Long-Term Care Insurance Explained

Matthew Allgood |

Life has a way of moving faster than we expect. We plan for retirement, invest for growth, and protect our families with life insurance, but one area too often overlooked is long-term care planning. As we live longer, the need for assistance with daily activities such as bathing, dressing, or managing medications becomes more common. That’s where long-term care insurance (LTCI) steps in. 

At Allgood Financial, we strive to help our clients “do all good things” by engaging with them through thoughtful financial planning that stands the test of time. Based in Nashville, Tennessee, we specialize in helping families secure financial stability for generations. And understanding long-term care insurance and its alternatives is a key part of that journey. 

What Is Long-Term Care Insurance? 

Long-term care insurance is designed to help cover the costs of care services not typically covered by traditional health insurance, Medicare, or even Medicaid for some of forms of care. This can include: 

  • In-home care
  • Assisted living
  • Skilled nursing facilities
  • Adult day care centers
  • Memory care units 

Essentially, it provides financial protection for when you or a loved one need extended support due to aging, illness, or disability. 

According to the U.S. Department of Health and Human Services, about 70% of adults over 65 will need some form of long-term care during their lifetime. Yet, without a plan, these expenses can quickly deplete retirement savings or burden family members. 

Why Long-Term Care Insurance Matters 

In Nashville and across Tennessee, the cost of long-term care continues to rise each year. A private room in a nursing home in the state can cost more than $100,000 per year, according to the Genworth Cost of Care Survey. Even home health aides, which is a more affordable option, can average over $60,000 annually. 

That’s why including long-term care planning is such an important part of a comprehensive financial plan. It helps you: 

  1. Protect Your Savings: Avoid spending down retirement funds or selling assets to pay for care.
  2. Relieve Family Burden: Give loved ones peace of mind knowing professional care is covered.
  3. Preserve Independence: Choose the type and location of care that fits your preferences.
  4. Enhance Financial Flexibility: Some hybrid policies offer both long-term care coverage and life insurance benefits. 

How Long-Term Care Insurance Works 

A typical long-term care policy reimburses policyholders for a set daily or monthly amount when they require assistance with Activities of Daily Living (ADLs) such as eating, dressing, or mobility. Benefits usually begin after an elimination period (often between 30 - 365 days) and continue until the maximum benefit period or benefit amount is reached. 

Here are a few key terms to understand: 

  • Benefit Amount: The total pool of money available for care.
  • Benefit Period: How long benefits last (e.g., three years, five years, or lifetime).
  • Inflation Protection: Ensures your coverage keeps up with rising care costs.
  • Premiums: The regular payments that keep your policy active. 

Each policy is different, so it’s a good idea to work with a trained Certified Financial Planner™ (CFP®) who can help you review options tailored to your health, age, and financial situation taking into account other goals and objectives that are important to you as well. 

Types of Long-Term Care Insurance 

There are several planning products and options available, each with their own benefits and costs: 

Traditional LTC Insurance: 

  • Provides coverage solely for long-term care expenses.
  • Premiums may increase over time.
  • Typically the most affordable option for younger buyers. 

Hybrid Life + LTC Policies: 

  • Combine life insurance with long-term care benefits.
  • If you never use the LTC portion, your beneficiaries receive a death benefit.
  • Offers greater flexibility and guaranteed premiums. 

Annuity-Based LTC Products: 

  • Funded with a lump sum investment.
  • Converts part of your annuity’s value into long-term care benefits.
  • Can be a good choice for those with existing annuities or low health risks. 

Choosing the right structure depends on your overall financial picture, risk tolerance, and legacy goals … areas where professional guidance can make a substantial difference. 

When to Buy Long-Term Care Insurance 

One of the biggest misconceptions about LTCI is that it’s something to think about only in your 60s or 70s. In reality, the sooner you begin to develop a plan, the more time you give yourself for the plan benefits to develop and grow, or the lower the level of resources required for you to achieve a meaningful level of benefits.   For example, in your early 50’s, premiums for traditional long-term care policies are about as affordable as they’ll ever be, and you’re more likely to qualify for coverage before any serious health conditions emerge. 

AARP notes that waiting until later in life often results in higher premiums or worse, being declined coverage due to medical history. 

Planning early ensures that you lock in protection at a manageable cost while giving yourself more flexibility in policy options. 

How to Include LTC Planning in Your Financial Strategy 

At Allgood Financial, we believe long-term care insurance is more than just a product, it’s a key part of a comprehensive financial plan. We integrate it alongside retirement income, estate planning, and tax strategies to create a cohesive plan for lifelong financial well-being. 

Here’s how our advisors in Nashville, TN approach LTC planning: 

  1. Evaluate Your Risk: We start by reviewing your family health history, financial goals, and existing coverage.
  2. Explore Policy Options: We compare traditional, hybrid, and annuity-based plans from reputable insurers.
  3. Coordinate with Other Strategies: Your LTC plan should align with Social Security timing, investment withdrawals, and estate planning goals.
  4. Reassess Over Time: As life changes, so can your planning options. We help clients revisit their plans every few years to ensure continued protection. 

Common Misconceptions About Long-Term Care Insurance 

“I’ll rely on Medicare.” 

Medicare only covers short-term rehabilitation and not ongoing custodial care. Without insurance, the full cost of long-term care typically falls on individuals or families. 

“It’s too expensive.” 

Policies vary widely. Customizing your benefit period, daily coverage limit, or inflation protection can make LTCI more affordable. 

“My family will take care of me.” 

While family support is invaluable, professional care ensures that your loved ones don’t face financial or emotional strain trying to meet long-term needs alone if that’s even an option for family members who may live far away. 

The Bottom Line 

Planning for long-term care isn’t just about anticipating potential health issues—it’s about protecting your financial independence, your family’s future, and your peace of mind. The cost of care in Nashville and across Middle Tennessee is rising, but with the right strategy in place, you can navigate the future with confidence. 

At Allgood Financial, we help clients build lasting financial security through personalized, values-based planning. If you’re ready to explore long-term care insurance options in Nashville, TN, our team can guide you through every step of the decision-making process. 

Schedule a Consultation 

Your financial future deserves thoughtful preparation. Schedule a consultation with Allgood Financial today to learn how long-term care insurance can fit into your overall financial plan.