Should You Self-Insure for Long-Term Care or Buy a Policy?
LTC insurance premiums are expensive and rising. Self-insuring works for some. The analysis shows the breakeven.
What Does Long-Term Care Actually Cost?
2025 national averages: - Home health aide: $65,000/year - Assisted living: $64,000/year - Nursing home (semi-private): $104,000/year - Nursing home (private): $120,000/year
Average duration of need: 3 years for women, 2.2 years for men. But about 15% of people need LTC for 5+ years.
A 3-year nursing home stay at $104,000/year = $312,000. With 5% healthcare inflation, a similar stay in 15 years costs $648,000. This is the number your analysis must absorb.
When Should You Self-Insure vs. Buy Coverage?
Self-insure (absorb the cost from portfolio): - Portfolio above $2M with moderate spending - Monte Carlo success rate stays above 75% even with a 3-year LTC event overlay - Spousal income (SS + pension) covers the non-affected spouse without portfolio support
Buy LTC insurance: - Portfolio $500K-$2M - Success rate drops below 60% with LTC event overlay - No spousal income backup
Hybrid life/LTC policy: - Solves the 'use it or lose it' concern (death benefit if LTC never needed) - Higher premiums than standalone LTC - Good for people who want coverage but can't accept the possibility of paying premiums for nothing
The analysis engine runs two Monte Carlo scenarios: with and without a LTC event. The success rate delta tells you exactly how vulnerable you are.
Want to See Your LTC Vulnerability?
The analysis at myaifinancialplan.com models a long-term care event overlaid on your retirement projection — showing the success rate with and without the event. Start free at myaifinancialplan.com.
Terms in This Article
Browse Full Glossary →This article is for educational and informational purposes only. It does not constitute investment advice, financial planning advice, or a recommendation to buy or sell any security. AI Financial Plan is not a registered investment adviser, broker-dealer, or financial planner. You should consult with a qualified professional before making financial decisions. Past performance and projected outcomes are not guarantees of future results.
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