Long-Term Care Coverage 101: Protecting Your Retirement And Legacy

How Important Is Long-term Care Coverage In My Financial Planning?

A single health event can hijack decades of careful saving. We dive into the hard truths and practical solutions around long-term care: what it really costs, when to start planning, and how to protect both your income and your legacy. With real-life caregiving stories and clear-eyed numbers, we walk through the typical path most families face—family help, private in-home care, then assisted living—and why waiting to address it can limit your choices and spike your costs.

We break down the tools that can safeguard your plan. Stand-alone long-term care insurance offers focused protection but is harder to qualify for as you age and as health issues stack up. Hybrid approaches—life insurance or annuities that multiply dollars for qualified care—can be easier to underwrite and create a dedicated pool for expenses, without abandoning flexibility. Think of it as the retirement-era counterpart to disability insurance: instead of replacing a paycheck, it protects the income streams your plan depends on.

Underwriting for long-term care looks at morbidity, not mortality, which is why timing matters. Starting in your late 50s to early 60s can improve approval odds and pricing. We also address how policy design has evolved since the 1990s, why premiums changed, and how to decide between paying ongoing premiums or allocating a lump sum to a hybrid product. Above all, we show how to model premiums, benefits, and likely costs inside a complete retirement plan, so you can see whether your lifestyle holds under stress and your legacy remains intact.

If you’ve watched parents wrestle with care decisions, you know the stakes. Use this conversation to turn worry into a plan: measure your risks, consider the right coverage mix, and decide where you want care delivered before urgency makes the choice for you. If this helped you think differently about long-term care planning, subscribe, share with a friend who needs it, and leave a review with the one question you still want answered.

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Securities and advisory services offered through Silver Oak Securities, Inc., Member FINRA/SIPC. Silver Oak and B&H Wealth Strategies are not affiliated. http://www.finra.org/ http://www.sipc.org/

Transcript

Welcome And Theme Setup

SPEAKER_00 0:03

Welcome to the Four Seasons Podcast, brought to you by BH Wealth Strategies, serving Northeast Tennessee and Southwest Virginia since 1966. Here, we guide you through the ever-changing seasons of your financial journey, offering insights to help you grow, protect, and enjoy your wealth. Ready to turn your financial dreams into reality? Dare to dream. And now, here's your host, President of BH Wealth Strategies, Jeff Bingham.

The Case For Long-Term Care

SPEAKER_02 0:44

One unexpected health event can reshape a lifetime of planning. Long-term care coverage may be more essential than you think. Welcome back, everybody. Skip Monty, co-host slash producer, back in the studio with president of BH Wealth Strategies, Jeff Bingham. Jeff, hope the week's been treating you well.

SPEAKER_01 1:00

It has, Skip. And uh at least as we're as we're recording this, it's Friday the 13th. So uh we'll take that as a as a good omen, not a not a bad omen. So um, yeah. Amen. Yeah, yeah. Didn't even think about that. Yeah, it is, like I said. No black cats crossing.

SPEAKER_02 1:18

No, no, no, no, no, no, no. Whatever. Well, Jeff, one of the things that's been on my mind lately, and it's something I've had to deal with personally, is long-term care. My parents uh uh uh were were you know elderly and had health issues, and there was a lot of challenges there. So um let's just dive right in. How important, uh and I'm sure lots of our listeners and viewers have had the same experience and concerns and uh want to plan for it in their long-term planning, how important is long-term care coverage in my financial planning?

