Using Life Insurance to Cover Long-Term Care Costs
- coreincomemarketing
- May 1
- 5 min read
How many clients do you have that want to spend their hard-earned savings on long-term care?
Zero.
But unfortunately, many will need to.
As care costs continue to rise, they can quickly erode a lifetime of savings, reduce what’s left for a surviving spouse, and shrink the inheritance intended for children.
For older clients and those who intend to pass assets on to the next generation, purchasing a life policy with a long-term care rider is a good option to help address this challenge.
We’re here to help you identify the case designs and opportunities where this strategy fits and how to structure it effectively.
To discuss your client cases, call us anytime at 800-541-7713 or email info@coreincome.com.
In this article, we walk through:
Interested in more advanced planning strategies like this one? Watch our webinar recording where Core Income’s Co-Founder and Head of Sales, Tim Foley, walks through 3 solutions tailored to your older clients.
Client Example
At 71, Maria and Jesse are enjoying a financially stable retirement together.
Their home is paid off, and they’ve saved $2 million for retirement. They live modestly on Social Security and small portfolio withdrawals, hoping to leave most of their savings to their children.
But Maria has seen firsthand how long-term care can affect a family’s finances. Her 92-year-old mother has spent five years in memory care, exhausting her savings.
Concerned they could face the same situation, Maria and Jesse began looking into long-term care insurance.
Due to their age, the quotes they received were expensive at about $25,000 per year.
This cost would require larger withdrawals from their savings and deplete their nest egg over the next 20 years, regardless of whether they ever use the coverage.
This created a difficult decision for them.
If care is necessary, purchasing long-term care insurance is a smart investment.
If care doesn’t become necessary, $500k less is passed on to their children.
Their financial advisor introduced another solution: life insurance with a long-term care (LTC) rider.
This option would give them access to funds for care if needed, and if not, it would provide a tax-free death benefit to their heirs.
Jesse and Maria each purchased a policy with a $500k death benefit.
Jesse’s premium = $19,060/year
Maria’s premium = $17,400/year
While this strategy still draws on their portfolio, it preserves the value of their estate in both scenarios, whether they needed care or not.
After evaluating three different scenarios, here’s a high-level look at how each would impact their heirs.
Current scenario (no action taken)
No LTC event: $2 million estate at death
LTC event: $500k to $1 million estate at death
Purchase an LTC policy
No LTC event: $1.5 million estate at death
LTC event: $1.5 million estate at death
Purchase a life policy with an LTC rider
No LTC event: $2.5 million estate at death
LTC event: $1.75 million estate at death
This is a very high-level summary of a client case. If you’d like to discuss how we arrive at these projections in more detail, we’d love to arrange a 1:1 meeting with one of our life experts. Call 800-541-7713 or email info@coreincome.com.
How Core Income is Here to Help Advisors
Core Income is your back-office team for life insurance, handling everything from start to finish and providing any level of support you may need.
Quick Quotes from 30+ Carriers
With just a basic medical profile (no application required), we can request preliminary quotes from over 30 insurance carriers at once.
On a brief call, we’ll walk through your client’s health profile with you, then use that to check how each carrier is expected to rate them.
This gives you a clearer picture of your client’s insurability before putting them through medical exams or the full underwriting process.
From there, we can run a cost-benefit analysis to see if the policy options make sense for your client.
With clear, objective strategies backed by rigorous analysis, you can confidently guide clients toward long-term financial security while effectively managing risk.
Full, Informal Underwriting
Another way we can assist is through full, informal underwriting– an efficient way to evaluate your client’s insurability before submitting a formal application or scheduling a client medical exam.
With just one HIPAA form, we can gather your client’s medical records and access the same underwriting databases insurance companies use. This lets us identify potential rating issues, like the client’s medications or upcoming doctor visits, early in the process, before they become surprises.
Using this data, we can build a full medical profile and predict with 95% confidence how the client will be rated.
Then, we’ll proceed with the medical exam and formal application.
We handle this process in-house for three important reasons:
To make the experience easier and less invasive for your client.
To give you a realistic sense of policy pricing upfront.
To keep your options open. We shop at multiple carriers instead of locking you into just one.
For clients with more complex medical records, such as a history of cancer or long-term medications, we’re often able to secure approvals and, in many cases, favorable ratings by positioning the case properly from the start.
The Best Underwriting Advice is Just a Call Away
Whether you already work with us or not, we encourage you to contact us about any case, especially those involving older clients or complex health histories.
We’re happy to hop on a call to walk through the case details with you and discuss how we can support your life insurance planning, particularly for clients you may be unsure about.
Advanced Support
At Core, we offer a very high level of advanced support for even the most complex life insurance cases.
Most of this is handled in-house by our team, but we also partner with top industry experts to loop into the conversation when needed:
Phil Vogel
As a financial services consultant focused on ultra-high-net-worth clients, Phil supports cases involving premium financing and advanced tax planning strategies to help clients preserve their exemptions.
Rob Wellendorf
A nationally recognized estate planning expert. If your client owns multiple businesses, has a complex trust structure, or needs advanced wealth transfer strategies, we encourage you to contact us, and we can bring Rob into the conversation.
No matter how simple or complex the case, we’ll guide you through it, from design to delivery, with precision and care.
Our job is to help you look great in front of your clients and protect the long-term relationships you’ve built.
Unlike other FMOs, we don’t lock you into exclusivity contracts. We’re here to help advisors do what’s right for them and their clients. If that means the right product isn’t on our shelves at that time, we’ll help you find what’s best for them, wherever that may be.
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Core Income is an FMO, IMO, and independent insurance brokerage dedicated to serving financial advisors, their staff, and their clients.
Our mission is to help advisors deliver financial certainty by supporting them through actuarial precision, elite responsiveness, and collaborative partnerships.
To learn more about how we can support you, schedule a consultation with our team or call us at 800.541.7713.
Stay connected with us on social media for more tips and insights on annuities, life insurance, and long-term care.
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