long-Term Care at 50

Severe long-term care event averages

Severe long-term care event averages

A 50-year-old couple is beginning to think about retirement. They are exploring ways to optimize their retirement income.

They are considering how long-term care will affect their retirement. They decide to focus on a severe event because it will have the largest effect on their retirement income.

Their choices include:

  • Self-funding from investments
  • Traditional health-based longterm care insurance
  • Asset-based long-term care benefits combined with whole life insurance

Potential Long-Term Care Event Outcomes

With no protection they will:

  • Have the highest risk for out-of-pocket costs associated with a mild or severe LTC event
  • Receive no death benefit

With health-based protection they will:

  • Have premiums that may increase over time
  • Need to purchase two policies to ensure they are both covered
  • Receive no death benefit

With asset-based protection they will:

  • Face the lowest risk for out-of-pocket costs associated with a mild or severe LTC event
  • Have premiums guaranteed never to increase
  • Have the option to cover both spouses with one policy
  • Receive a death benefit
    Note: Potential death benefit reduced if long-term care benefits are received.