A Beginner’s Guide to Buying Long-Term Care Insurance: What You Need to Know

As a financial planner, I’ve encountered a bunch of clients over my career who’ve felt overwhelmed by the idea of purchasing long-term care insurance. If you feel this way too, know it’s a common concern, and rightfully so. It is hard to think about a time when you or someone in your family won’t be able to take care of themselves any longer. However, this type of insurance plays a crucial role in providing you with choices if this ever does happen which will secure your future, and probably your sanity.

In this guide, my goal is to start to demystify the process of buying long-term care insurance by providing you with the knowledge you need to make informed decisions and give you a secret that a lot of people don’t know about…

Understanding Long-Term Care Insurance

What is Long-Term Care Insurance?

Long-term care insurance is designed to cover the costs of services you may need as you age, such as in-home care, assisted living, or nursing home care. It’s about protecting your assets and ensuring you receive the care you need without burdening your loved ones financially.

Why is Long-Term Care Planning Important?

The reality is that as we age, the likelihood of needing long-term care services increases. Medicare and standard health insurance plans often fall short in covering these expenses. Long-term care insurance provides the benefits that fills in this gap, providing peace of mind for you and your family. 


If you have experienced taking care of a loved one who was no longer to care for themselves, you know how difficult a situation this can be for everyone involved.


Without a plan in place, families can fight and the one who is losing their ability to be 100% independent can feel like they are a burden to the ones they love.

thinking to buy long-term care insurance
It is hard to think of a day when you may not be 100% independent.

How to Buy Long-Term Care Insurance

Access you Long-Term Care Needs

When embarking on the task of buying long-term care insurance coverage, the first critical step is to thoroughly assess your needs. This involves a deep dive into your personal and financial circumstances to determine the level and type of coverage that’s best for you. I recommend you think about what you would want to happen in a perfect world where you do need care. How do you want to be treated, where do you want to be treated and who do you want to be taking care of you are a couple of the common questions to contemplate.

Communicate with your family and loved ones

One of the more overlooked steps in determining your long-term care needs is communicating with everyone what your desires are.


From experience, I can tell you many families will say “We will take care of you” and that may be true. As an added benefit, some states have programs that allow payments for family members to provide care which can help too. If programs like that exist where you live, it will be good to discuss who is going to potentially need to leave their jobs or move. These are serious considerations.


However, many families will just state that they will provide care out of pure love. As nice as this sounds, the reality is it may be too big a task to actually implement. Talk to your family and explain your desire for there to be flexibility. 

Your financial situation

Your financial situation plays a crucial role in determining the affordability and necessity of long-term care insurance. Consider your income, savings, investments, and other assets. How much can you realistically allocate towards premium payments without compromising your lifestyle or retirement goals? It’s essential to find a balance between securing adequate coverage and maintaining financial stability.


If you don’t mind spending your assets, you can do this and not buy coverage. If you run out of money, your state will have a Medicaid program that will ensure you have a basic level of care. Medicaid may not be the level of care you want. In addition, if you have any estate planning goals where you would like to bequest money to your family or favorite charity, that money will be gone and therefore not available to do so.


There are a number of other strategies available where you give your money away before needing care so that the state can’t “Claw it back” but these strategies still involve you going on welfare and receiving Medicaid in your later years.


Securing long-term care coverage provides you with the money to pay for the care you want and allows you to protect some if not all of your assets for your children, grandchildren or favorite charity. You may be able to secure some forms of long-term care coverage, when you are younger, without it impacting your retirement lifestyle. As a matter of fact, you may find you can buy long-term care coverage and build your retirement savings more efficiently with it! I will explain more towards the end of this article…

Your Risk Tolerance

Assessing your needs also involves understanding your risk tolerance. How comfortable are you with the possibility of paying for long-term care out of pocket if you never use your insurance policy? Some individuals prefer the peace of mind that insurance provides, while others might be more willing to take the risk and invest the money elsewhere.


Generally speaking, I recommend one never retain a risk where, if the peril (event) occurs (such as needing long-term care services for many years) it could cause financial devastation. Through proper planning, you can eliminate or transfer away these types of risks and pick up additional risks where there is a high probability of success which can increase your wealth and get the “financial barbarians” out of your life.

