Understanding Your Long Term Care Insurance Options

You’ve taken the time to invest for a financially secure retirement, hoping to spend those years doing the things you enjoy most. But have you considered how an unexpected long-term care event could change your financial outlook? Unfortunately, many individuals require extended care in their later years, and the cost of an uncovered long-term care event can be significant—negatively affecting both your finances and your family.

To help protect your retirement income from potential long-term expenses, it makes sound financial sense to consider all of your insurance options. To help you determine which option may be right for you, here we’ll focus on the differences between two types of policies: traditional long-term care insurance (LTCI) and linked-benefit LTCI.

Traditional LTCI

  • Traditional LTCI offers a flexible plan design, giving you the ability to customize coverage based on your needs and financial situation.
  • You pay premiums every year until you make a claim or you pass away; they can be paid on a monthly, quarterly, semiannual, or annual basis.
  • These plans do not accumulate cash value.
  • Typically, there is no return-of-premium feature, or if there is, it is extremely expensive.
  • Premiums are subject to rate increases.
  • The underwriting process is extensive, typically including a phone health interview and the review of medical records. The carrier may also require a face-to-face interview.

Linked-benefit LTCI

  • This type of life insurance policy is also known as hybrid or asset-based LTCI.
  • A large, single premium is required ($50,000–$100,000 or more per person). A few carriers do offer multi-pay options.
  • Linked-benefit LTCI is designed for those with high net worth or for individuals who have access to a large amount of cash or cash value in an existing life insurance policy.
  • The benefits typically are not robust, so you may have to pay out of pocket for some long-term care expenses.
  • Since all policy values are guaranteed, there will never be a rate increase.
  • If long-term care is never needed, your beneficiary will receive a death benefit.
  • This type of policy has a cash value.
  • A return-of-premium feature is available if you decide you no longer need the policy.
  • Underwriting may be simplified to include only a phone health interview, or it could include a full medical review.


It’s important to keep in mind that without a long-term care plan, you will have to pay for extended care out of your existing income and assets, which could have a devastating effect on your financial situation and your ability to transfer wealth to your heirs. The right type of LTCI, on the other hand, will help cover the cost of long-term care events, give you the opportunity to choose where you will receive care (e.g., at home, in an assisted-living facility, or in a private-pay nursing facility), and preserve your assets for their intended purpose.

If you’d like to learn more about either of these options, please feel free to contact me at [email protected].

Joelle Spear is a financial advisor located at Canby Financial Advisors, 161 Worcester Road, Framingham, MA 01701. She offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser.


Fixed insurance products and services offered through Canby Financial Advisors, LLC or CES Insurance Agency.

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