After last week’s webinar on Live On vs Leave On assets, a client reached out with an honest concern. He liked the concept of separating assets into two buckets, but he and his wife don’t have long-term care insurance. He wasn’t sure how to fit that risk into the framework, and the uncertainty was weighing on him.
He’s not alone. Many people recognize that long-term care is expensive and that there’s a real chance they or their spouse may need it one day. Yet they haven’t actually planned for it. As a result, the issue lingers in the background — not fully addressed, but never quite forgotten.
The problem with leaving long-term care unaddressed is that it often creates low-level anxiety. Either people avoid thinking about it altogether, or they worry about it without taking any concrete steps. Good planning removes that uncertainty. When you quantify a risk and decide how you’re going to handle it, you can stop carrying it around in the back of your mind.
Start by Quantifying the Risk
Before choosing a strategy, it’s helpful to get a realistic sense of what long-term care could actually cost you. This isn’t about predicting the future with certainty — it’s about understanding the range of possibilities.
Consider these questions:
- What level of care are you most concerned about? (Home care, assisted living, or a nursing home?)
- How much support could your spouse or family realistically provide?
- What are the current costs of care in your area?
- How long might you need care? (Many people plan for two to four years on average, though some need it significantly longer.)
Once you have a rough idea of the potential cost — even if it’s just a range — you’ve turned an abstract worry into something you can actually plan around.
Three Practical Ways to Address Long-Term Care
Once you have a sense of the potential cost, there are generally three ways to handle it. Each option has different implications depending on whether you’re thinking about your Live On assets or your Leave On assets.
1. Self-Insure Using Your Leave On Assets
The first option is to self-insure. This means planning to cover any long-term care costs from your own savings — primarily from your Leave On bucket.
If your financial model shows that you have a meaningful amount of Leave On assets (money you likely won’t need to spend during your lifetime), you could decide that this money would also serve as a backup for long-term care expenses. In other words, you’re comfortable using some of what would have gone to your children to pay for care if needed.
This approach keeps things simple and avoids paying ongoing insurance premiums. It works best if you have a sufficiently large Leave On bucket and you’re okay with the possibility that your heirs might receive less if you end up needing significant care.
2. Traditional Long-Term Care Insurance (Paid from Live On Assets)
The second option is traditional long-term care insurance. This works similarly to homeowners or auto insurance. You pay premiums on a regular basis, and in return, the policy helps cover the cost of care if you need it.
With this approach, the premiums would come out of your Live On assets, as they become part of your ongoing retirement expenses. If you never need care, you don’t get the premiums back. However, if you do need care, the policy can help protect your assets from being drained too quickly.
This option tends to appeal to people who want to preserve their Leave On assets for their family and are willing to pay premiums to transfer the risk to an insurance company.
3. Hybrid (Asset-Based) Long-Term Care Policies (Funded from Leave On Assets)
The third option is a hybrid, or asset-based, long-term care policy. These policies are typically built on a permanent life insurance chassis.
Here’s how it generally works: You transfer a lump sum (or spread payments over several years) from your Leave On assets into the policy. If you need long-term care, the policy can reimburse you for those expenses. If you never need care, the policy pays a tax-free death benefit to your heirs. Many of these policies also offer a surrender value or return of premium feature if you change your mind later.
This option is appealing because the money stays in a policy that has value either way — whether for care or as a legacy. It essentially allows you to reallocate a portion of your Leave On assets into a more protective structure while still preserving some benefit for your family.
Final Thoughts
Long-term care is one of those risks that many people know exists but often avoid dealing with directly. The problem is that when you don’t address it, it can quietly create ongoing stress that sits in the background of your retirement plan.
By quantifying the potential cost and then choosing one of these three paths — self-insuring with Leave On assets, purchasing traditional long-term care insurance from your Live On bucket, or using a hybrid policy funded from your Leave On assets — you can remove that uncertainty and make a deliberate decision.
None of these options is perfect, and what works for one person may not be right for another. But making a decision and building it into your plan is almost always better than leaving it unaddressed.
If you’d like help running the numbers on how long-term care might impact your specific situation, I’m currently offering to build a Smart Retirement Model at no cost or obligation while time slots are available. You can book a quick 15-minute call on my calendar at LeonardiFamilyWealthcare.com.
For more practical retirement insights, I release new episodes of my podcast, A Smarter Way to Retire, every week. You can also find video versions and short clips on my YouTube channel [@LeonardiFamilyWealthcare](https://www.youtube.com/@LeonardiFamilyWealthcare).
There really is a smarter way to retire — and part of that is addressing the concerns that keep you up at night.