A well-thought-out care plan can give clients more control over where they receive care, who provides it, and how they’ll pay for it. But that flexibility is usually greatest before a health event forces the family to make decisions under pressure.
The opportunity for financial advisors now is to help clients connect care preferences with retirement income, available assets, insurance coverage, tax considerations, and family capacity.
Insurance may support the plan, but it’s only one part of a broader funding conversation. So, what should you look for when building a flexible care plan? Let’s start with the easy answers, then dive into long-term care funding options.
When Should Clients Start Creating a Care Plan?
Preparation should begin while clients still have time to evaluate their preferences, finances, family support, and potential coverage options. Waiting until care is needed can lead to issues, like reduced care choices, especially when insurance products require medical underwriting.
Age does matter here, but it shouldn’t be the only reason to start the conversation. A useful opening is to ask clients what they’d want their care to look like if they needed assistance with daily activities. Some questions to ask are:
- Would they prefer to remain at home?
- Would they consider assisted living?
- Which relatives or friends might be able to help?
- How much support could those people realistically provide?
These questions turn an abstract risk into a planning scenario. They can also reveal conflicts earlier in the planning process. For example, a client may want to remain at home, but the nearest family member lives several states away. Another may expect a spouse to provide care without considering their health, abilities, or financial needs.
Start at the Care Plan, Not the Product
A care plan should identify the client’s preferred setting, available caregivers, decision-makers, and even sources of money. Products can then be evaluated according to how well they support those choices.
Current costs provide a useful starting point: The CareScout Cost of Care Survey, released in March 2026, reported national median annual costs of $74,400 for assisted living, $80,080 for 44 hours per week of non-medical home care, $114,975 for a semiprivate nursing-home room, and $129,575 for a private room. Actual costs of course depend on the location, setting, hours of care, and the level of support required. Nevertheless, these numbers indicate the hefty cost of care in the US.
Related: Long-Term Care Risks That Could Affect Clients’ Retirement Plans
Build a Funding Map Around Retirement Income and Liquidity
A long-term care funding map identifies which resources could pay for care and what using those resources might mean for the rest of the household.
Start by separating predictable retirement expenses from assets that could serve as a care reserve. Then identify which accounts are accessible, how withdrawals could affect taxable income, and how much should remain available for a spouse’s expenses.
The analysis should also account for timing. Selling investments during a market decline, taking a large taxable distribution, or redirecting an asset that supports retirement income could create consequences beyond the care bill itself.
Advisors can stress-test several scenarios instead of relying on one estimate. For example:
- Part-time home care that supplements family assistance
- Several years in an assisted living community
- A longer event requiring extensive home care or nursing-home support
The goal isn’t to predict which scenario will occur. It’s to determine whether the household has enough flexibility to respond without abandoning other priorities.
What Are Common Ways to Pay for Long-Term Care?
Clients generally use some combination of insurance benefits, income, savings, investments, family support, and public programs. Each common approach below addresses different needs and carries its own limits.
#1: Traditional Long-Term Care Insurance
Traditional long-term care (LTC) insurance can provide a dedicated pool of benefits for qualifying care. Depending on the policy, covered services may include care at home, in the community, or in a facility.
Policy details do matter here. Clients should review benefit triggers, elimination periods, coverage settings, inflation protection, exclusions, and benefit limits. They should also consider if they can sustain the premiums, including the possibility of approved class-wide premium increases.
#2: Life Insurance with Long-Term Care Benefits
A life insurance hybrid or linked-benefit policy may combine LTC benefits with a death benefit. If the insured needs care and qualifies for benefits, the policy can provide funds for covered services. If little or no care is needed, a residual death benefit may remain for beneficiaries.
Accessing care benefits generally reduces the policy’s remaining death benefit. Funding requirements, benefit triggers, inflation features, surrender values, and guarantees also vary considerably.
The central planning question is whether the client is comfortable repositioning assets to address both care and legacy objectives. It’s important to note that you should evaluate that trade-off using the actual contract rather than assuming every hybrid policy works the same way.
#3: Annuity-Linked Long-Term Care Approaches
Certain annuities may offer a feature that allows for the potential use of funds for qualifying long-term care expenses, while also maintaining an accumulation or protected income feature.
These arrangements require a close review of liquidity, surrender provisions, inflation, taxes, underwriting, and the client’s need for current income. Federal long-term care consumer guidance also cautions that annuity income may not cover the full cost of care and may lose purchasing power over time.
Before repositioning an asset, determine whether the client may need that money for routine retirement expenses. An asset can’t reliably serve as a care reserve if it’s already essential to the household’s income plan.
#4: Self-Funding and Blended Strategies
Self-funding gives clients control over their assets and doesn’t require medical underwriting. But, the household retains the risks associated with care costs, longevity, inflation, market performance, taxes, and liquidity.
A self-funding analysis should identify how much can be reserved without weakening retirement income or the surviving spouse’s plan. A large portfolio alone doesn’t answer that question. The advisor also needs to consider the portfolio’s purpose, tax characteristics, accessibility, and exposure to market losses.
Some households may prefer a blended strategy. Insurance might cover part of a qualifying event, while income and designated assets address elimination periods, uncovered services, or costs above a policy’s limits. This allows clients to decide which risks they want to retain, transfer, or share.
Related: Care Planning: How AI and Family Involvement Work Hand-In-Hand
What Should Families Decide Before Someone Needs Care?
Families should document who will make health and financial decisions, who will coordinate care, and who will communicate updates. They should also identify a backup if the primary caregiver becomes unavailable.
This conversation deserves specific answers. “The children will help” doesn’t establish who can provide transportation, manage bills, attend medical appointments, or coordinate professional services.
Legal documents, including appropriate powers of attorney, should be reviewed with a qualified attorney. Trusted contacts and account access procedures may also help the family respond more efficiently without bypassing privacy and security requirements.
The Opportunity for Independent Advisors
Care planning gives independent advisors a practical way to connect retirement income, insurance, taxes, estate considerations, and family expectations.
A periodic care-planning review can help clients update cost assumptions, evaluate existing coverage, clarify family roles, and adjust their funding map as circumstances change. Coordination with tax and legal professionals can address questions outside the advisor’s scope, too.
The most useful outcome is a plan the family can understand and carry out. When clients know where they’d prefer to receive care, who can help, and which resources are available, they’re better prepared to make thoughtful decisions during a difficult transition.
