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Finding the Right Fit for your Client’s Long-term Care Planning

July 27, 2021

In our last blog, we addressed the obstacles you may face when discussing long-term care (LTC) planning with your clients and how to overcome those objections. Once your client is on board, it is important to help them choose LTC coverage that best fits with their overall financial strategy.

Helping clients understand long-term care insurance

Common questions that clients may have are:

  • How much is long-term care insurance?
  • What does long-term care insurance cover?
  • How are LTC benefits paid?
  • How does long-term care insurance work?

How much does long-term care insurance cost?

The cost of LTC coverage depends on factors including age, sex, and health of the insured as well as planning details such as the amount of coverage, whether inflation is added, and whether or not the LTC plan will be paired with a financial product. The variety of products available today can provide an opportunity to match a policy with a client’s budget and other potential planning needs.

What a long-term care policy covers

While basic coverage is universal among most policies, it is important to read the contract for small details and variances in coverage. Contractually, all policies cover the basics such as:

  • Home health care
  • Assisted Living
  • Adult Day Care
  • Nursing Home Care

However, the type of LTC benefit payment model the policy uses may also help to establish what other LTC services the policy benefits can be used for, and/or how much of the benefit dollars will be available to be spent for a particular type of care service.

Long-term care benefit payment models

While there are many variations, LTC benefits models generally fall into two categories – reimbursement and cash indemnity plans.


These policies only reimburse the actual cost of qualifying care, up to the issued policy benefit amount. Bills and receipts must be submitted each month to determine the amount of reimbursement.  Keep in mind that reimbursement policies may have limitations and do not cover all expenses a person may consider necessary for their care; thus there may be items or services on a bill that will not qualify for reimbursement (i.e. hair care from the facility’s beauty parlor, massage therapy, or upkeep of home care is being received in). Such expenses will have to be paid for out of pocket.

Cash Indemnity

These policies are generally more flexible than reimbursement plans. Once payments begin, there is no monthly paperwork required, and the full available LTC benefit is paid each month. The insurer places no restrictions on how LTC benefits are used for care. Benefits can be spent on whatever care services are desired. This would include using 100% of the LTC benefits to pay for unlicensed care (including immediate family members) as well as to pay for ancillary care needs such as prescriptions, home maintenance, laundry, etc.

Making the most of your long-term care planning

Choosing the best coverage for your situation is a multi-step process. It starts with looking at your overall financial strategy, both current and future. This would include:

  • Assessing whether additional life insurance or retirement planning is needed
  • If legacy planning is desired (whether family legacy or charitable giving)
  • Financial protection of a surviving spouse
  • How much income or which asset is available to fund the LTC coverage
  • What LTC benefit model would be preferable

Once you have determined these planning points, you can move forward with product choice. There are several ways to fund for a long-term care event, including:

  • Traditional LTC insurance
  • LTC Rider on life insurance
  • Linked Benefit (Hybrid) LTC coverage

Each one of these solutions work differently, address different concerns, and provide their own unique way to pair with an overall financial strategy.  These differences may even affect when to buy long-term care insurance.

Traditional LTC insurance

This policy only pays if a qualifying LTC event occurs. While often providing the most LTC coverage for the least cost, premiums are not guaranteed. There may be more flexibility in choosing options such as elimination periods, benefit periods, and inflation. With most carriers, only life-time premium payment schedules are available and generally, these policies only pay LTC benefits by reimbursement.

This solution may be valued by people who:

  • Do not want or need life insurance
  • Want more customization of benefits
  • Understand that the policy is essentially “use it or lose it” regarding premiums paid (a few companies offer riders for an additional cost that return unused premium to beneficiaries)
  • Are looking for the most coverage for the least amount of premium

Life insurance with a LTC Rider

This solution is for people with a life insurance need, but also have LTC concerns. This policy can help provide family protection now, but if life insurance needs diminish in the future, the policy can transition more into being long-term care protection. LTC benefits are paid as an acceleration of the death benefit, but if LTC benefits are little used or never needed, any remaining death benefit will be paid to the beneficiary. Some solutions can guarantee both the premiums and LTC benefits (as long premiums are paid as scheduled). There is a multitude of premium schedules available, and both reimbursement and cash indemnity benefits are available depending on the carrier chosen. This solution provides the best leverage of death benefit, but may not provide the most amount in LTC benefits compared to other products.

This solution may be more desirable for people who:

  • Currently have a life insurance need
  • Want both life insurance and LTC but don’t want to buy each separately
  • Want more choice in premium schedules – either to fit a budget or pay up premium obligations quickly
  • Like the idea of a leveraged death benefit that pays if the policy is little or never used

Linked Benefit (also known as Hybrid) LTC coverage

These policies are for people whose primary need is LTC but want cost recovery if LTC is little or never needed. This policy has two benefit pools linked together:

  • The first benefit pool is life insurance with a LTC Rider, and LTC benefits are paid from this benefit pool first. If LTC is never needed, the death benefit is guaranteed to be at least equal to or better than the total premiums paid.
  • The second benefit pool continues to pay LTC benefits but is for LTC benefits only.

These policies have options more similar to traditional LTC coverage such as choice of benefit periods and inflation options. Policy premiums and LTC benefits are guaranteed (assuming premium is paid as scheduled). These policies can be purchased with a single premium and limited pays such as five or 10 years, and some insurance companies offer longer premium schedules such as pay to age 65 and pay to age 100.

This coverage is good for people who:

  • Primarily want LTC coverage
  • Are looking for some customized policy options
  • Want guaranteed premiums and benefits
  • Want premium protection if the policy is little or not used


Long-term care planning can be an important part of a retirement strategy. There are more options than ever for finding LTC coverage that can fit into a client’s budget, as well as their current and future financial approach.