Important Facts

Your Lifestyle vs. the Cost of Long-Term Care Insurance

This article discusses Long-Term Care Insurance which helps pay expenses of living in a nursing home or an assisted living facility and important elements to consider when calculating your LTCI needs.

Long-Term Care Insurance Planning: Why Averages Don’t Apply to Above-Average Wealth

When it comes to long-term care insurance (LTCI), most people feel that if they have the available assets, then self-insuring against future long-term care expenses is a more logical argument versus paying life insurance premiums.

However, not unlike other insurance policies you own, LTCI is also a vehicle in which to transfer risk. And when you look at the staggering costs of becoming chronically ill or disabled at any age, the benefits of a LTCI policy can help preserve what you’ve worked so hard to accumulate for a comfortable, worry-free retirement.

Asset Protection

By transferring the majority of this risk out of your estate, LTCI can be a much wiser choice than the self-insured option when it comes to preserving your assets. For example, nursing homes, assisted-living centers, and home health care are becoming increasingly expensive, and there is no telling for how long you may need any one of these services. So just think for a moment about what it would actually cost you out of pocket to self-insure compared to the benefits provided by a LTCI policy. Moreover, the simple strategy of funding your LTCI premiums with interest from other investment accounts (leaving your principal untouched), can create an instant method of estate preservation.

The $200,000 Mistake

There are a number of important objectives in measuring how much LTCI you might need. When determining your limits, what’s often overlooked is your current standard of living. More often than not, these “average” costs used for calculating long-term care expenses may not be congruent with your lifestyle preference, or be enough to offer you the ability to select the type of facility or provider you prefer.

While the cost of long-term health care depends on the type and duration of care you need, the provider you use, and where you live, the estimated average annual cost for basic long-term care can be as high as $56,000. However, for higher-end skilled facilities that include full-time care, specialized physical therapy, and provide full access to a variety of amenities, can realistically run upwards of $200,000 or more annually.1 When discussing limits for your long-term care needs, be sure to take in account the type of care you truly desire to have and where you want to live should the need arise. Don’t make this $200,000 mistake thinking that your assets are enough to cover costs based on artificial barometers.

An insurance policy is only as good as its limits. And if you have a long-term care insurance policy (or have been thinking about purchasing one) it’s important to calculate policy limits in accordance with your particular standard of living, net worth, and risk tolerance.

For more information on estate planning and retirement, visit the Protective Learning Center.


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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax‐related decisions. For information about Protective Life and its products and services, visit

Long-Term Care Insurance

When it comes to long-term care insurance, may people think they are better off paying for costs out-of-pocket. However, when you look realistically at what long-term health care can cost, you may be putting your assets as risk. When shopping for long-term care insurance, be sure to look at potential health care costs realistically. If you don’t, you may be jeopardizing everything you worked so hard for. For more information, visit our learning center.