Following our recent discussion detailing how to prepare for retirement spending, we now turn to long-term care (LTC), a crucial yet often overlooked pillar of financial planning.
According to ACL, someone turning 65 today has approximately a 70 % chance of requiring long-term care during their remaining years. Yet the vast majority of Americans enter retirement without a dedicated payment strategy. That exposes their independence, life choices, and financial security to serious risk.
As advisors guide clients toward economic independence and legacy goals, incorporating a thoughtful long-term care strategy has become an essential part of holistic wealth management. With modern, commission-free insurance solutions and flexible plan designs, advisors can now deliver protection that aligns with fiduciary values and integrates seamlessly into retirement plans.
Dispelling Common Misconceptions
A common barrier to LTC planning is the misconception that coverage is overly expensive or inaccessible. Although premiums are higher than term life, they generally cost less than self-funded care. Modern plans are customizable to meet diverse budgets and goals.
Another misconception is that LTC coverage only applies to nursing home care. Historically, that was true, but today’s solutions provide much broader protection, including assisted living facilities, in-home care, and other flexible care arrangements.
Additionally, many clients fear that insurers may deny claims or make qualifications difficult. In practice, benefit qualification is achievable with proper guidance, and today’s underwriting standards are more inclusive than ever before.
The Evolution of LTC
Originally, LTC policies lacked flexibility and penalized unused benefits. Modern options now let advisors help clients choose from a range of traditional and hybrid solutions, each designed to strike a balance between cost, flexibility, and legacy considerations.
Traditional LTC insurance is usually the most cost-effective entry point, covering nursing home, assisted living, and home care expenses, though future premium increases are possible. Whereas Hybrid LTC solutions combine long-term care protection with life insurance or annuities, helping clients preserve value even if care is never needed. Additionally, hybrid products may include a:
Fixed premium structure, removing uncertainty about future rate hikes
Death benefit, ensuring premiums contribute to legacy goals, and provide tax-free distributions when used for qualifying LTC expenses
These innovations help advisors design coverage to fit each client’s needs and comfort level regarding risk, liquidity, and cash flow.
The Cost of Waiting
Delaying LTC planning often comes with consequences primarily related to health and insurability. Insurance carriers underwrite policies based on morbidity, not mortality, meaning conditions that affect lifestyle or mobility can impact approval. The younger and healthier a client is, the easier and more affordable it is to qualify. Advisors should encourage clients to explore coverage in their 40s or 50s, when they typically have strong health profiles and steady income. Waiting until the mid-60s or beyond can narrow options and significantly increase costs.
Tailoring Coverage to Each Client
There is no one-size-fits-all solution for long-term care. Suitability depends on a client’s age, health, liquidity, and financial priorities. Traditional LTC may be ideal for those seeking lower initial costs and who can manage potential rate adjustments over time. Hybrid LTC may be suitable for clients who prioritize guaranteed premiums, asset protection, or flexibility in estate planning. Advisors can also repurpose existing assets, such as life insurance policies with cash value or annuities, to fund hybrid coverage without additional out-of-pocket costs. This approach keeps clients’ investment portfolios intact while introducing meaningful protection.
It’s Time to Start the Conversation
Long-term care planning is not only about financial protection; it's also about ensuring a quality of life. It is about dignity, independence, and relieving family burdens. Advisors should help clients envision how they want to receive care and who they expect to provide it. According to the report Caregiving in the U.S. 2020 by AARP and the National Alliance for Caregiving, an estimated 41.8 million U.S. adults provided unpaid care to someone aged 50 or older in the past 12 months. Relying on adult children is a common assumption, but few families are emotionally or physically prepared for that responsibility. By addressing the topic early, advisors can empower clients to make choices that protect both their finances and their families.
Discussing long-term care can be a sensitive and complex topic. SS&C Black Diamond Wealth Solutions is here to help you approach these conversations with clarity, confidence, and a focus on your clients’ best interests. Through the Annuities & Insurance Marketplace, advisors can access LTC solutions that align with fiduciary standards. These offerings make it easier to integrate long-term care into holistic financial plans, evaluate both traditional and hybrid products side by side, and deliver transparent, client-first solutions that protect wealth and legacy. By leading these conversations early, you can demonstrate to your clients that your firm delivers the kind of proactive, fiduciary thinking that builds lasting trust.
To explore this topic further, listen to our Tech It Up podcast, Planning for the Unpredictable: Long-Term Care Conversations Advisors Need to Be Having, where hosts Jasmine Conner and Trent Berry join Amy Arnett, VP of Insurance Solutions at DPL Financial Partners, to unpack how advisors can engage confidently and tactfully around LTC planning.
