The Cost Long-Term Care

Planning for Long-Term Care

This week’s reader question is about long-term care insurance: The cost of long-term care continues to rise—is it worthwhile to maintain this type of insurance? What are my options?

Senior Financial Planner Vanessa Carter-Witt, CLTC®, had this to say:

Many people consider letting their long-term care policy lapse or taking a lump sum payout when they are hit with a large premium increase. While this impulse is understandable, as it could save you a few thousand dollars per year, it’s usually the wrong move.

You’ve likely paid into your current plan for years, so why give up those benefits now? Instead of walking away, consider how you can decrease your annual premium amount while keeping your coverage intact.

First, look into decreasing your monthly benefit amount. For example, reducing your benefit from $6,000 per month to $4,000 per month will shrink your premium. While this provides lower coverage, it might be exactly what you need. (The average monthly cost of an assisted living facility is $4,300. For a semiprivate nursing home, it’s $7,756.)

Next, co-insure your care. You don’t need a long-term care policy to cover everything. It makes sense to co-insure—which simply means assuming a portion of payment out of pocket to keep your deductible in check.

Talk to your policy provider to find out which other elements of your long-term care plan can be adjusted to lower your premium…but keep the trade-offs in mind. Changing certain core terms can reduce the value of your overall coverage.

photo of Senior Financial Planner Vanessa Carter-Witt and a quote reading "Instead of walking away, consider how you can decrease your annual premium amount while keeping your coverage intact."

For instance, increasing the elimination period—the amount of time you agree to wait for benefits to begin—could cause you to pay more out of pocket. (This is especially true if the elimination period is based on service days versus calendar days.)

Likewise, reducing the benefit period—the length of time you are covered—could cause you to pay much more out of pocket. An average claim length is about 36 months. If you were to reduce your benefit period from four years to two years, you would not be adequately covered.

Finally, getting rid of or reducing the inflation rider in your policy (which increases the benefits provided by a fixed amount per year) could be risky, especially if you are in your 60s and may not need to use your benefits until you are in your 80s or 90s.

If you are unsure how to manage a premium increase, call us. We would be happy to run through the scenarios with you and help you decide.

Ask Us a Question!

We’re always interested in the topics or concerns you might like us to comment on. Ask us a question about investing, the markets or financial planning and one of Adviser Investments’ experts will answer it in a future edition of The Week in Review. CLICK HERE NOW TO POSE YOUR QUERY.

About Adviser Investments

Adviser is a full-service wealth management firm, offering investment managementfinancial and tax planningmanaged individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trusts, institutions and foundations since 1994. Adviser Investments and its subsidiaries have over 5,000 clients across the country and over $8 billion in assets under management. Our portfolios encompass actively managed funds, ETFs, socially responsible investments and tactical asset allocation strategies, and we’re experts on Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To. To see a full list of our awards and recognitions, click here, and for more information, please visit or call 800-492-6868.

For informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities.  All investments carry risk of loss and there is no guarantee that investment objectives will be achieved. Past performance is not an indication of future returns.  Always consult a financial professional before taking specific action. Tax, legal and insurance information contained herein is general in nature, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice, nor sell insurance products. Always consult a licensed attorney, tax professional, or licensed insurance professional regarding your specific legal or tax situation, or insurance needs.

© 2022 Adviser Investments, LLC. All Rights Reserved.