For decades, I've watched clients meticulously build their wealth—diligently planning, saving, and investing. Yet, I've seen even the most carefully constructed estates face a critical single point of failure: the high cost of long-term care (LTC) needs.

Here’s the striking paradox: all that meticulous financial planning becomes insufficient if it fails to account for what is frequently the most significant potential financial drain in retirement. Confronting the Long-Term Care risk is now arguably a fiduciary-level essential for safeguarding the client's intended legacy transfer.The market shows urgency: this is a complex risk for insurers to manage, leading to pricing and product complexity, which is why it's so tough for clients to manage on their own. And as professionals, it’s our responsibility to lead this effort.

Confronting the Client's Blind Spot: 70% Will Need Long-Term Care

Frank Tebyani  President, Career Agency Distribution AmeriLife

The biggest hurdle we face is denial. When we bring up long-term care, we see pushback. Many clients subscribe to the belief, "It won't happen to me," but the reality shows a different story. Approximately 70% of Americans aged 65+ will require some form of long-term care services during their lifetime. And for couples, the risk is compounded. For a 65-year-old married couple, there’s an estimated 77% likelihood that at least one spouse will require nursing home care at some point.

These numbers transform LTC from a distant possibility into a near certainty that must be factored into every single plan.

The Harsh Reality: Long-Term Care Costs vs. Inflation

Rising care costs define the financial impact of this risk on legacy transfer, consistently outpacing general economic inflation. The most recent data illustrates the magnitude of the expense:

The median annual cost of a private nursing home room, at an outstanding $127,750, is rising at 9%, far exceeding broad economic inflation. If a client chooses to self-insure a multi-year stay, they must be prepared to liquidate a substantial portion of their principal—that is, the legacy drain in action.

The Magnitude of the Legacy Drain: Quantifying the Risk

This elevated risk necessitates a formal analysis of “self-insure" gambling. When modeling the financial impact, the outcome is clear: the likelihood of a catastrophic wealth event is substantial. One in seven people turning 65 will incur out-of-pocket LTC costs exceeding $100,000.

When demonstrating LTC expenses in financial simulations, the damage to generational wealth is dramatic. For households with $1 million in assets, LTC expenses can reduce the median bequest value by almost 60%. The probability of plan failure (exhausting the portfolio) jumps to 38%.

Asset Repurposing: Converting Wealth for Tax-Advantaged Care

Effective LTC planning today requires a strategy I call asset repurposing—sophisticated financial engineering that leverages existing wealth for care without liquidating the core retirement portfolio, when appropriate.

Assure your clients understand these hybrid solutions:

1. Life Insurance with LTC/Chronic Illness Riders: This utilizes non-qualified money to serve a dual purpose. It provides either a tax-advantaged LTC benefit or a guaranteed death benefit, ensuring the asset is utilized regardless of the outcome.
2. Annuity Products with LTC Riders: one option is to demonstrate converting lower-yielding, conservative assets into a source of leveraged care funding. This is a crucial strategy for protecting core investment accounts from forced liquidation during a health crisis.

Leveraging Tax Advantages

We must champion favorable tax treatment for qualified LTC benefits. For instance:

• Benefits paid under a qualified plan are generally excluded from taxable income.
• The IRS allows a portion of the premiums to be deducted as medical expenses, with the eligible amount increasing by age. For example, the maximum age-indexed limit for a policyholder age 71+ is $6,020 for the 2025 tax year.
• Self-employed individuals can often deduct up to 100% of the eligible (age-indexed) LTC premiums.

From Planner to Guardian

Protecting a client’s legacy from the threat of LTC costs is the highest demonstration of professional competence. Integrate sophisticated LTC risk modeling into every wealth-transfer discussion, making it an essential component of a secure retirement-income plan. Clients can't manage this alone, but by integrating current cost data and customized risk modeling, as professionals, we can help them secure the future they've spent a lifetime building.

Frank Tebyani is the President of Career Agency Distribution for AmeriLife, overseeing more than 860 agents across 50 offices– specializing in leadership, sales, and business strategy for the division.