Future Lifestyle and Care Preferences

Think about your preferences for future care. Would you prefer in-home care, assisted living, or a nursing home? Each option comes with different costs and considerations, which should be reflected in your insurance policy. Additionally, consider the location where you plan to retire, as the cost of care can vary significantly from one region to another.

By taking the time to assess your needs in these areas, you’ll be better equipped to choose a long-term care insurance policy that aligns with your health, financial situation, and personal preferences. This careful evaluation ensures that you’re adequately protected while also managing your resources wisely.

Tips For Buying Long-Term Care Insurance

  1. Start Early: The younger you are when you purchase a policy, the lower your premiums will likely be. You will never be younger than you are right now…
  2. Understand the Costs: Make sure you’re comfortable with the premium payments and that they fit within your budget. If you purchase a stand-alone long-term care insurance policy, understand the cost may rise. Find out the maximum that could be and plan accordingly.
  3. Read the Fine Print: Pay attention to the details of the policy, including any exclusions or limitations.
  4. Consider Inflation Protection: This feature ensures that your benefits keep pace with the rising cost of care. $200 a day benefit in the future might be more like what $50 will get you today!
  5. Review Annually: Reassess your policy annually to ensure it still meets your needs and make any necessary adjustments. Most policies have options that allow you to decrease coverage without penalty. However, if you want to increase coverage, full underwriting may have to be performed again. If you don’t qualify, you will only be able to get what you already have.

Understand Policy Riders

Riders are additional benefits that you can add to your long-term care insurance policy for extra coverage or flexibility. Some common riders include:

  • Inflation Protection Rider: This rider helps your benefits keep pace with inflation (the thief that decreases the value of your money), ensuring that your coverage remains adequate over time.
  • Waiver of Premium Rider: This feature waives your premium payments if you’re receiving long-term care benefits, helping to reduce financial strain during what would be a difficult time.
  • Return of Premium Rider: If you don’t use your long-term care benefits, this rider can refund a portion of your premiums.
  • Restoration of Benefits: If you receive long-term care services and recover, this rider “rejuvenates your policy” putting back in place the maximum benefits your policy provides.

Explore Buying Hybrid Long-Term Care Insurance

Hybrid policies combine long-term care insurance with another financial product, such as life insurance or an annuity. These policies offer the dual benefit of providing long-term care coverage while also serving as a life insurance policy or investment vehicle. Hybrid policies can be appealing because they address the “use it or lose it” concern associated with traditional long-term care insurance.

If you are married, consider "shared care" joint policies.

Shared care policies allow couples to pool their long-term care benefits, providing more flexibility in how they use their coverage. If one partner exhausts their benefits, they can tap into the other’s policy. This feature can be particularly valuable for couples, ensuring that both partners have access to the care they need.

Partnership Plans If You Live in a State That Has Them

Some states offer partnership programs that allow individuals with long-term care insurance to protect additional assets if they ever need to apply for Medicaid. By purchasing a qualifying policy, you can ensure that a portion of your assets is shielded from Medicaid spend-down requirements, providing an extra layer of financial security.

Working with an advisor to create a plan that works for you...

Not only is navigating the world of long-term care insurance complex, but the entire financial game is a big game that many times seems it is rigged so the rich get richer and everyone else is just trying to figure it out and hopefully be ok.

Working with a knowledgeable  advisor can provide clarity and guidance. Not only can they help you understand the fine print and choose a policy, they can show you how your choices can impact other areas of your financial life too.

After all, buying long-term care coverage is only one of the many concerns you have in your life. With the proper coordination with other areas, you may be able to achieve more than you thought possible.

Final thoughts on buying long-term care insurance

Purchasing long-term care insurance is a proactive step towards securing your financial future. While the process may seem daunting at first, understanding the what it is you want and seeking expert guidance can make it more than manageable. Remember, the goal is to give yourself and your loved ones peace of mind, knowing that you’re prepared for whatever the future holds without having to sacrifice too much of your lifestyle to achieve it.

By consulting with a professional, you can find a long-term care insurance policy that meets your needs, provide the security you deserve and have a solution that helps you accomplish other money goals that you never knew were available.


 Don’t wait until it’s too late – start exploring your options today and take the first step towards a secure and worry-free future.


By the way, I wrote a guide that explains a little known strategy that can help you both secure long-term care insurance and helps you manage the risk of the stock market crashing. It even gives you the flexibility to increase your returns over your lifetime!


It is called “The SALLO Strategy” and if you would like, you can check it out by visiting

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