How Advisers Can Lead Long-Term-Care Planning

Holly Westervelt

A single long-term-care event can quickly unravel a well-constructed retirement strategy, disrupting income streams, draining savings and placing unexpected pressure on family members. Yet despite the potential impact, long-term-care planning is often pushed to the sidelines of client conversations.

Advisers often encounter familiar barriers: high premiums for traditional LTC insurance, stringent underwriting requirements and client resistance driven by the “use it or lose it” nature of coverage. These challenges can lead to inaction, which leaves clients exposed.

LTC annuities act as an alternative to traditional LTC insurance, allowing clients to set aside funds for extended care costs without the risk of losing the funds if they never need care. While product designs vary, these solutions generally combine an annuity with enhanced benefits that can be used for qualified long-term-care expenses. Unused funds can pass along to survivors after the client dies.

In practice, this means a client allocates assets to an annuity that provides tax-deferred growth and the ability to use the funds for LTC costs when needed. Unlike traditional LTC insurance, these products can rely on a repositioning of existing assets, rather than ongoing premium payments. LTC benefits are typically leveraged at two to three times the initial premium.

For advisers, the key is not the product itself, but the planning function it serves: creating a dedicated pool of assets that can support either potential care costs or a death benefit for loved ones.

Weighing the Options

Integrating LTC annuities into a retirement plan requires careful positioning. These solutions are not intended to replace retirement income sources, but to complement them. By designating a specific resource toward LTC costs, clients may be less likely to draw down investment portfolios prematurely or disrupt their overall income strategy.

Advisers should focus on identifying clients for whom this dual-purpose approach makes sense. When evaluating LTC planning options, advisers should frame the conversation around trade-offs, rather than positioning one solution as universally better.

Traditional LTC insurance may offer greater leverage, particularly for clients who are younger and in good health. However, it comes with ongoing premium commitments and the possibility that benefits may never be used. With LTC annuities, clients retain access to their funds in some form—whether through income, care benefits or a death benefit—which can make the decision more palatable. At the same time, the level of LTC coverage may be more limited than in a dedicated insurance policy.

For advisers, the goal is to align the solution with client preferences and constraints. Clients who prioritize flexibility and asset control may lean toward annuity-based strategies, while those seeking maximum coverage may still find traditional LTC insurance more appropriate.

Moving the Conversation Forward

Perhaps most importantly, advisers should take the lead in initiating these conversations. Rather than waiting for clients to raise concerns about long-term care, advisers can frame the discussion as a natural extension of retirement planning, helping clients understand how different risks intersect and how they can be addressed in a coordinated way.

Advisers need a clear understanding of the client’s overall financial picture, including current assets, liquidity requirements, health status and risk tolerance. From there, due diligence with product features is critical, including how and when LTC benefits are triggered; the structure of payouts; and any limitations or trade-offs embedded in the design. Advisers should ensure that annuity allocations do not create unintended constraints on liquidity or flexibility.

One practical step is to revisit existing client plans with a specific focus on long-term-care exposure. Where gaps exist, introducing alternative solutions like LTC annuities can open the door to more productive conversations and more resilient outcomes. Looking ahead, the advisers who will stand out are those who move beyond traditional silos, approaching retirement planning not just as an income challenge, but as a broader exercise in managing uncertainty.

Holly Westervelt is the vice president of sales for Krause Agency, a national wholesaler of insurance products for the senior market.

This feature is to provide general information only, does not constitute legal or tax advice, and cannot be used or substituted for legal or tax advice. Any opinions of the author do not necessarily reflect the stance of ISS STOXX or its affiliates.