For High-Net-Worth Individuals, Long-Term Care Insurance Is a Smart Strategy – Just Like the Rest of Us
Long-term care costs are skyrocketing, and affluent individuals are taking notice. The cost of long-term care services is a big problem and is often overlooked by both wealthy and middle and upper-middle-class families.
The LTC News survey on the cost of long-term care services projects shows that by 2050, in-home care in Philadelphia, Pennsylvania, for example, will average over $140,000 per year (based on a 44-hour work week). Those projected costs are considered conservative.
Assisted living costs are projected to reach $155,000 per year, excluding additional surcharges that could add up to $2,000 per month, bringing the total annual cost to approximately $180,000 annually.
Over four years, assisted living alone could exceed $716,000, while memory care and nursing home expenses will be even higher.
Instead of self-funding, many are turning to Long-Term Care Insurance as a strategic component of their retirement plans. The reason? Protecting wealth, ensuring choice of quality care, and avoiding the emotional and logistical burdens placed on family members are all reasons many consider LTC Insurance.
Long-Term Care Insurance is an affordable option to safeguard future income and assets from the costs and burdens of aging. You don't have to be wealthy to have an LTC Insurance policy.
More people are choosing Long-Term Care Insurance not out of necessity, but as a strategic move—one that safeguards their wealth, secures quality care on their terms, and spares their loved ones from physical, emotional and financial burdens.
Success Brings Wealth—But Also Responsibility
You've worked hard to build your success. Whether through business, investments, or strategic financial planning, you've created a life of security. But as you age, an overlooked risk looms—long-term care.
What happens when you or your spouse need assistance with daily activities? Longevity adds to dementia risk, and you may require supervision. Who will manage your care? Will your assets need to be liquidated? Who will make those decisions?
The reality is that many successful people assume they can self-fund care, only to find themselves in a stressful financial and emotional dilemma.
Many successful people assume they can self-fund long-term care, only to realize too late that the rising costs and emotional burden create a challenge even wealth can’t easily solve.
The Burden of Long-Term Care on Families
When a parent needs long-term care, adult children often step in. This can mean:
- Finding and managing caregivers
- Deciding between home care, assisted living, or a nursing facility
- Selling assets to cover costs
- Providing hands-on care while balancing work and family
- Managing the emotional toll of a loved one's decline
Your family wants the best for you, but should they be the ones making these tough choices? Most adult children want time to be family, not forced to balance their family and career, and deal with the consequences of your future long-term care.
Your adult children want to be family, not full-time caregivers—forced to juggle careers, responsibilities, and the heavy burden of your long-term care. Planning ahead gives them the gift of love without the weight of obligation.
Should they be forced to juggle their own careers and children while ensuring you receive proper care?
Self-Funding vs. Self-Insuring—What's the Difference?
Many wealthy individuals believe they can "self-insure" for long-term care, but this is a misconception. You cannot self-insure; you can only self-fund.
- Self-Insuring implies creating a structured plan with risk pooling like an insurance company does. This is not possible for an individual.
- Self-Funding means paying for care costs directly from your income and assets. This approach can have serious financial consequences:
- Loss of Control – Family members may end up deciding how and when money is used for care.
- Asset Liquidation Risks – Selling real estate, businesses, or investments at the wrong time can result in major losses.
- Tax Implications – Withdrawing large amounts of money to cover care expenses will trigger capital gains taxes and higher income tax brackets.
- Depleting Legacy Plans – Without a dedicated funding source, money meant for heirs or charitable causes may be redirected to care costs.
Consider this: If you need long-term care now for five years at $100,000 per year, that's $500,000—without even accounting for future inflation, which can more than double that cost. If that money is pulled from investments, the actual loss could be even greater due to missed market gains and taxes.
Plus, if you need care when the markets are down, you may be forced to sell investments at a loss—yet still face taxable gains. That's a double hit to your finances. Ouch.
LTC Insurance protects against these financial pitfalls by covering costs tax-free, preserving liquid assets, and avoiding forced asset liquidation.
Power of Inflation Protection in LTC Insurance
The chart below illustrates how a $1,000,000 long-term care benefit account grows at a 3.5% compound rate from age 50 to 85, ensuring that your coverage keeps pace with rising costs:
Long-term care costs are rising every year, but an LTC policy offers guaranteed inflation protection benefits that ensure your coverage keeps up with those increases.
- Guaranteed Growth – Your benefits increase at a set rate (e.g., 3% or 5% compounded annually), protecting against future costs.
- Tax-Free Benefits – Unlike investment withdrawals, LTC insurance payouts are tax-free, maximizing their value.
- Market Independence – While stock markets fluctuate, your LTC Insurance benefits remain stable and guaranteed.
- Unlimited Benefits – Some policies offer lifetime benefits, ensuring you never run out of coverage, even if you require care for decades due to Alzheimer's, Parkinson's, or a severe stroke.
