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Paying For Long-Term Care After A Lifetime Of Caregiving

Updated: Jun 29, 2022

After a lifetime of caregiving, many women are faced with the pressing questions, “Who will take care of me?” and “If I need long-term care, can I afford it?” Their answers can differ dramatically, depending on planning and circumstance.

Women face some stark realities that converge and can dramatically affect how they will live out their later lives. They are more likely to need some form of long-term care (LTC), which is projected to increase significantly in cost (see Figure 1). What’s more, after a life of serving as primary caregivers for other family members, income during prime earning years may suffer—one study estimates by an average of $324,000 [1]. Collateral damage can include reduced pension and Social Security benefits. When coupled with the greater likelihood women will end up living longer and alone, the concern is acute.

Figure 1. National Annual Median Cost of Long-Term Care

Long-Term Care Costs

* ** Based on 3% annual inflation 1 Based on 44 hours per week by 52 weeks 2 Based on 12 months of care, private, one bedroom 3 Based on 365 days of care † Costs can vary widely by geography. These median costs may also not reflect what high net worth clients pay as they are likely to pay above average expenses that reflect their financial resources. Source: Genworth Financial’s17th annual Cost of Care Survey (Cost of Care Calculator)


Long-Term Care Policy


Elaine Roberts owns an art supplies distributor which she bought after a career at a similar company. At age 57, she has two children in their 20s living in different states, and an older, soon-to-be retired husband, Mike. Now that her children have graduated from college, her cash flow has increased. She is in reasonably good health, but her husband has diabetes and his family has a history of heart trouble. Elaine loves her business and its employees and believes that she will work for at least another decade.

She also recently experienced what many women face: balancing her work life and caring for her ailing mother before she died. Becoming a caregiver for her mother, who lived on a fixed income and relied on Elaine, made her fully aware that she needs a plan in case she too needs care in her later years. After careful consideration, Elaine assessed her priorities and responsibilities and:

  • Does not want to financially burden her husband or children should she need care.

  • Does not want the intense effort of her actual care to fall on her family.

At the same time, she

  • Wants to have sufficient funds to ensure any estate costs are taken care of at her death.

  • Wants to leave a legacy to her children and, she hopes, grandchildren.

  • Feels responsible for her employees and, if long-term care is needed, does not want to sell her business and leave them in uncertain hands.

Elaine is open to learning about any options her insurance professional offers. She and her husband have accumulated savings, not including her business and their home, of over $5 million. She has considered trying to self-fund any long-term care costs, which offers the flexibility of pivoting if necessary. However, Elaine also favors calculated, manageable risks and worries about the potential for a long-term, debilitating, protracted illness that could wipe out whatever she worked to build.


Our solution: Working with TRC Financial, she asks for an explanation of all options which could help provide dedicated income to fund a caregiving plan.

Long-Term Care Policy Options

[A] Traditional Stand-alone LTC This choice would provide you with both non-medical and medical care if you can’t meet usually two of six activities of daily living (ADLs) or develop a disease such as Alzheimer’s disease. After your insurer approves your care, your waiting period is applied before reimbursement begins. Traditional LTC offers some real advantages. You select the coverage, waiting period, how long it lasts and premium payment schedule. Your premiums are usually tax-deductible. However, you should also be aware that traditional LTC can be costly, particularly if you wait until you’re older to purchase it. If the policy is not triggered, you lose any benefits unless you buy a return-of-premium rider. However, the availability of such a rider varies by company and state.

[B] LTC Rider A permanent life insurance policy can also be purchased with a LTC rider. Its versatility can help protect you and your loved ones and ensure there are sufficient funds both during your life and at your death. This is possible because of a rider that allows some of that death benefit to be applied to long-term care expenses if, and when, the need arises. This flexible protection helps keep your financial plan on track. The policy’s cash value can also help you fund for retirement. Typically, life insurance with a LTC rider is more expensive than traditional LTC, although your money is buying you two types of protection: death benefits and long-term care coverage. It’s also worth noting that there may be a maximum amount on the rider, so if you have specific estate tax funding needs, your death benefit will be reduced by LTC benefits paid out.

