Long-Term Care Insurance

Summary of Long-Term Care Insurance

by DIY Money

19m•May 25, 2026
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Overview of DIY Money — Long-Term Care Insurance

In this episode of DIY Money, Quint and Allie answer a listener question from Melanie about how important long-term care insurance is in retirement planning. They explain why long-term care is one of the biggest unknowable risks in retirement, how they handle it in client financial plans, and why the answer depends heavily on health history, family support, and overall assets. They also share their personal experience buying a hybrid long-term care policy.

Main Takeaways

  • Long-term care is one of the hardest retirement risks to predict.
    • Unlike inflation, market volatility, or life expectancy, you do not know whether you’ll need assisted living, in-home care, or memory care.
  • If long-term care is not planned for, it can severely disrupt a retirement plan.
    • The hosts note that memory care or nursing care can cost thousands per month and can quickly overwhelm a portfolio.
  • The need for insurance is highly personal.
    • Family health history, available assets, children’s ability to help, and personal comfort with risk all matter.

How They Approach Long-Term Care in Financial Planning

Their Default Planning Assumption

  • Their planning process typically includes:
    • Two years of long-term care expenses per person
    • About $7,000/month in today’s dollars
    • 6% annual healthcare inflation
  • They treat this as a buffer in the retirement model rather than assuming it will definitely happen.

Why They Build It In

  • The goal is to avoid reaching age 80 or 85 and realizing the retirement plan has no room for care costs.
  • They generally do not assume the home will be sold or tapped immediately to fund care.
  • They prefer the plan to have flexibility rather than relying on a crisis-driven decision later.

Insurance Perspective: Traditional vs. Hybrid Policies

Traditional Long-Term Care Insurance

  • Quint explains that decades ago traditional long-term care insurance was more affordable and widely available.
  • Over time, many insurers underestimated care costs, leading to:
    • huge premium increases
    • companies exiting the market
    • fewer policy options

Hybrid Policies

  • Quint says he and his wife recently bought a hybrid long-term care policy.
  • Benefits of hybrid policies:
    • If long-term care is never used, there is often a life insurance benefit for heirs
    • Some policies allow you to recover much of the premium if circumstances change
  • He views it as one more way to “check the box” in case of a future care need.

Important Planning Considerations

1. Family History and Personal Risk

  • If dementia, stroke, or other chronic care issues run in the family, long-term care planning becomes more urgent.
  • Even without genetic concerns, personal experience with aging parents or relatives can change your view.

2. Family Support Is Not a Complete Plan

  • Having local children can help, but it may not be realistic to expect them to provide full-time care.
  • The hosts encourage families to discuss whether care would be:
    • in-home support
    • rotating family care
    • hired professional care
    • facility care

3. Don’t Rely Too Heavily on the House

  • Many people assume home equity will cover care expenses.
  • The hosts caution that using the house through a HELOC, refinance, or sale may be the last thing you want to do in a care crisis.

4. Be Careful with Medicaid Planning

  • They warn against assuming the government will step in early.
  • Medicaid typically requires significant spend-down of income and assets before coverage begins.
  • Some legal strategies still exist, but rules have become much stricter, so they recommend consulting an elder law attorney if needed.

Advice for Families

  • Have the long-term care conversation before a crisis.
  • Ask:
    • What is the plan if mom or dad needs care?
    • Who would help?
    • Would we pay for home care, assisted living, or memory care?
  • The hosts emphasize that this is a sensitive but necessary family discussion.

Closing Thoughts

The episode’s core message is that long-term care insurance is not a one-size-fits-all decision. The best plan depends on your finances, health history, family structure, and goals. Even if you do not buy insurance, the hosts strongly recommend building some long-term care assumption into your retirement plan so the risk is not ignored.

Notable Quote

  • “The secret to wealth is pretty simple: live on less than you make, invest the rest, and do so for a very long time.”