Caregiving Realities And Costs

How Insurance Evolved And Got Pricier

SPEAKER_01 1:52

Uh very important is what I would say. I mean, you know, again, uh when we we start talking about, you know, kind of dare to dream the where are you, you know, where are you now, where you want to go and how do you want to get there, you know, usually the the as those conversations begin and you start, you know, talking about this planning and the and the clients are then are kind of, you know, you're giving them this landscape and they start paying it. They're not talking about, they don't talk about long-term care. It's not not many, unless they've experienced, you know, and but again, more more and more people have experience with parents, you know, or or love other loved ones, you know, aunts, uncles, whatever, that that have experience that have gone through it. So there is more, much more awareness of it now, but it is not the thing that bubbles to the top to begin with, right? But it is um pardon the pun for me, but it is it's a blind spot that we want to identify. So it's a blind spot that doesn't have to stay a blind spot. So you identify this as a as a possibility, you know, and you can you look at people and you understand their you know, not their genetics, let's say, but what, you know, what did their what was their experience with their parents? You know, what where are they in their life? What does their health look like when they're sitting across the table from me and and and whatnot that you look at? But it is um, you know, it it's it's out there. Most people are going to, we used to say, I think, if I get this right, there are three kinds of people that are out there, those that are currently giving care to someone, those that have given care to someone, and those that are gonna give care to someone. I mean, that that's the three, there really are only three realities that are out there. And so, um, you know, that's and I have, and Matt to a degree as well, and his experiencing it it now is also is that, you know, I had both uh my ex-wife uh now, but her parents and both and my parents. So we, you know, we were in the middle of caregiving for, you know, for our parents uh for a number of years. And it's, you know, it's very expensive. It's very emotionally taxing and physically taxing, you know. Uh, and so, you know, you've got to try to plan for that. And so we can talk about what are the, you know, how do you, you know, what what tools are available, right, to to try to to up, you know, want let it wipe out a lifetime worth of wealth accumulation, you know, because like I said, you know, people that that we're when we're planning and looking at, you know, retirement or just financial freedom, which is uh I think a term that I like to use more, you know, it's as opposed to just you know retirement, because I don't think anybody should ever just retire completely from everything. That's not how we're built, that's not how we're wired, you know, it's not how God made us, but you know, we move to a different chapter in that. And so we might, where we find work and service, you know, may not be employment, you know, or you might want to do something else. So you've got to have financial freedom to do that. So you're trying to plan for financial success. And that financial success and that freedom and that legacy that you want to plant pass along to the next generation, which is what most people's goals are, certainly that have children, uh, or even to charities, they don't want that wiped out, you know, by having just to pay for the your your you know, your last you know, years of life, you know, in a in a facility or for caregivers coming in your home just to take care of you, right? Just to kind of, you know, to bathe and feed you and you know, take care of your needs. I mean, there's, you know, and but that happens, you know, with with great regularity. So, you know, what what are what are some of the steps that you can take to do that? Um, you know, to to try to insure that risk, because it is it is an insurable risk to a degree. Um, but long-term care insurance, um, and I've been doing this for a long time, it's it it ain't what it used to be, right? As far as being able to um the coverage, the affordability, the various things, because when I started some 35, 36 years ago now, I guess, uh, and long-term care insurance was really just kind of coming into uh into the marketplace, you know, the the need was there. And so the insurance companies that wanted to venture into that, you know, began to develop policies and price those policies at that point in time. And they, you know, insurance companies are phenomenally good at managing risk and pricing and doing their act their calculations, their actuarial calculations. But they missed a lot of that in the early, you know, going back into the 90s and those policies that were out there, what we call indemnity policies. They used to be quite uh, you know, if you got them at the right time, I mean, you you might have thought it was expensive at the time, but I think based on what it looks like now, not even, you know, not at all, but it was affordable. The coverage was was was substantial and robust. Uh, but the insurance companies were also, though they were smart enough when they did, as they, as a result, they did underprice those, they also put in, you know, mechanisms in there to where they could up the price over a period of time, right? Now they have to go to the state, it has to be of the class, they can't do it just on an individual basis. So it's a it's a process they have to go through, but they left that open-ended. So it wasn't a fixed premium price, like a lot of people really probably thought they were getting, you know, back you know, all those many years ago. But so they've seen those prices increase, but it's still generally those things are still a pretty good deal. So the the current marketplace is a little is a is a little, if you want indemnity policy straight like that, they're they're definitely more expensive. They're usually uh limited, uh somewhat in coverage. Um, and uh, but there are other alternatives that are out there.

When To Start Planning

SPEAKER_02 7:33

Very interesting. So are there particular age ranges or life stages when people should start considering long-term options?

SPEAKER_01 7:41

Before you get sick and need it.

SPEAKER_02 7:44

Yeah, that'd be good.

