When people think about protecting their assets and passing them down to future generations, life insurance is often the first product that comes to mind. It’s a familiar concept – if something happens to you, your family receives a payout that can help them cover expenses, pay off debts, and maintain their quality of life.
But there’s another type of insurance that many families overlook, even though it may offer more comprehensive protection: long term care insurance. While life insurance provides financial support after you pass away, long term care insurance helps protect your family while you’re still alive – and that can make all the difference in what you’re able to pass down to your heirs.
The Link Between Long Term Care and Family Financial Security
Most people assume that if they need long term care – whether due to aging, illness, or disability – Medicare or their health insurance will cover it. Unfortunately, that’s often not the case. Medicare only covers short term rehabilitation or skilled nursing care under specific conditions, and traditional health insurance rarely covers custodial care like help with bathing, dressing, or eating.
Without long term care insurance, families are left with two difficult options:
- Pay Out of Pocket – Long term care is expensive. The national average cost for a private room in a nursing home exceeds $100,000 per year, and even in-home care can cost tens of thousands of dollars annually. These costs can quickly drain savings, retirement accounts, and assets that were meant to support your spouse or leave an inheritance for your children.
- Provide Care Themselves – Many families try to manage care on their own to avoid the financial burden. This often means adult children reducing work hours, leaving their jobs entirely, or putting their own health and well-being at risk to care for a parent. The emotional, physical, and financial strain can be overwhelming.
In order to receive any type of financial support for long term care, you often have to exhaust your assets completely, leaving you with less that you can hand over. In some cases, it may even become difficult to continue to pay for life insurance in these scenarios (each individual case is different, please talk to an insurance advisor to discuss your specific situation).
Long term care insurance may help prevent both of these scenarios by covering the cost of professional care, whether in your home, an assisted living facility, or a nursing home.
Why Life Insurance Alone May Not Be Enough
Life insurance serves an important purpose, and it is often best to have both policies. But it’s designed to address a specific need: replacing your income and supporting your family after you’re gone. It doesn’t help with the costs that arise if you need care while you’re still living.
Here’s where the gap appears:
- Life Insurance Pays After Death – If you need long term care for years before passing away, your family may already have spent down your savings to pay for that care. By the time your life insurance policy pays out, there may be little left to protect.
- Long Term Care Can Deplete Your Estate – Without long term care insurance, the assets you hoped to leave behind – your home, retirement savings, investments – may need to be sold or liquidated to cover care costs. This can leave your spouse with fewer resources and your children with a much smaller inheritance than you planned.
- Your Spouse May Suffer Financially – If you’re married, paying for long term care out of pocket can put your spouse in a difficult financial position, especially if they’re also retired and living on a fixed income.
Long term care insurance helps preserve your savings, protect your assets, and ensure your family isn’t forced to make difficult financial sacrifices to care for you.
How Long Term Care Insurance Protects Your Family
Long term care insurance offers protection in ways that life insurance simply can’t:
- It Covers the Cost of Professional Care – Whether you need in-home care, adult day care, assisted living, or nursing home care, long term care insurance helps cover these expenses. This means your family doesn’t have to choose between providing care themselves or draining savings.
- It Preserves Your Savings and Assets – By covering care costs, long term care insurance allows you to keep your retirement accounts, investments, and other assets intact. This protects your spouse’s financial security and preserves any inheritance you want to leave for your children.
- It Reduces the Burden on Family Members – When you have long term care insurance, your family doesn’t have to become your primary caregivers. They can focus on being present and supportive, rather than exhausted and overwhelmed by the physical and emotional demands of caregiving.
- It Gives You More Control – With long term care insurance, you have more choices about where and how you receive care. You’re not limited by what you can afford out of pocket, which means you can choose the care setting that best fits your needs and preferences.
Now, life insurance can still provide an outstanding payout. But *when* your heirs receive that payout may be later than expected, while you – and they – potentially suffer financially in the present. It is best to have both LTC and life insurance, but if you were forced to choose one, the answer is not always straightforward.
When Should You Consider Long Term Care Insurance?
The best time to purchase long term care insurance is while you’re still relatively young and healthy – typically in your 50s or early 60s. Premiums are more affordable when you’re younger, and you’re more likely to qualify for coverage before health issues arise.
If you’re still working and have dependents, long term care insurance can be just as important as life insurance – if not more so. It protects your family from financial hardship during a time when they may already be dealing with the emotional challenges of seeing you need care.
Finding the Right Balance for Your Family
This isn’t to say that life insurance isn’t important. For many families, the ideal approach is to have both life insurance and long term care insurance as part of a comprehensive financial plan. Each serves a different purpose, and together, they provide more complete protection.
If you’re not sure which type of coverage makes the most sense for your situation, it’s worth speaking with a financial advisor or insurance professional who can help you evaluate your needs and explore your options.
Long term care insurance may not be as well-known as life insurance, but for many families, it offers protection that’s more immediate, more practical, and more likely to be needed. If you want to make sure your family is truly protected – both now and in the future – long term care insurance deserves serious consideration.
If you’d like to learn more about how long term care insurance can protect your family, reach out today and let’s start a conversation about your options.