Broker Check

A New Look at Extended-Care Planning

August 30, 2017

Successful people spend the majority of their adult life working to better themselves, advance their careers, and put away enough money to eventually reach the day where they gain financial independence. It is a great feeling to know that you own your time and can spend it in whatever way you desire. The luckiest of people truly enjoy the work that they have so diligently devoted themselves to for 40 or more years and may want to continue out of pleasure, not necessity. The thought of finding oneself in a compromised capacity and in need of extended care is not one that crosses our minds regularly, if at all. However, finding yourself or a loved one in this situation without planning in place may overshadow the joys of retirement and jeopardize the financial and mental well-being of healthy spouses as well as children.

Traditional long term care policies are one way to help protect against the financial burdens of an extended-care episode. One common issue that has plagued these sorts of policies is rising premiums that can become a major expense to maintain. Premiums become unsustainable and polices lapse later in the insured’s life, right when they may need that coverage the most, with nothing to show for the premiums paid through the life of the policy.

An alternative option, made available through the Pension Protection Act of 2006, is asset based extended-care coverage. These policies allow the owners to leverage up money that may already have earmarked for healthcare costs, or build up coverage during earlier years in retirement that can be accessed tax free for extended-care expenses. This helps to protect assets from depletion due to extended-care costs and preserve income streams for a surviving spouse. These policies can be issued as non-cancellable contracts, preventing premiums from increasing through the life of the policy, and also provide a death benefit in the event that funds are not used for extended-care purposes.

With almost 70% of people turning age 65 needing extended care at some point in their lives, this planning is pivotal to an all-encompassing retirement income and asset preservation strategy. Diligent planning may also save your family from unnecessary stresses brought on by the costs of care or personal sacrifices by family members who act as caregivers. Taking the time to address these risks sooner rather than later can have immense benefits not only from a financial aspect, but can save family relationships from the damages brought on by the stress of providing care for a loved one.

Joshua C Rosenberg is an investment advisor representative at Nabell Winslow Investments, a regional investment advisory firm. He can be reached at 910-239-9130 or

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