Care Pathways And Cost Tradeoffs

Qualifying, Morbidity, And Odds

Poor, Rich, Or Insured Framework

SPEAKER_01 7:46

Yeah, I mean, um I mean, yeah, I mean, and the younger you do it, now you don't want to be too young to do it because it's not crazy. I mean, the way I would some ways you kind of think about this, and we used to, and I think still kind of present it this way, is that when you're when you're working, you use uh you you have disability, you have disability insurance, right? Disability. So if you become disabled and you can't work, it replaces your your income from work, right? So during your your work. So you're gonna, let's say you were gonna work to age 65, 60, 60, 62, 65 years old, whatever that time period is. So you're covered with a disability income replacement policy there. You can go out. Sometimes your employers, if you work someplace, they will you know, uh give you access to a policy like that. Sometimes they'll fund it for you. And sometimes you can add on to that, or you can go into the marketplace uh and have those. I had one for me because in my eyesight, as an example, you know, so uh and had one for years for income replacement kind of situations. And so, but when you you know when you're leaving the workplace and you're planning to leave the workplace and now you've got a retirement plan in place, well, what's the natural replacement for disability income replacement is long-term care insurance, because it is, in a sense, you know, kind of you know, disability coverage for your retirement income that you're gonna have come, you know, come streaming out, right? So and it's gonna take a lot of money to be to go to a long-term care you know facility, or if they're coming into your home, you know, assisted living, all of those kind of things. So I guess where if you've heard what my message was in that, it's somewhere in that transitional phase generally from you know, from work to retirement or at the at your main, you know, the the your main job, I guess, if you will, let's call it that, uh, is kind of the time to look at it. Doesn't mean you can't look at it beforehand, you know, because a lot of people will come in that have been, you know, that are in their you know, mid to late 50s, let's say, and they may still have a number of years for work, and they've either heard about it, but oftentimes where the catalyst for the conversation begins with my clients that are coming in that as I just described in that in that age range are their parents, right? They're seeing, they're having to take care of their parents, they're they're watching their parents have to use their money uh either to pay people to come into the home, right? Caregivers that are coming in the home, because that's your first thing. Family's gonna take care of you first, then you're gonna fund private caregivers to come in into your home because you're going to stay in your home typically as long as you can. That's just how we're hardwired to do it. It's in my experience with my clients. The next phase of that is is assisted living, right? And so when you start thinking about assisted living, um, at least in my experience with my parents, it was pretty uh, you know, my mom, uh my dad never went, but my mom did, was very reluctant, uh, and I would say obstinate and you know, stubborn to to go into what you don't want to leave your home, you know. Uh so you know, you've you you've got to but it but the inevitably, or that inevitably kind of comes comes true. And generally I will say this having caregivers in your home versus going to an assisted living facility, if that's kind of what you're transitioning to be, is less expensive at an assisted living facility. If you have to have kind of round-de-clair clock at home, it's expensive. Uh, but again, there are policies that help take care of that. There are ways to do it with different types of investment tools that are kind of hybrids with life insurance and annuity products that insurance companies have created to where um it leverages up, you know, the dollars that you invest. Uh, you know, it kind of is not going to give you the growth that you would think of from a typical investment, but it multiplies the the money factor should you need it for a long-term care event. You know, maybe you put$100,000 into just a number I can do easy math on. And maybe it it moves that$100,000 should you need it for a long-term care event. It might multiply it to$200,000, you know, or maybe two exit, uh, you know, or maybe even more for a period of time. So you now have a pool of money that you've kind of put out there designated for that right there. Those are, if you've got the money, those are easier to qualify for, you know, from an underwriting standpoint. You know, because again, you know, the it's not easy to qualify to get a long-term care insurance the older you get, because they're looking not at your you know, at your death rate. They're not looking at mortality, they're looking at your morbidity. So you've got arthritis, you've got, you know, you know, congestive heart failure, you've got whatever the, whatever your terrain looks like, right, that's what they're gonna underwrite. And so they're looking at the at the morbidity of that and the likelihood that you're gonna need that kind of care. And so it becomes the older you get, not always true, but the older you get, the more of those um, you know, kind of creeping age-related diseases and ailments that are gonna affect the price and probably that because of and not only affect the price of a long-term care policy, but the need, the probability of the need that you're going to have for it. Because I think it's probably, you know, I think if you're 65 years old, there's probably a better than a two-thirds, you know, almost a 70% chance that one of you, if you're a husband and wife, is gonna need some type of long some kind of help, some kind of long-term care stay is gonna, or in home health care is gonna be required before you die. I mean, the the the stats are staggeringly high. I mean, it is so if you can, if you can insure it, you do it. Now you can, you know, we used to always use attrition to be rich, you can be insured, uh, you know, or be poor, right? To be poor, be rich, or be insured, uh, is what we would say the three things that cover long-term care. Being poor means uh if you don't have any money or you spend all your money, you know, Medicaid will cover long-term care expense, right? Medicaid, not Medicare, Medicaid. And how do you qualify for Medicaid? It's a welfare program, right? I mean, for all intents and purposes. Uh and so you, but you have to, what are the qualifications for Medicaid? Being broke, right? Not having any money. So if you rip through your assets or you don't have any assets, you know, you're poor and you're insured, and they'll you've got, you'll have access to a facility. Uh you know, be rich, you can afford to self-insure yourself. The thing though that we'll see about people that are rich, they will almost always insure that risk because that's you know, it just makes sense, right? If I can I can afford the insurance, why would I want to leverage out my money over here when I for, you know, for a few, you know, percentage points on the actual need that I might have, they'll do that. That's what, you know, that's what rich people do. You insure, you know, again, if I I'll talk to people all the time when we talk about long-term care insurance, about insuring the risk. It's like, well, you insure your home, right? So you have a$300,000 home, you got an you know, you got a portfolio worth, you know, half a million dollars, million dollars, whatever it is. Do you have to insure your own? I mean, you got enough money to replace the home, should it, should it ever, you know, burn down, let's say, right? You could self-insure that. How many people do you know that self-insure their home? Like almost none, right? I mean, if your health insurance, I mean if your insurance runs out on your home, you're gonna be doing, you'll, you'll move heaven and earth to get an insurance policy put back in place as soon as you realize that maybe a premium payment's been made or you've been canceled, or whatever the case is. But we don't do that for long-term care. You know, what are the chances, and the chances of your house burning down are pretty small. The chances of you needing your your physical being burning down using the same analogy, right? And needing help for long-term care is like I said, it's you know, it's about if you're 65 years old, there's probably a 65 to 70 percent probability you're gonna need some type of of care that you're gonna have to pay for out of your pocket or some insurance pocket if you can insure it. So long answer.

