Long-Term Care Insurance: 7 Critical Strategies Wealthy Families Must Know Before It’s Too Late

Why Long-Term Care Insurance Matters More for High-Net-Worth Families

Long-term care insurance is one of the most misunderstood — and most consequential — planning decisions facing affluent families today. If you have a portfolio of $1 million or more, the conventional wisdom that you can “self-insure” may be dangerously incomplete.

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Here’s the reality: according to the U.S. Department of Health and Human Services, roughly 70% of Americans turning 65 will need some form of long-term care during their remaining years. The average cost of a private room in a nursing facility now exceeds $115,000 per year nationally — and in many coastal and metropolitan markets, that figure climbs well past $150,000.

For families with $2 million to $10 million in investable assets, a prolonged care event can erode decades of careful wealth building. It can disrupt income plans, trigger unnecessary tax consequences, and ultimately compromise the legacy you intended to leave behind.

This post explores seven critical strategies that high-net-worth families should understand about long-term care insurance — and why acting before health changes is non-negotiable.

The Dangerous Myth of Self-Insuring Long-Term Care

Why Wealthy Families Assume They Don’t Need Long-Term Care Insurance

In our experience working with executives, business owners, and retired professionals, the most common objection we hear is: “We have enough to pay for care out of pocket.”

On the surface, this makes sense. If your portfolio is $5 million, why pay premiums for something you might never use? But this reasoning ignores several compounding risks that apply specifically to affluent households:

• Extended care durations: Wealthier individuals tend to live longer and may require care for 5–8 years, not the average 2–3 years often cited in generic planning articles.
• Spousal impact: When one spouse requires expensive care, the healthy spouse’s lifestyle, income, and long-term security are directly threatened.
• Inflation compounding: At 5% annual healthcare inflation, a $120,000/year care cost today becomes roughly $195,000/year in just 10 years.
• Portfolio sequence risk: Liquidating $150,000–$300,000 per year during a market downturn can permanently impair portfolio recovery.
• Tax consequences: Forced liquidations from IRAs or concentrated stock positions can push you into the highest tax brackets and trigger IRMAA surcharges on Medicare premiums.

How Long-Term Care Insurance Differs for HNW vs. Mass-Market Families

Mass-market financial planning often treats long-term care as a binary question: buy a traditional policy or don’t. For high-net-worth families, the landscape is far more nuanced.

Factor	Mass-Market Approach	HNW Approach
Typical Strategy	Traditional standalone LTC policy	Hybrid policies, asset-based LTC, or strategic self-insurance with guardrails
Premium Sensitivity	High — rate increases cause lapse	Lower — focus is on benefit design and tax efficiency
Estate Impact	Minimal consideration	Must coordinate with estate plan, trusts, and gifting strategy
Tax Planning	Standard deductions if applicable	IRMAA avoidance, Roth conversion timing, capital gains management
Spousal Protection	Often overlooked	Critical — healthy spouse’s income and lifestyle must be preserved
Medicaid Planning	Central concern	Rarely relevant — focus is asset preservation and legacy

The key takeaway: high-net-worth families need a long-term care insurance strategy designed around wealth preservation, not just coverage. Consult a qualified financial professional for your specific situation.

7 Critical Long-Term Care Insurance Strategies for Wealthy Families

Strategy 1: Hybrid Life Insurance and Long-Term Care Insurance Policies

Traditional standalone long-term care insurance policies have become increasingly expensive and harder to find. Many carriers have exited the market or imposed significant premium increases on existing policyholders.

Hybrid policies combine life insurance (or an annuity) with long-term care benefits. Here’s why they’ve become the dominant solution for affluent families:

• Return of premium: If you never need care, your beneficiaries receive a death benefit — your premiums aren’t “lost.”
• Premium stability: Most hybrid policies are funded with a single premium or limited-pay structure, eliminating the risk of future rate increases.
• Leverage: A $200,000 single premium might provide $500,000–$800,000 in long-term care benefits.
• Tax-advantaged benefits: Under IRC Section 7702B, qualified long-term care benefits are generally received income-tax-free.

For clients with $500,000 or more in low-yielding CDs, bonds, or cash equivalents, repositioning a portion into a hybrid policy can be remarkably efficient.

Strategy 2: Asset-Based Long-Term Care Insurance Solutions

Asset-based solutions are closely related to hybrids but deserve separate attention. These products allow you to reposition existing assets — often from a money market, CD, or underperforming annuity — into a policy that provides both growth potential and care coverage.

The appeal for high-net-worth clients is straightforward: you’re not “spending” money on insurance premiums. You’re reallocating capital from a low-return asset class into a vehicle that provides significant leverage if care is needed, and preserves value if it isn’t.

This approach is particularly effective for clients who:

• Hold excess cash or near-cash positions beyond their liquidity needs
• Want to maintain control over their assets (many policies allow partial surrender)
• Prefer a “use it or keep it” structure over traditional “use it or lose it” insurance

Strategy 3: Using Long-Term Care Insurance to Protect Your Estate Plan

For families with estates approaching or exceeding the 2026 federal estate tax exemption — which is a critical planning year as the Tax Cuts and Jobs Act provisions are set to sunset — long-term care costs represent one of the largest uncontrolled variables in estate planning.

