Planning for Long-Term Care: For Your Parents and Yourself

Effective financial planning is about saving, investing — and managing risk.  The saving and investing part is usually focused on retirement, so you can keep your lifestyle going even after you stop earning.  The risk management part is essentially about insurance. The most familiar is life insurance, to protect you and your family if something happens to your earning power. But there’s another kind of insurance you should be thinking about, and the sooner the better.

What We Cover: Long Term Care Insurance

By 2034, for the first time in U.S. history, older adults will outnumber children1. This aging of our society means that people working now are having to balance saving for retirement, paying for college for children– and shouldering the burden of caring for their parents.

Buying a long-term care insurance policy (LTC) is more affordable the younger you (or they) are. The best reason to purchase LTC earlier, however, is that it is near impossible to get a policy after something happens that the policy would cover.

Long-term care policies can provide for the full spectrum of care, from someone who just needs weekly help, to the move to a nursing home or other facility.

While the insurance is not inexpensive, the benefits go beyond the freedom from worry if it should become necessary. A LTC policy also allows the insured to make health care decisions based on need and preference and not just on cost.

How Does It Work?

Policies are customizable to your needs – you can select the level of coverage, which will be capped on a daily and a lifetime limit. You can also purchase a policy with cost-of-living adjustments to protect against inflation; shorter elimination periods (like an insurance deductible, the elimination period is the period you pay for care before the insurance company kicks in); and fewer restrictions on the types of coverage. When you make a claim, the insurance company will begin paying after the elimination period. During this gap period, you’ll need to pay for your own care – so you’ll still need to set aside some funds.

Are the Premiums Tax-Deductible?

They can be considered medical expenses for tax purposes, but only if the policy meets certain federal standards and is labeled “tax-qualified.”

How Do You Purchase a Plan?

Long-term care insurance used to be largely only available through an agent, or a group, such as an employer. The cost of care has skyrocketed in recent years, leading to losses for insurance companies as payments threatened to outstrip gains from investments in the prevailing low interest rate environment. Today, the number of insurance companies that offer long-term care insurance has plummeted to only a handful nationwide.

The ones that are left are changing their business models to eliminate agents and are setting up direct-to-consumer models. You should be able to find several quotes with an internet search; just be sure you select an insurance company with solid financial performance and high ratings.

The Bottom Line

Once you’ve done the research for your parents – consider purchasing a policy for yourself, especially if you are already in your 50s. It’s never too early to start planning the risk management aspects that will keep your lifestyle on track.


  1. Older People Projected to Outnumber Children for First Time in U.S. History. The United States Census Bureau, March 13, 2018.

The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.

This content has not been reviewed by FINRA.