Long-term care planning can be one of the most complex and emotionally charged parts of your financial journey. Whether you're watching a parent transition into assisted living or planning ahead for yourself, the decisions surrounding long-term care often feel overwhelming – but they don’t have to be.
Many of the families we work with are at a crossroads. They want to ensure they won’t become a burden on their loved ones while also protecting the estate they've worked a lifetime to build. With people living longer and the risk of cognitive or physical decline increasing with age, the need to plan for long-term care is more relevant than ever.
Several paths are available for long-term care coverage. Traditionally, direct long-term care insurance policies were common, but many providers have stopped offering them due to high utilization rates. In contrast, life insurance is often never claimed because many people outlive the policy’s window of need. Long-term care, however, tends to be used – and insurers have taken notice.
Today, the more typical option is a hybrid policy. These combine permanent life insurance with a long-term care rider. Despite the added cost, these policies allow individuals to access the death benefit if they experience a qualifying condition. This can provide crucial support during times of need without fully depleting the estate.
But here’s something many families overlook: you may already be self-funded. When we meet with families, we evaluate whether their estate is large enough to handle the costs of long-term care without draining their financial resources. In most cases, especially among FEG families, the risk of losing the estate to medical expenses is low – but that assessment is key and should be personalized.
Here’s a snapshot of what long-term care can cost in Indiana:
- Assisted living: $60,000–$70,000 per year (Genworth 2023; SeniorsGuide).
- Private nursing home: $100,000–$106,000 per year (Caring.com; SeniorLiving.org via IndianaEstateElderLaw).
- Semi-private nursing home: $85,600 per year (Genworth 2020 via Caring.com & Dillman-Owen).
National medians from the 2024 Genworth/CareScout Cost of Care Survey show higher averages: $70,800 for assisted living, $111,325 for semi-private nursing homes, and $127,750 for private rooms.
Average duration of care also varies. According to Genworth, women typically require care for 3 to 4 years, while men average closer to 2 to 3 years. Understanding how these costs align with your financial resources helps determine if you truly need long-term care insurance or if self-funding is a viable strategy.
Important considerations when using a long-term care policy include:
- Elimination period – Most policies require a 90-day waiting period before benefits begin. You’ll need the liquidity to cover those first three months out of pocket.
- Qualifying for benefits – You must be unable to perform at least two of six activities of daily living (ADLs), such as bathing, dressing, or eating. A medical professional makes this determination.
If a claim is necessary, the process can be emotionally difficult, especially when evaluations are done virtually, as we saw during the COVID era. Understanding the requirements now can reduce stress later.
Ultimately, long-term care planning isn’t one-size-fits-all. Whether it’s a hybrid policy, self-funding, or even a Medicaid spend-down approach, each has different implications and outcomes. What matters is having a trusted advisor help you analyze your situation and guide your decisions thoughtfully.
- Consider the potential duration and cost of care based on your health, gender, and family history.
- Review your estate to determine if you’re truly at risk of depletion.
- Evaluate the need for insurance based on personalized financial modeling.
A plan built around your unique needs gives you peace of mind — and ensures your family is supported, not surprised.
Financial Enhancement Group is an SEC Registered Investment Advisor.
