Do You Need a Long-Term Care Insurance Policy?
May 22, 2026 - Whether a long-term care insurance policy is right for you is really several questions under the same umbrella. “Do I need long-term care insurance at all?” “Should I keep the policy I already have?” “If someone has approached me about coverage now, which type of policy deserves consideration?” “And if the proposal is a paid-up policy, what exactly am I being asked to buy?”
A useful place to begin is with the basics. The purpose of insurance is to transfer a risk one cannot afford to bear. Long-term care is a genuine risk — it is believed that more than half of our aging population will need long-term services at some point, and about a quarter of us will need care for more than five years. It is good to plan for this very expensive possibility, and buying insurance is one of the options.
Who May Need Long-Term Care Insurance
For many people, the need for a long-term care insurance policy depends less on fear and more on financial reality. If an extended care event would materially impair someone’s financial situation, then transferring at least part of that risk may be sensible. If the family can retain the risk with confidence, then insurance may be optional rather than essential.
The decision depends on age, health, retirement goals, income, assets, and even the tax plan. We have heard a saying about long-term care insurance: if you can afford it, you don’t need it, and if you need it, you can’t afford it. There is some truth to that. If you can afford it, it is worth understanding how a long-term care event would play out financially and whether insurance is likely to help.
“If I Already Have a Policy, Should I Cancel It?”
For families who already have long-term care insurance, the answer is usually: proceed carefully before canceling.
The market has changed materially over time. Older stand-alone policies were sometimes priced too optimistically, and later claims experience proved they were underpriced. Over time, that contributed to premium increases and a broad market shift toward hybrid or combination products.
An older policy may be more valuable than it appears. A premium increase is unpleasant, but that does not automatically make cancellation wise. In some cases, the older contract may still compare favorably with what is available now. New coverage may be more expensive, less generous, harder to qualify for, or some combination of all three.
So the question becomes whether keeping the policy is still the best use of premium dollars inside the broader financial plan.
The Main Types of Long-Term Care Policies
Broadly speaking, there are three categories of long-term care insurance policies.
Traditional Stand-Alone Long-Term Care Insurance
This is the older, more familiar design. It is built specifically to cover qualifying long-term care expenses, whether in a nursing facility, assisted living setting, or home care environment, depending on the contract.
Life Insurance With a Long-Term Care Rider
These policies are often attractive to people who dislike the idea of paying premiums for something they may never use. If qualifying care is needed, the death benefit may be accelerated to help cover expenses. If care is never needed, the policy may still pass a death benefit to heirs, subject to the contract terms.
Hybrid or Combination Policies
The third category is the broader hybrid or combination products, often tied to life insurance or annuities.
Insurance is all about probabilities. Our opinion is that the more complex the policy is, the lower the probability that the consumer receives meaningful value from it.
What About a Paid-Up Policy?
A paid-up long-term care policy means a large premium is paid at the beginning rather than spread over many years. Some people prefer certainty and want to pay once without future premiums.
These policies can be more attractive to those with an estate tax issue, since paying the premium can reduce the taxable estate. However, greater wealth can also be a reason not to buy a paid-up policy because the family may already have the resources to self-insure the risk.
If you are advised to buy long-term care insurance, consider getting a second opinion from someone who does not have a commission incentive to sell it.
Why So Few Americans Own Long-Term Care Insurance
Ownership remains relatively low — about 15% of those age 65 and older. That tells us most families do not solve this issue through private insurance.
Some consciously retain the risk. Some cannot justify the premiums. Some never analyze the issue carefully. Others may eventually rely on family support or public programs.
The Cost of Care vs. the Net Cost to the Family
One concept can get missed when deciding the best path. Families sometimes look at the cost of assisted living or nursing care and assume that figure simply lands on top of the existing household budget.
In reality, an extended care event often changes the rest of spending. Housing maintenance, utilities, groceries, transportation, travel, and other recurring lifestyle expenses may decline or disappear. That does not make care inexpensive, but it does mean the net burden may be different from the headline number.
For some people, the cost of care can be partially offset by reduced living expenses.
There may also be significant tax implications. Qualified long-term care services may be included as medical expenses when they are required by a chronically ill individual and provided under a plan of care prescribed by a licensed healthcare practitioner.
IRS Publication 502 also explains that in certain institutional settings, meals and lodging may count as medical expenses when the principal reason for being there is medical care.
For affluent families, that can create room to recognize more income because deductible medical expenses can lower the marginal tax rate. That may allow larger IRA distributions or Roth conversions during high-care years, potentially reducing taxes for beneficiaries in the next generation.
The Emotional Case for Long-Term Care Insurance
Long-term care insurance is not always a purely mathematical decision. There is also a human dimension that deserves respect.
Although this is difficult to prove empirically, families with coverage often seem more willing to accept help sooner because the care feels as though it is being paid for with other people’s money rather than their own.
Without a policy, the opposite can happen. A couple may delay bringing in help because every hour of care feels like an out-of-pocket loss, and asking for help may feel like defeat, even when the need is clear.
A familiar example is the exhausted spouse who becomes the default caregiver while insisting on managing alone. Over time, that arrangement can wear down both spouses.
In some cases, the practical value of long-term care insurance is not that it produces the highest mathematical return, but that it gives a family permission to act earlier.
“So, Do I Need a Long-Term Care Insurance Policy?”
Self-insuring long-term care risk may be the more rational path when there is enough money to absorb the cost without disrupting the rest of the plan.
A large percentage of policyholders will either never use the full benefit, use only a modest portion of it, or surrender value through years of premiums for a risk that never materializes.
For a family of means, retaining the risk can be a good decision. In that case, long-term care insurance may solve more of an emotional concern than a financial one.
Should you cancel the policy you already have? Sometimes the answer is not “buy one” or “cancel one,” but rather, “analyze the one already owned much more carefully than the premium notice would suggest.”
And sometimes the real issue is not whether to insure the risk, but which version of the risk should be retained, which should be transferred, and whether the policy being proposed is solving the right problem in the first place.
Final Thoughts
If you would like help deciding whether long-term care insurance fits into your plan, contact us.
We don’t sell insurance, so we have no incentive for you to buy it. Our focus is on helping families make the best decision for them.
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Information presented is for educational purposes only and is not personalized investment, financial, legal, tax, or accounting advice. Nothing on this website should be interpreted to state or imply that past performance is an indication of future performance. All investments involve risk and unless otherwise stated are not guaranteed. Be sure to consult with tax, legal, accounting, and financial professionals about your specific situation before implementing any planning strategies. Investment Advisory Services offered through Timberchase Financial, LLC, a Registered Investment Adviser with the U.S. Securities & Exchange Commission. Registration does not imply a certain level of skill or training.