Planning and Funding

Planning: We are living longer and with a longer life expectancy comes the increased chance of needing long-term care.


Extended care is a life-changing event that will impact the life of a loved one by requiring them to change the way they conduct their own life, family and career. Not only does this affect the caregivers but it can greatly impact your finances when capital is invaded to help pay for care. Assets and money intended for heirs or charities may be surrendered to pay for care.

  • Projections from the U.S. Department of Health and Human Services are that 70% of Americans age 65  and older will experience a long-term care event in their remaining years.  

  • About 59% of long-term care claims last more than one year and the average duration is 4.2 years.

Things to consider when planning for the possibility of long-term care:

  1. Who do I want or not want to care for me?

  2. Where would I like to receive care?

  3. When will I require care?

  4. Am I at increased risk for needing long-term care?

  5. How will I finance my long-term care needs?

  • Most people want to stay at home for as long as possible but without disrupting the lives of their spouses or children. They would rather have their family be the care manager instead of the care provider.

  • Goal of preserving the retirement plan and other assets meant for spouse, children or charity.

If you do not have a spouse or children, long-term care planning allows for you stay home for as long as possible and to hopefully never run out of money.

Affluent clients also need planning as not to disrupt every plan put into place for retirement. Long-term care insurance helps:

  • assure the surviving spouse has enough financial resources

  • with tax planning

  • assure charitable giving plan 

  • the estate transfer plan

  • with funding of grandchildren's college education

  • with a special needs plan for a disabled relative

It is important to remember that assets do not pay for care, income pays for care. Things to consider if you rely on assets for long-term care:

  • liquidity of assets

  • market conditions

  • tax implications

  • legacy assets like a vacation home or other valuables that are meant to be passed on to heirs

Funding: Traditional or stand alone long-term care insurance can be paid monthly, quarterly, semi-annually or annually. Most traditional insurance is paid for your lifetime until you go on claim. It may also be deducted as a medical expense depending on your situation.

Hybrid/Asset based plans allow for a single premium or even a flex pay ranging from 5-20 years depending on your age and the carrier. These plans can be funded from cash or a 1035 exchange from cash value life insurance or an annuity.

111 Founders Plaza, Suite 1706, East Hartford, CT 06108

1-833-REEDLTC (733-3582)

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© 2018 by Reed Insurance Agency, LLC