Planning ahead for long-term care is one of the most important financial decisions you can make. According to recent studies, most Americans over 65 will need some form of long-term care during their lifetime including home health assistance, assisted living, or nursing facility care. The costs can be staggering, often reaching thousands of dollars per month.

This brings up a key question: How should you pay for it? Two of the most common approaches are insurance (such as long-term care insurance or “hybrid” life/long-term care policies) and personal savings. Both strategies come with advantages and drawbacks. Let’s break down the pros and cons of each.

Paying with Insurance

Pros:

  • Financial Protection: Long-term care insurance helps protect your savings by covering a portion—or sometimes all—of the cost of care.
  • Peace of Mind: Having coverage in place means you and your family can focus on care decisions, not just finances.
  • Flexibility with Hybrid Policies: Many newer policies combine life insurance or annuities with long-term care benefits, so if you don’t use the care benefit, your beneficiaries may still receive a payout.
  • Inflation Protection Options: Some policies include riders that increase benefits over time, helping keep pace with rising care costs.

Cons:

  • Cost of Premiums: Traditional long-term care insurance premiums can be expensive and may increase over time.
  • Use It or Lose It (Traditional Policies): If you never need long-term care, you may never benefit from the premiums you paid.
  • Health Qualifications: You may not qualify for coverage if you apply later in life or have certain medical conditions.

Paying with Savings

Pros:

  • Full Control: Using personal savings gives you complete flexibility in how and when to spend your money on care.
  • No Premiums: You’re not locked into monthly or annual insurance payments.
  • Liquidity: Money in savings or investments can be used for other purposes if care is never needed.
  • No Medical Underwriting: Unlike insurance, your ability to self-fund care doesn’t depend on your health.

Cons:

  • Erosion of Assets: Long-term care can quickly deplete retirement savings, potentially impacting your spouse or heirs.
  • Uncertainty: It’s difficult to predict how much you’ll need for care, which makes planning with savings alone risky.
  • Opportunity Cost: Large amounts of cash set aside for care may not be growing as effectively as if the funds were invested elsewhere.
  • Family Burden: If savings run out, loved ones may need to step in financially or provide unpaid care.

Which Strategy Is Best?

The right approach depends on your financial situation, health, and goals. Many families find that a combination strategy works best—purchasing enough insurance to cover a base level of care, while relying on savings and retirement income to fill in the gaps.

What matters most is that you don’t leave the question unanswered. Having a plan—whether through insurance, savings, or both—can help protect your finances and give your family confidence in the years ahead.

Next Step: Talk to Generations Planning Group! We can help you evaluate your options, compare insurance products, and determine how much to allocate from savings to balance protection with flexibility.

Securities offered through IFP Securities, LLC, member FINRA/SIPC. Investment advice offered through IFP Advisors, LLC, a registered investment adviser. IFP and Generations Planning Group, LLC are not affiliated.

The information given herein is taken from sources that IFP Advisors, LLC, dba Independent Financial Partners (IFP), IFP Securities LLC, dba Independent Financial Partners (IFP), and its advisors believe to be reliable, but it is not guaranteed by us as to accuracy or completeness. This is for informational purposes only and in no event should be construed as an offer to sell or solicitation of an offer to buy any securities or products. Please consult your tax and/or legal advisor before implementing any tax and/or

legal related strategies mentioned in this publication as IFP does not provide tax and/or legal advice. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation, or needs of individual investors. This report may not be reproduced, distributed, or published by any person for any purpose without IFP’s express prior written
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