Ask an Advisor: Benefits of long-term care insurance

Jeff Hoffmann
Posted by Jeff Hoffmann
Private Client Services

In this regular series we feature an advisor from Bank of the West’s Wealth Management Group sharing a useful reply to a question that many of our clients have. Today Steve Starzec answers this question:

Is long-term care insurance worth it?

Older African American couple outside their beach house, talking and looking out to the horizon.An important part of my role as a wealth financial advisor is to help our clients consider their future financial needs, even those that might not be top of mind. While people obviously have different needs, I ask every client about their plans for long-term care. While this is a difficult topic — considering the prospect that you might not be able to care for yourself in the future — it is important to think about from a financial perspective.

That’s because 70% of Americans who reach the age of 65 will need some sort of long-term care in their lifetime, according to the U.S. Department of Health and Human Services. But only about 3% of Americans over the age of 18 have a long-term care plan in place, as reported, using 2011 data from the American Association for Long-Term Care Insurance.

Common tactic, disappointing returns

When I see clients with large balances in their checking or money market accounts, I ask what these funds are for. A common answer for those over 60 is that they are for emergency purposes or if they need additional healthcare assistance. While it is understandable that our clients want to keep cash or liquid assets on hand for emergencies, I often ask my clients if they are also saving for their possible long-term care needs. With current interest rates so low, I bring up the advantages of long-term care insurance since clients are not always aware of the potential benefits this insurance can provide to assist with long-term care expenses.

The funds in a checking or money market account may take a long time to grow, and may not be sufficient to cover long-term care, which can cost an average of $81K per year, according to a MetLife study.

Long-term care insurance has changed a lot since my mother bought it. In the past, you’d just pay in and if you never used it, you’d lose it, like car and house insurance. Now, you have many options, including combined policies that provide long-term care benefits as part of your life insurance.

Benefits with flexibility

Long-term care insurance policies typically are flexible and permit you to apply the benefits to assisted living, full nursing, or home-care services, although certain limits and exclusions may apply.

Long-term care insurance helped my parents — and by extension, my family — tremendously. It allowed my mom and dad to live together much longer and provided them with additional funds they would not have had to take full advantage of professional care. Instead of relying on our extended family for caregiving, we could enjoy their final years together knowing they were in good hands.

If you haven’t already, I encourage you to talk with a Bank of the West financial advisor about your options. We’ll walk you through a very simple interview process and a review of the health records insurers use to make a determination of benefits, then we’ll look at insurance providers to see which plan works best for you.


Coverage and costs associated with long-term care policies will vary. It is important to carefully review a long-term care policy to understand the related costs and details of coverage.

To learn more about Bank of the West’s Wealth Management Group or to find a private client advisor, click here.

Steve StarzecAs Market Leader and VP for Bank of the West Wealth Management in Boulder, CO, Steve Starzec leads a team of financial professionals helping high-net worth clients meet their financial goals. Steve’s team takes a holistic approach, offering assistance in many areas, including private banking, investment management, trust services, insurance, mortgages, personal loans, estate planning, and business succession planning.

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