Planning Ahead: Understanding Your Long-Term Care Options

Thinking about long-term care (LTC) isn’t always easy, but it’s one of the most important parts of preparing for retirement. Health care costs continue to rise, and people are living longer than ever before. Having a plan in place can help protect both your savings and your loved ones.

When it comes to LTC planning, two options that often come up in conversations are:

• Life Insurance with a Long-Term Care Rider
  
  

• Hybrid (Asset-Based) Life/LTC Policy
  
  

Both provide ways to use life insurance to help cover future care costs, but they work in different ways. Let’s break them down.

Life Insurance with an LTC Rider

This option adds an LTC benefit onto a traditional life insurance policy.

• Cost: Usually a lower ongoing premium, with an added fee for the rider.
  
  

• How It Works: If you need long-term care, you can use part of your life insurance benefit while you’re still

  

  living.
  
  

• Impact on Your Policy: Each dollar you use for LTC reduces the life insurance benefit your loved ones receive.
  
  

• Death Benefit:
  
  

  • If you don’t use LTC: Your beneficiaries receive the full death benefit.
    
    

  • If you do use LTC: The death benefit is reduced by the amount used for care.
    
    

This type of policy is often a fit for someone who wants a cost-effective way to have coverage in case of care needs, while still maintaining life insurance protection.

Hybrid (Asset-Based) Life/LTC Policy

This option combines life insurance with a separate pool of money specifically for LTC.

• Cost: Requires a larger commitment upfront — usually a lump sum or payments over a set number of years.
  
  

• How It Works: Provides a pool of LTC dollars (often 2–3x the premium you contribute) in addition to the life insurance benefit.
  
  

• Impact on Your Policy: You can have both a dedicated LTC benefit and a life insurance benefit.
  
  

• Death Benefit:
  
  

  • If you don’t use LTC: Your beneficiaries receive the full death benefit.
    
    

  • If you do use LTC: Many policies still provide a reduced death benefit even after care expenses are covered.
    
    

This may be more appealing to someone who wants the security of a dedicated LTC fund while still leaving something behind for heirs.

Which Option Is Right for You?

The right choice depends on your personal situation. A few key questions to consider:

• Do you prefer lower ongoing costs or would you rather commit a larger amount upfront?
  
  

• Is it more important to have flexibility (rider) or a separate pool of LTC funds (hybrid)?
  
  

• How important is it to you to leave a death benefit for your beneficiaries?
  
  

There’s no one-size-fits-all answer. These solutions can be powerful tools, but they need to be considered in the context of your full retirement plan.

The Bottom Line:

Both options can help protect against the rising costs of long-term care. The difference comes down to how you want to fund that care and how important leaving a death benefit is to you.

Disclaimer: This article is for informational purposes only and should not be considered financial, tax, or legal advice. Please consult with a licensed professional before making decisions regarding insurance or retirement planning.

Disclosure: Investment advisory and financial planning services are offered through Simplicity Wealth, LLC, an SEC-registered investment adviser. SEC registration does not constitute an endorsement of the firm nor does it indicate that the adviser has attained a particular level of skill or ability. Investing involves the risk of loss. Insurance, Consulting and Education services offered through Hux Capital Management. Hux Capital Management is a separate and unaffiliated entity from Simplicity Wealth.