Is Long-Term Care Insurance Worth It? A Real-Life Dilemma (Part 1)
My husband and I are at a transitional age. Retirement is still years off, but we’re in that window where long-term care (LTC) insurance is still accessible before an unexpected illness renders us uninsurable.
Neither of us has a family history of early-onset dementia or cognitive decline. Three of our four parents are alive and over 80, suggesting strong longevity. But like many couples, we’ve watched family members require intensive care in their final years.
This leaves us with a high-stakes decision: Should we transfer our risk to an insurance company, or self-fund our care?
The Insurance Route: Paying for Certainty
Traditional LTC insurance guarantees coverage if we need it. We don't have to worry about market drops, rebalancing, or outliving our savings strategy.
However, that certainty comes with trade-offs:
High, unpredictable premiums: Rates can spike over time.
Rigid rules: Bureaucracy can make claims difficult to execute and there will be limitations on what is and isn’t covered.
"Use it or lose it": You can pay premiums for decades and receive zero payout if you never need high-level care.
The Self-Funding Route: Relying on Discipline
Choosing to self-fund means betting on ourselves. It gives us total control over our capital, but puts all the operational burden on our shoulders:
Behavioral discipline: We must treat these funds as off-limits for standard retirement spending.
Management transfer: We need a foolproof plan for someone else to step in to manage the funds if we experience cognitive decline.
Tail-risk exposure: We have to plan for an average 2-year nursing stay and the catastrophic risk of 5+ years of intensive care.
As a do-it-yourselfer, my heart leans toward self-funding. But choosing self-reliance requires solving its biggest vulnerabilities: portfolio management and behavioral temptation.
Closing
In Part 2, I’ll break down our exact framework for solving the weaknesses of self-funding which includes strategies such as asset automation, secret mental buckets, and our backstop funding source.
You don't have to figure out your wealth-building strategies on your own. Schedule an initial consult with your Fulla wealth advisor today.
