Non-Traditional Long-Term Care Insurance Options

Posted in: Personal Financial Management, Personal Insurance

A recent Associated Press article reports that government figures show nearly 7 in 10 Americans will need long-term care at some point after they reach age 65, whether it’s from a relative, home health aide, assisted living or a nursing home.

Even with statistics showing a high likelihood that long-term care will be needed, many are hesitant to purchase insurance policies. Commonly heard objections include concerns that rates for long-term care insurance are not guaranteed and that the cost can be quite high. For those who share these concerns, there is a non-traditional long-term care insurance option.

Non-traditional long-term care insurance offers the following options:

  • The insurance company cannot change your rate.
  • Should you change your mind at any time, you can request a refund of the premium you paid. Depending on the length of time between the time the premium was paid and the refund request, the amount could increase. At minimum, you will always be guaranteed the full return of the premium paid.
  • There is a death benefit payable to your beneficiaries tax free.
  • Finally, there is long-term care coverage available if needed.

Because this option is a one-time premium costing between $50,000 to $150,000, it is a better fit for individuals who have a portfolio with assets in a conservative investment. For those interested in securing long-term care protection with flexibility, it may make sense to consider repositioning assets (from investments like money markets and CDs) to cover the cost of the premium.

To better illustrate this non-traditional long-term care insurance option, here’s an example, A 55 year-old non-smoking female pays a one-time premium of $100,000. At the end of one year she:

  • Decides to request a refund (meaning that she wants to opt out), she’ll receive $100,000;
  • Passes away, her beneficiaries will receive $299,468; or
  • Needs long-term care benefits, she will receive a total of $254,980 or a maximum monthly amount of $3,845.

And when she reaches the average age when long-term care is needed, 78, she will receive the following:

  • $107,634 Refund Value OR
  • $169,783 Death Benefit Payable to Beneficiaries OR
  • $745,884 Total Long-term Care Benefits Yielding $11,249 Maximum Long-term Care Benefits per month

This non-traditional long-term care insurance option is not right for everyone. For those with the assets in place, it can provide a viable solution to many of the objections against traditional long-term care insurance. If you have any questions about non-traditional long-term care options, please contact me at

All guarantees and benefits of the insurance policy are backed by the claim-paying ability of the issuing insurance company and are not the responsibility of PSA Insurance and Financial Services and/or its affiliates.  Long term care insurance options will vary based on the terms and conditions of the policy and optional riders.  Prior to purchasing a policy be sure to read and understand all information provided, including the benefits, exclusions, and limitations within the policy and optional riders.  There is no guarantee that long term care insurance will cover all expenses.  “A Shopper’s Guide to Long-term Care Insurance” informational booklet is offered by The National Association of Insurance Commissions (NAIC)