Ask a Trust Officer: Planning for the Long-term

Dear Trust Officer: Should I buy long-term care insurance? Is it a good deal?

Retiring Soon


These are excellent questions for which there are no simple, easy answers. You are wise to be addressing your potential need for long-term care now, while you still have choices. According to the AARP (formerly the American Association of Retired Persons), someone who reaches age 65 has around a 50% chance of needing long-term care someday.

At one time, more than 100 companies offered long-term care insurance; now reportedly only 15 do so. The reason for the shrinkage is many companies lost money on these policies through a combination of actuarial missteps. The most important error was overestimating the lapse rate, which is the number of policyholders who would drop coverage before making claims. It turned out many considered their long-term care policy as an investment, not as insurance.

Given these developments, the costs of such policies have risen considerably in recent years. This brings us to your second question. At the price insurance companies need to charge, is it still worth the major expense of annual premiums when there is a 50% chance you will never make a claim?

When you buy car or homeowner’s insurance, you hope to never make a claim. Many people do not feel the same about their long-term care insurance, and they are afraid the premiums might be “wasted.” This objection has led to a new generation of hybrid policies which include a life insurance element. If a claim is never made, a substantial portion of the premiums may be returned to the family in the form of a death benefit. Such policies are more expensive than the traditional long-term care policy and they may require larger payments earlier in the life of the contract.

If your wealth level is high enough, you may be able to self-insure for these costs. You may also want to consider funding a living trust for yourself, naming us as the trustee. This allows us to continue to provide financial and investment management for you as you age, including in the event of incapacity.

Do you have a specific question about long-term care planning? Please contact us at (800) 530-5254 or visit, and one of our Certified Trust and Financial Advisors will be happy to assist you.