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Increased Longevity Equals Higher Long-Term Care Risks

July 11, 2023

As people age, the likelihood of needing assistance with daily activities such as walking, eating and bathing increases. Long-term care insurance is a financial planning tool that provides coverage for these services, offering financial support and ensuring peace of mind during a potentially challenging phase of life.

Long-Term Care Strain

The cost of long-term care services continues to rise. Whether provided at home, in an assisted living facility or in a nursing home, these services can be quite expensive.

Without adequate insurance coverage, people may deplete their savings and retirement assets and potentially put financial, physical and mental strain on their families. Long-term care insurance helps mitigate this risk by providing funds to cover the costs of care, thus preserving you and your family’s assets, and preventing financial hardship.

The evolving landscape of health care is another key reason to consider long-term care insurance. With advancements in medical technology and improved standards of living, people are living longer.

However, longer lifespans also increase the chances of requiring long-term care services potentially due to major, incurable illnesses such as Alzheimer’s and dementia. Since traditional health insurance plans and Medicare do not cover these services, long-term care insurance fills the gap and ensures that people have access to the care they need without compromising their or their family’s financial stability.

Solution Options

When considering long-term care insurance, you should be aware of the various options available. The three main types of policies are traditional long-term care insurance, hybrid long-term care insurance and life insurance with a long-term care rider.

  1. Traditional Long-Term Care Insurance: This type of policy offers comprehensive coverage for long-term care services. It typically provides a daily benefit amount for a specified period of two to five years and may include inflation protection to account for rising costs over time. Traditional policies can be more affordable when purchased at a younger age, but premiums typically increase over time. This option is a use-it-or-lose-it scenario, meaning if there is no long-term care event to trigger the coverage, the premiums are not recouped by the insured’s family.
  2. Hybrid Long-Term Care Insurance: Hybrid policies combine long-term care coverage with a life insurance or annuity component. The objective of these plans is to reposition low yield assets, such as cash or fixed-income portfolios, with a cash value life insurance policy that also provides long-term care. These policies offer a death benefit if long-term care is not needed, but they also provide long-term care benefits if required. Hybrid policies may have a higher upfront cost but offer the advantage of preserving some financial value even if long-term care is not needed.
  3. Life Insurance with a Long-Term Care Rider: Life insurance with a long-term care rider provides the ability to access 100% of the policy’s death benefit for long-term care services as needed. With this option, the insured can provide peace of mind and perhaps a legacy to their loved ones. In some instances, the need for life insurance has changed. In those situations, it may make sense to repurpose existing life insurance cash values to help pay for the upfront costs of life with a long-term care rider policy.

When selecting a long-term care insurance policy, it’s important to carefully consider factors such as benefit amounts, waiting periods before benefits begin, and the financial stability and reputation of the insurance provider. Consulting with a knowledgeable insurance professional can help you navigate the options that best suit your needs, preferences and budget.

Oswald Companies’ experienced long-term care team can help you build a plan that mitigates the financial risk and family stress that a long-term care event causes.

For more information, please visit our Oswald Life page or contact me direct:

Mario Mastroianni, CLTC, CEPA
Sales Executive


Note: This communication is for informational purposes only, and is not intended to offer legal, tax, or client-specific risk management advice. Information in this communication is not meant to describe specific coverages that may be advisable or available to you or your company, or to interpret specific coverages that may already be in place. General insurance descriptions in this communication do not include complete insurance policy definitions, terms, and/or conditions, and should not be relied on for coverage interpretation. Actual insurance policies must always be consulted for full coverage details and analysisView our privacy notice.