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Self-Insuring Your Long-Term Care

Investor Insights

According to LongTermCare.gov, nearly 70% of Americans age of 65 or older will require some form of long-term care during their lifetime, and 20% will need long-term care for more than five years. These statistics underscore the importance of thinking about how you will fund your potential long-term care needs.

There are two primary options to consider: 1) self-insuring, where you pay for your long-term care expenses directly from your savings, and 2) long-term care insurance (LCTI), policies written specifically to help cover nursing home and at-home care services. 

While making the decision between these two options can be complex and it’s best to engage the assistance of an experienced financial professional, here are some important questions to consider. 

Are you a good candidate for self-insuring your long-term care?

Wealthier individuals, particularly those without dependents, may be better suited for self-insuring their long-term care needs due to their ability to fund these expenses directly. 

How long can you wait to make a decision?

Long-term care insurance rates are typically more favorable between the ages of 55 and 65. Delaying the decision beyond this window may make it more challenging to find suitable long-term care insurance coverage.

How much should you set aside for long-term care if self-funding? 

Determining the right amount needed for your long-term care involves considering future care costs, inflation, life expectancy, and projected returns. In addition, your desire to provide inheritance, your philanthropic goals, and the liquidity of your assets also play a role. Unfortunately, there is no magic number for the amount you need to set aside, so making a careful evaluation with a financial planning partner is essential. 

How important is peace of mind? 

Emotional factors, such as the desire for financial security and peace of mind, should not be overlooked. For some individuals, the reassurance provided by a dedicated long-term care insurance policy is worth the annual premium expense. 

Like many things in life, the decision to self-fund your long-term care or purchase a long-term care insurance policy is a personal one based on your specific financial situation, goals, and risk tolerance. Our team at American Portfolios is ready to help you understand your options and guide you toward an informed decision. 

Securities offered through American Portfolios Financial Services, Inc., Member: FINRA, SIPC. Advisory services offered through American Portfolios Advisors, Inc. and Novem Group, Inc., SEC-Registered Investment Adviser firms. American Portfolios Denver, Inc. and Novem Group, Inc. are independent of each other and independent of American Portfolios Financial Services, Inc. and American Portfolios Advisors, Inc.