Consider this scenario: a couple with a $9 million estate has carefully structured irrevocable trusts, annual gifting, and charitable strategies to minimize estate taxes. Then one spouse requires care costing $180,000 per year for six years. That’s $1,080,000 in after-tax dollars drained from the estate — potentially unwinding years of strategic planning.

Long-term care insurance effectively ring-fences this risk, ensuring that your estate plan functions as designed regardless of health events. Some families even purchase policies within irrevocable life insurance trusts (ILITs) to remove the death benefit from the taxable estate entirely.

Strategy 4: Coordinating Long-Term Care Insurance with Roth Conversions and IRMAA Planning

One of the most overlooked interactions in retirement planning is how long-term care costs affect your tax picture. Forced IRA withdrawals to pay for care can:

1. Push you into higher tax brackets — potentially the 32% or 35% federal bracket for high-income retirees.
2. Trigger IRMAA surcharges — in 2026, single filers with modified adjusted gross income above approximately $106,000 (and joint filers above $212,000) face increased Medicare Part B and Part D premiums. Large IRA distributions can push you well into higher IRMAA tiers, adding thousands per year in Medicare costs.
3. Reduce the efficiency of Roth conversion strategies — if you’re executing a multi-year Roth conversion ladder, unexpected care costs create competing demands for taxable income space.

By having long-term care insurance pay for care costs, you preserve your ability to control the timing and amount of taxable income — one of the most valuable levers in high-net-worth retirement planning. Consult a qualified tax professional for your specific situation.

Strategy 5: Shared-Care and Couples Long-Term Care Insurance Policies

For married couples, shared-care policies offer a compelling way to maximize coverage while managing costs. These policies create a shared pool of benefits that either spouse can access.

For example, a couple might purchase a shared-care policy with a combined $1 million benefit pool. If one spouse uses $300,000 in benefits and the other uses $700,000, the full pool is available. If only one spouse needs care, they can access the entire $1 million.

This structure is particularly valuable for affluent couples because:

• It provides more total coverage per premium dollar than two individual policies
• It protects the healthy spouse’s financial security
• It adds flexibility to accommodate unpredictable care scenarios

Strategy 6: Tax Deductions and Long-Term Care Insurance Premiums

The IRS allows a deduction for qualified long-term care insurance premiums as a medical expense, subject to age-based limits. For 2026, the approximate deductible limits are:

• Age 50 or under: ~$480
• Age 51–60: ~$1,270
• Age 61–70: ~$3,390
• Age 71 and over: ~$5,350

These amounts are per person and are deductible as medical expenses subject to the 7.5% AGI threshold on Schedule A. For most high-income earners, this floor limits the practical benefit of the deduction on personal returns.

However, business owners have additional options. S-corporation shareholders who own more than 2% of the company can deduct qualified long-term care insurance premiums as a business expense, subject to the age-based limits above. C-corporations can deduct the full premium as a business expense with no age-based limitation. Consult a qualified tax professional to determine which structure is most advantageous for your situation.

Strategy 7: The Underwriting Window Is Closing — Why Timing Matters

Perhaps the most important strategy is simply this: act while you’re healthy enough to qualify.

Long-term care insurance underwriting is far more restrictive than life insurance underwriting. Common conditions that can result in a decline or significant rating include:

• Diabetes with complications
• Parkinson’s disease or any dementia diagnosis
• Stroke history
• Use of a walker or wheelchair
• Certain cardiac conditions
• Cognitive impairment of any kind

The optimal window for purchasing long-term care insurance is typically between ages 50 and 65. By age 70, options narrow significantly. By 75, most traditional and hybrid products are either unavailable or prohibitively expensive.

In our experience working with clients, the most common regret we hear is: “I wish I had looked into this five years ago when I could still qualify.”

How Long-Term Care Insurance Fits Into a Comprehensive Wealth Plan

Integrating Long-Term Care Insurance with Your Overall Financial Strategy

Long-term care insurance should never be evaluated in isolation. It’s one component of a broader wealth management framework that includes:

• Investment portfolio design — ensuring sufficient liquidity and growth to support retirement income, care costs, and legacy goals
• Tax planning — coordinating Roth conversions, capital gains harvesting, and income timing with potential care scenarios
• Estate planning — aligning trust structures, beneficiary designations, and gifting strategies with long-term care risk
• Insurance architecture — evaluating life, disability, umbrella, and long-term care coverage as an integrated system

At Davies Wealth Management, our comprehensive wealth management services address each of these dimensions for high-net-worth families. We believe that long-term care planning is not an “insurance decision” — it’s a wealth preservation decision that affects every other part of your financial life.

Why Professional Athletes and Executives Face Unique Long-Term Care Risks

Two groups we work with closely — professional athletes and corporate executives — face distinct long-term care considerations:

Professional athletes often retire in their 30s or 40s with significant assets but a very long potential care horizon. The earlier you retire, the more years of potential care exposure you face. Athletes may also have elevated risk of cognitive decline or joint deterioration depending on their sport, making early underwriting especially important.