Long-Term Care Insurance is fully customizable—you decide the benefit amount and coverage details. For example, an $8,000 monthly benefit with a 3.5% compounded growth rate increases significantly over time with inflation protection. Here’s how it adds up.
Imagine a scenario where you need long-term care in 20 years. If costs have doubled, but your policy includes inflation protection, your benefits will have grown to meet the rising expenses—without additional out-of-pocket spending.
Tax Advantages of an LTC Policy
Unlike self-funding, LTC Insurance offers substantial tax benefits:
- Tax-Free Benefits – Payouts from Long-Term Care policies are always tax-free.
- Premium Deductibility – Business owners and self-employed individuals can deduct premiums as a business expense.
- Health Savings Accounts (HSA) – Pre-tax HSA dollars can pay LTC Insurance premiums, reducing costs.
- C Corporations – Business owners can deduct 100% of Long-Term Care Insurance premiums, even for single-pay policies.
RELATED: LTC Insurance Tax Deduction Amounts and HSA Contribution Limits for 2025
A single-premium LTC Insurance policy provides an immediate write-off for those seeking a significant deduction, reducing taxable income.
Coverage That Adapts to Your Needs
LTC Insurance policies offer flexible benefits, covering:
- Home care, assisted living, memory care, and nursing homes
- Cash benefits that pay the full amount tax-free, regardless of actual expenses
- Shared spousal benefits, allowing couples to use a joint pool of funds
- Hybrid policies that provide a death benefit if care is never needed
With premium payment options ranging from single-pay to multi-year (5, 10, or 20 years), policyholders can design coverage that fits their financial strategy.
For example, if you add an LTC policy in your 40s or 50s, you can set it up so the premium has been paid by the time you retire. One less bill to be concerned about once you retire!
A Long-Term Care Insurance policy paid off in just ten years means securing your future care without a lifelong financial commitment. Set it up in your 40s or 50s, and by retirement, it’s one less bill—and one more layer of security—you’ll never have to worry about.
Longevity and the Wealthy—A Double-Edged Sword
People who accumulate significant wealth often live longer due to access to better healthcare and lifestyle choices. However, longevity increases the risk of developing chronic illnesses, dementia, and frailty, requiring long-term care services.
With a 56% chance of needing extended care that increases as you age, the question isn't if but when and for how long. A well-structured LTC Insurance policy ensures that care needs are met without depleting wealth or disrupting family dynamics.
The Real Cost of Care
According to the LTC News Cost of Care Calculator, current long-term care costs vary significantly by location and care type. For example:
- Home health aides can exceed $100,000 per year in some states.
- Assisted living facilities average $50,000–$75,000 or more annually, with memory care costing even more.
- Private nursing home rooms surpass $120,000 per year in many areas.
These costs continue to rise, making planning essential. Access the current and future costs of long-term care services where you live.
What's Your Legacy?
If you've built a business, a real estate empire, or a financial nest egg, you likely have a vision for how your wealth will impact your family. Will it be used to create opportunities for your children and grandchildren? Fund philanthropic causes? Or will it be spent on care costs that could have been covered with a fraction of the investment?
You already insure against risks with low probabilities—like damage to your home or car. While these policies may be required, you'd probably still choose to have them for peace of mind. Long-term care, however, is the greatest involuntary risk you'll face in your lifetime, yet many overlook the need to plan for it.
Why It Makes Sense Now
For high-net-worth individuals, LTC Insurance isn't just about protecting wealth—it's about ensuring the best quality care and reducing the burden on loved ones.
- Eliminates Family Stress – Your children won't have to navigate care decisions under pressure.
- Preserves Assets – Wealth remains intact for heirs or philanthropic goals.
- Provides Choice & Quality Care – An LTC policy ensures access to top-tier care on your terms.
A Call to Action
You've spent a lifetime making smart financial decisions. Why stop now?
Planning for long-term care is the final step in securing your legacy and protecting your loved ones. Explore your Long-Term Care Insurance options today—before age or health issues limit your choices. Use the LTC News Long-Term Care Insurance Education Center to learn more.
Seek a Long-Term Care Insurance specialist to help you review options and get accurate quotes from all the top-rated insurance companies that offer long-term care solutions. Most financial advisors and general insurance agents lack specialized expertise in long-term care planning and typically work with only one or two insurance companies, limiting your options.
You can rely on LTC News Trusted LTC Insurance Specialists when you seek accurate quotes for Long-Term Care Insurance. Quotes From Trusted Long-Term Care Insurance Specialists. These LTC News trusted partners are professionals who are screened by LTC News and hold the esteemed CLTC designation, are endorsed by the American Association for Long-Term Care Insurance (AALTCI), and come highly recommended as Ramsey Trusted Pros by financial expert Dave Ramsey's organization (Ramsey Solutions).
Your future self—and your family—will thank you.