Gerald  Townsend
Patricia Annino
Long-term care insurance regardless of your client's net worth
Seven reasons your clients should consider LTC insurance.

July 19, 2012
by Patricia M. Annino, J.D.

When creating an estate plan, your clients should consider the risk of someday losing control over their physical or mental faculties. Advances in medical science mean that many people are living longer. But with that extended lifespan comes the real possibility that your clients’ mental and physical conditions will weaken and they will need additional support.

The challenge for all of us is to avoid the Scarlett O’Hara “I’ll think about that tomorrow” approach, and to plan for those risks now, while we’re physically and mentally strong, and our planning can be clear-headed, strategic, and efficient.

Here are seven good reasons to consider investing in long-term care (LTC) insurance now.

  1. Protect yourself

    It is up to your clients to consider what might happen to them in the future and to make decisions now about future care, should they be unable to do so later. This is not easy. It is normal to be in denial about that possibility and to focus instead on today.

    Even for those willing to face these issues, it is impossible to quantify the financial consequences. How do you predict how much or how long care will be needed or even what the best care will be? Since the cost is not predictable, how do you save for it? Investing in a long-term care policy offers a safety net of sorts. A long-term care policy offers an assurance that you have covered your risk and provided for your care using the best information available. If you need the care, the insurance will at most cover the risk and at worst cushion the blow.

  2. Maintain your independence

    As independent thinkers, your clients would want to control their own destiny and make decisions about the future. By creating and implementing a safety net, your clients do not have to rely on someone else to make those choices for them nor risk that those choices are different from the ones they would have made. To maintain your clients’ independence, they need the financial ability to support their choices, and must put in place the legal documents that will ensure that the choices are honored and respected.

  3. To preserve your dignity

    Many problems begin when aging parents’ status is threatened by failing powers. When their physical and mental health begins to decline, and they suddenly need assistance with the activities of daily living—cleaning, bathing, eating, and dressing—whom do they want to assist them? Many parents do not want their children in that role, especially when the adult child is of the opposite sex. But without a comprehensive care system in place, and insufficient funds to have outsiders provide that care, those awkward tasks frequently fall to family members. An investment in a long-term care policy helps pay for a custodial caregiver and helps maintain dignity.

  4. Create a plan now so that it will be ready when needed

    Investing now in a long-term care policy makes it easier for loved ones to have that difficult, but vital, conversation about care. With a policy in place, care will be available when needed, without a family struggling to first figure out what to do and then find and implement an appropriate caregiving plan.

  5. Protect the health of family caregivers

    While loved ones focus on elderly parents in declining health, the burden of taking care of that parent inevitably falls to one or two individuals. If the primary caregiver is the spouse, he or she may not have the physical, mental, or emotional energy to take on the demands of that role.

    It’s also problematic if the primary caregiver is an adult child, who probably has responsibilities of his or her own, including a spouse, children, and a job. He or she is torn between seeing caregiving as a burden and feeling a deep sense of obligation. If the caregiving needs are extreme, the adult child may need to quit his or her job or take a leave of absence, leading to loss of income, insurance, benefits, retirement plans, etc. The emotional toll is enormous, leading to feelings of loss, exhaustion, anger, and depression. However, an investment in long-term care means that the caregiving responsibilities will be shared with professional aides and companions who will help preserve not only the health of the declining parent, but also the health and well-being of the family caregivers.

  6. Expanded care options

    It is inherently difficult to determine what type of care might be required or how much it will cost. With limited financial resources and no LTC policy in place, the available care options are likewise limited. These options might include the goodwill of family members and governmental social services. With ample financial resources to invest in a LTC policy, there are alternative options, including aides’ and social workers’ visits, assisted-living facilities, quality nursing homes, Alzheimer’s units, and geriatric care managers (GCMs). A family may be able to keep a parent at home with caregiving shared between professionals and family members.

  7. Protecting your financial position

    Your clients have worked hard to build their net worth and cash flow. Along the way, there have been unavoidable setbacks, such as recession, inflation, emergencies, etc. While proper planning cannot solve all of those issues, it can hedge against the risk and cushion the blow if LTC assistance is needed. Exploring the purchase of LTC insurance is an important economic exercise. Some families share the cost of the premium so that the parents’ assets and income are protected, and the system of caregiving is in place. Sharing the cost of the premium can help families ensure that there will be an inheritance to pass to subsequent generations.

    Those who have saved for a rainy day never contemplated that the cost of care would be so exorbitant and, often, would not only exceed income and cash flow, but eat into the principal they have worked hard to preserve and protect.

    In all marriages, spouses are obligated to support each other. Whether your clients have been married for two days or 50 years, whether it’s their first marriage or their fourth, the law considers the assets and incomes of both parties to be spousal. If one of your clients has significant medical expenses, law and public policy mandate that he or she support his or her spouse. It does not matter if your client brought more assets into the marriage or if he or she earns more income. Wealthier spouses should consider purchasing LTC insurance to cushion the blow of any LTC expense their spouse may incur.

    Your clients could consider executing a prenuptial agreement (or a post-nuptial agreement) mandating that if either of them incurs medical expenses, then the ill spouse’s income and assets must be used in full (to the extent of depletion) before touching the other spouse’s assets.


The issues we face as we live longer are more complicated than those faced by prior generations. Protecting ourselves, our assets, our income, our family, and our loved ones becomes more difficult each day. The time to broach these important topics is now, before a crisis. Making sure that your legal and financial affairs are in order, and that the topic of LTC insurance is discussed and evaluated, should be a primary goal of each family that wants to plan responsibly for the future.

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Patricia M. Annino, J.D., LL.M., is partner in the estate planning practice group at Prince, Lobel Tye LLP. She is a Fellow of the American College of Trust and Estates Counsel.

* The AICPA’s PFP Section provides information, tools, advocacy and guidance to CPAs who specialize in providing tax, retirement, estate, risk management, and investment advice to individuals and their closely held entities. All members of the AICPA are eligible to join the PFP section. For CPAs who want to demonstrate their expertise in this subject matter, apply to become a PFS Credential holder. PFP Section members can access more information on COBRA using Forefield Advisor.