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Affluent Caregiving Funding Considerations

Updated: Dec 10, 2019

Affluent individuals view longevity as a top risk when planning for retirement. One longevity risk is the difference between health expectancy and life expectancy. This gap may require caregiving and could require significant income to fund the plan of care depending on the duration and type of care that is needed.

Affluent clients have resources to receive top-level care either at home or in a facility, but how that care is funded can pose challenges. These key considerations should be discussed with an advisor:


  • Will assets need to be liquidated to fund care?

  • Is net worth tied up in a business, real estate, or other investments?

  • Should additional costs be considered when liquidating? (Taxes, market timing, fees, etc.)

Retirement Portfolio Impact

  • If using income generated from a retirement portfolio, will principal be eroded if additional income is needed for caregiving expenses?

  • Will caregiving expenses divert funds away from other planned lifestyle and planning choices? For example: everyday lifestyle needs, a spouse’s future expenses, charitable/legacy goals.

  • How will a surviving spouse or other dependents be affected?

An existing funding source may be identified for use in the event caregiving is needed. In other situations, a client may choose an insurance policy to leverage their assets to provide a larger pool of dollars that can be used to fund their plan for care. A popular option is using a life insurance-based policy with a primary focus of providing benefits that will help cover long-term care expenses.

The best solution for a client will be based on their own situation. Generally, affluent clients are attracted to life insurance-based solutions due to premium guarantees and knowing their premium remains an asset, being used for either long-term care benefits, life insurance benefits to a beneficiary, or obtaining the cash value through a policy surrender or return of premium option.

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