Most of the conversations clients have had about long-term care insurance are based on products that no longer exist.

On this week's Financial Commute, Chris Galeski sits down with Russell Boring, Founder of Elevated Strategies Insurance Services, to walk through what has actually changed. The carriers that mispriced their policies are mostly gone. What replaced them are hybrid and annuity-based structures that solve the biggest objection people have always had: what happens to the money if you never need care?

The short answer: it comes back.

They also cover why people in their 70s who assumed they had aged out of the conversation now have options they did not before, and why the clients who can afford to self-fund are sometimes the ones who need this conversation most.

Key Takeaways

• 70 percent of people over 65 will likely need some form of long-term care before they pass away. Roughly 1 in 5 of those people will need care for more than five years. At six figures per year, a multi-year long-term care event is a real and meaningful risk to a retirement plan, not a remote possibility.
• The traditional long-term care model has largely disappeared. Carriers mispriced their products for years, which drove most of them out of the market. In California today there are fewer than five traditional carriers remaining. The products that replaced them are structured differently and carry different trade-offs.
• Hybrid and annuity-based structures solve the "money gone" problem. With newer products, money placed into a long term care policy either gets used for care or comes back as a death benefit to your heirs. A $100,000 contribution on a leveraged structure might provide $300,000 in long term care coverage day one, with the original contribution returned if care is never needed.
• Age is no longer the barrier it once was. Older product structures tied to life insurance became expensive and harder to qualify for as clients aged. Annuity-based long term care options have changed that. Someone in their 70s who previously would have been priced out can now access meaningful leverage on their safe-bucket assets without taking on additional market risk.
• Existing life insurance or annuity cash value can be repositioned. If you are holding a policy you no longer need for its original purpose, it may be possible to exchange that into a long term care structure in a tax-advantaged way, removing gain exposure and creating a leveraged, tax-free benefit pool for care.