Executives and business owners frequently have concentrated wealth in company stock, deferred compensation, or business equity. A long-term care event can force liquidation of these concentrated positions at inopportune times, potentially during lockup periods or unfavorable market conditions. Having long-term care insurance provides a liquidity buffer that protects your core wealth.

What to Look for When Evaluating Long-Term Care Insurance Policies

Key Features in a Long-Term Care Insurance Policy for HNW Clients

Not all policies are created equal. When evaluating long-term care insurance, affluent families should focus on these features:

1. Benefit amount: Ensure the daily or monthly benefit is sufficient for private-pay care in your preferred location. In coastal Florida, premium home care and assisted living facilities can exceed $12,000–$15,000 per month.
2. Benefit period: Consider policies with benefit periods of 4–6 years or longer. Unlimited benefit periods are increasingly rare but may be available through certain hybrid structures.
3. Inflation protection: For clients under 65, compound inflation protection is strongly recommended. A 3% compound rider doubles your benefit roughly every 24 years. Without it, your coverage may be inadequate when you actually need it.
4. Elimination period: This is the “deductible” period before benefits begin — typically 30, 60, or 90 days. Affluent clients can often choose a longer elimination period to reduce premiums, since they can comfortably self-fund the initial weeks of care.
5. Home care coverage: Verify that the policy covers care delivered in your home, not just in a facility. Most high-net-worth clients strongly prefer to receive care at home.
6. Carrier financial strength: Only consider carriers rated A or better by AM Best. Given that benefits may not be needed for 20–30 years, the insurer’s financial stability is paramount.

Red Flags to Watch for in Long-Term Care Insurance Products

Be cautious of:

• Policies with no inflation protection — these may seem affordable now but will be woefully inadequate in 15–20 years
• Carriers with a history of significant rate increases on in-force policies
• Products that restrict coverage to facility-only care
• Overly complex riders that reduce benefits in ways that aren’t immediately apparent
• Agents who push the largest possible policy without understanding your full financial picture

A fiduciary advisor who does not earn commissions on insurance products can provide an unbiased evaluation of your options. To explore how this works in practice, schedule a discovery conversation with our team.

Frequently Asked Questions About Long-Term Care Insurance

How Much Does Long-Term Care Insurance Cost for a High-Net-Worth Couple?

Costs vary widely based on age, health, benefit design, and carrier. A healthy couple in their mid-50s might pay $4,000–$8,000 per year combined for a quality traditional policy with inflation protection. Hybrid policies funded with a single premium typically require $100,000–$300,000 upfront but eliminate future premium risk and provide a death benefit if care isn’t needed.

Can I Deduct Long-Term Care Insurance Premiums on My Taxes?

Yes, qualified long-term care insurance premiums are deductible as medical expenses, subject to IRS age-based limits and the 7.5% AGI floor. Business owners may have additional deduction opportunities through S-corp or C-corp structures. Consult a qualified tax professional for your specific situation.

What Is the Best Age to Buy Long-Term Care Insurance?

The optimal purchasing window is generally between ages 50 and 65. Premiums are lower, underwriting approval is more likely, and you gain more years of inflation protection compounding. Waiting until 70 or beyond significantly narrows your options and increases costs.

Is Long-Term Care Insurance Worth It If I Have $5 Million or More?

For most families with $5 million or more, the question isn’t whether you can afford care out of pocket — it’s whether doing so is the most efficient use of your assets. Long-term care insurance provides leverage (turning $200,000 in premiums into $500,000+ in potential benefits), protects your estate plan, and preserves your investment portfolio during a vulnerable period. The wealthier you are, the more you have to protect.

What Happens If I Never Need Long-Term Care Insurance Benefits?

With traditional policies, unused benefits are forfeited — similar to auto or homeowner’s insurance. This is one reason hybrid and asset-based policies have become so popular among affluent families: if you never need care, your heirs receive a death benefit. Your premiums are never truly “wasted.” Some policies also allow you to surrender the policy and recover a significant portion of your premium.

Take Action Now to Protect Your Family’s Wealth

Long-term care insurance isn’t a topic most people enjoy thinking about. But for high-net-worth families, it represents one of the most impactful planning decisions you can make — one that protects not just your assets, but your independence, your spouse’s security, and the legacy you’ve spent a lifetime building.

The window for action is health-dependent and time-sensitive. Every year you wait, premiums increase, health risks accumulate, and options narrow. The best time to evaluate your long-term care insurance strategy is before you need it.

Ready to understand how long-term care insurance fits into your overall wealth plan? Take our Financial Wellness Quiz to see where your plan stands across all dimensions — including risk protection, tax efficiency, and legacy planning.

Or, if you’d prefer personalized guidance from a fee-based fiduciary team that works exclusively with high-net-worth clients: Book a complimentary phone call with Davies Wealth Management today.

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This content is for educational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Advisory services offered through Davies Wealth Management, a Registered Investment Adviser. Please consult a qualified financial, tax, or legal professional regarding your specific situation.

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