SPEAKER_02 15:39

That's all right, but a good one. Very, very informative. Now, real quick, um, as we wrap up, if someone's not quite sure whether long-term care can fit in their financial plan, uh, what steps would you recommend they take at this point?

Fitting Coverage Into Your Plan

SPEAKER_01 15:54

I guess when you think when you're if the question that I understood you to ask it and make sure this is it, is that can you can you afford to fund it, right? Can you afford to fund and find an insurance, whatever type of strategy it is, whether it's be one of these hybrid, you know, kind of investment or life insurance policies that can leverage up some some money for long-term care or paying a what we would call an annual kind of premium, right? An ongoing premium product, kind of an indemnity type product, if you will. Health, like a health insurance policy almost, right, for long-term care. It's and it indemnifies. Um, well, what you what you look at is that if you're not sure, then you come sit down with somebody like me, and I'll lug the commercial here. We go through our our four seasons, our retirement uh, you know, GPS system, right? And so here's your need for, you know, here's your assets, you know, here's where you are, here's where you want to go. And that where you want to go is how much money you want to have coming in on a regular basis and where it's gonna come from. Is that affordable? Do you are you on track to do that? Do you have enough money if you're in retirement? Is it gonna last as long as you do? Yes. But what happens if I have a long-term care, you know, thing? Well, it's gonna be cost this much money, it's gonna really be hard on these assets. Well, if we can find a way to fund that, right? Either take some of those assets and fund, you know, a hybrid policy or cash flow out and indemnity policy, we price that in, and that's part of your living expense, right? To take that asset and set it aside for that. And can you still afford to live the lifestyle you want to live during retirement and have that insurance, that peace of mind insurance coverage over here, you know, on the other side funded to do the same thing. So you just price it in into your overall plan and you can come up with a probability of success based on that. And that's that's the and then if that's the case, and we then you go out and you find that plan and you you buy that, you put that plan in place, you get that insurance policy there to cover the, you know, hopefully, uh, as my dad used to always say, when people would, when we would put uh long-term care policies in place for folks, and and he said, I hope this is the worst buy that you've ever made, right? Um, but you know, but often it's not. And you know, it just meant that obviously that, you know, that you're insuring this risk. I hope it never happens to you. And you just, you know, you pay these premiums all these years, but you never had to call on it because you don't suffer through, you know, through through a long-term care need. You know, and it's it's tough. I mean, it's tough on families, man. I mean, I've seen it. Like I said, it was brutal. Uh, and I say brutal, it's uh that's probably too strong a word. It was very difficult for uh, you know, both my former in-laws and and for my parents. And different, they were they were uniquely different, but they were very much the same at the you know, in in the in the result of what they were, the cost, the expense. You know, um the my in-laws had had had long-term care coverage that did beautifully, but they still uh had a lot of money out of pocket. And my parents, because of where they were and couldn't get it at the time because of their health issues, before they could get long-term care, you know, on a reasonable basis, um, you know, paid out of pocket. And it was um, you know, you'll you'll spend a few dollars doing that, you know.

SPEAKER_02 19:14

So a lot of money. I've I've got personal experience with that too. So definitely it is crazy, and it's something that affects everybody. I mean, everybody in one way or another. So thank you so much for shedding light on such an important topic and uh such an important part of long-term financial security.

SPEAKER_01 19:35

So it absolutely appreciates your insight. You bet.

SPEAKER_02 19:38

Absolutely appreciate your insight, and uh, we will see you in the next episode.

SPEAKER_00 19:46

Thanks for tuning in to the Four Seasons Podcast, brought to you by BH Wealth Strategies, where your financial success is our priority. Schedule your free 20-minute consultation today by calling 423-247-1152 or by visiting bhretire.com. Take the first step toward making your financial dreams come true. Until next time, remember, every season is the right season to plan for your future. Securities and registered investment advisory services offered through Silver Oak Securities, Inc. Member FINRA SIPC, BH Well Strategies and Silver Oak Securities, Inc. are not affiliated.