[C] Chronic care/Accelerated benefit riders You may also want to consider accelerated benefit life insurance riders that pay for chronic care. These riders can offer you coverage similar to LTC insurance, but there are differences. For instance, certification requirements may be slightly more stringent than LTC products. However, they are similar to a hybrid product because money used for care reduces the death benefit. Chronic care benefit riders are almost never considered until after underwriting is completed and a LTC rider is not available

TRC Financial points out that the hybrid option meets Elaine’s goals: Long-term care for her and protection for her family; cash value buildup that will provide liquidity to sustain her business if necessary; and a death benefit that can be used to meet estate expenses. And she offers a simple illustration of how it works (Figure 2).

Figure 2. $1 Million Life Policy with a $500,000 LTC Rider Example

Life Insurance Policy with Long-Term Care Rider

  1. $1 million life insurance policy with $500,000 LTC rider is purchased.

  2. A health event prompts a claim that requires a physician review and attending physician statement. If care is determined to be medically necessary, a Plan of Care is submitted to the insurance carrier. The outcome determines if the LTC rider is triggered or the policy's total life insurance benefit remains intact.

  3. If triggered, a maximum dollar monthly benefit is paid for the policy's specified benefit period, six years in this example. If the monthly benefit is $5000, for example, then the maximum benefit payment over six years is $360,000 ($5,000 x 12 x 6).

  4. If LTC benefits are received (3), the death benefit is $500,000 + $140,000 (unused rider benefits)=$640,000, paid at death. If rider is not triggered and there are no outstanding loans, the full $1 million death benefit is paid.


A Personal Decision

Life insurance with a LTC rider fits nicely with Elaine’s needs and reflect her goals:

  • Elaine has the protection needed if she experiences a long-term care health event.

  • Her loved ones are protected from the financial and physical burdens long-term care demands.

  • The life insurance death benefit relieves Elaine’s family of concerns about paying estate taxes.

  • The cash value in the life insurance provides potential liquidity to meet Elaine’s other goals, such as investing in a business.

Keep in Mind

Before creating the policy, her insurance professional reminds her that:

  • LTC coverage is only covered by government programs if assets are drastically spent down. Generally, it only covers care in a nursing home and not more commonly received care such as home care or assisted living facilities. Therefore, for the affluent this risk is an individual responsibility.

  • If health or lifestyle issues preclude a combination LTC policy, chronic care or other accelerated benefits riders may offer appealing alternatives.


Take the next step now . . .

The purchase of LTC coverage is one of the most important decisions that a woman will make. After a lifetime of caregiving, it is central to establishing the foundation of a woman’s physical and financial well-being, providing greater flexibility to create the type of life she wants later in life. Because it is such an important decision, it is essential to do it right.

This is the perfect time to enlist our firm’s expertise to explore permanent life insurance solution that can help you:

  • Understand your concerns and priorities.

  • Diligently research LTC options.

  • Work with a skilled insurance professional who understands the complexities and opportunities of the LTC market.

Our firm is prepared to work with your team to customize effective insurance strategies to your specific situation. Schedule a call today.


[1] “Tax, Class, Women, and Elder Care”, Nancy Shurtz - 43 Seattle University Law Review 223 (2019)

[2] Working caregivers (61% of caregivers) are greatly impacted by their caregiving responsibilities: 53% report going in late, leaving early or taking time off to accommodate care and 10% give up work entirely or retire early. A total of 15% cut back on work hours and 14% take a leave of absence. Caregiving in the U.S. 2020, The National Alliance for Caregiving (NAC) and AARP. The research report refers to all caregivers but does note that 61% of caregivers are women.

This hypothetical scenario is provided for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

TRC Financial is not authorized to give tax, legal, or accounting advice. An insurance contract's financial guarantees are subject to the claims-paying ability of the issuing insurance company.

3855213.1 (10/23)


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