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Wealth Management: Long-Term Care Explained

Wealth can mean different things to different people. For some, it simply means having enough money to cover their basic needs. Others may define wealth as having a large safety…

September 3, 2022

Written by Ty Bongiovanni

Wealth can mean different things to different people. For some, it simply means having enough money to cover their basic needs. Others may define wealth as having a large safety net that they can use to cover unexpected expenses or fund retirement. Most people may agree that wealth is more than just money. It’s also about confidence and feeling secure in your financial future.


No one knows what the future holds, but by preparing for as many potential risks as possible, you can rest assured that you’re doing everything in your power to protect yourself and your loved ones. For this reason, risk management plays a vital role in wealth management. One of the biggest risks people face is the need for long-term care, which will be the topic of today’s blog.


Read through the article to learn everything you need about long-term care. We’ll explain what it is, how it relates to wealth management, and some strategies for managing it. We’ll also discuss the benefits of long-term care and who might need it the most. Keep reading, whether you’re already working with a wealth manager or looking to get started.

What Is Risk Management, And What Does It Entail?

Risk management identifies, assesses, and mitigates risks to protect a person or organization’s assets. It’s about more than just insurance, although insurance is often a key part of the risk management process. For many business owners and heads of households, risk management is an ongoing process regularly reviewed and updated as needed.


Risk management has four critical components:

  • Identify Risks: You can do this through various methods, including interviews, surveys, reviews of past incidents, and data analysis. Your goal here is to identify as many potential risks as possible.
  • Assess Risks: Once you’ve identified potential risks, it’s time to determine their likelihood and the consequences’ severity. This step will help you prioritize which threats to focus on first.
  • Control Risks: Here is where you’ll develop strategies to avoid, minimize, or transfer risks. Some common risk control strategies include insurance, changes in business practices, and the use of contracts.
  • Monitor Risks: Even after you’ve taken steps to control risks, monitoring them on an ongoing basis is essential. This way, you can identify potential new risks and ensure that your control strategies are effective.

What Risks Do We Have To Be Prepared For?

There are many different types of risks that we should be aware of. Some, like the risk of death or disability, are relatively rare but would have a significant impact if they did occur. Others, like the risk of losing your job or your home, are more common but may not have such a severe impact. 


Some risks that people face include:

  • The risk of death or disability
  • The risk of job loss
  • The risk of losing your home
  • The risk of being sued
  • The risk of having your identity stolen
  • The risk of being in an accident
  • The risk of getting sick or injured

What Is Long-Term Care?

Long-term care is a type of care designed to meet the needs of people who have chronic illnesses or disabilities. You can obtain it in many settings, including nursing homes, assisted living facilities, and at home. Long-term care differs from conventional medical treatment because it concentrates on helping patients with activities of daily life like eating, dressing, and bathing.


There are two main types of long-term care: custodial and skilled. Custodial care is basic assistance with activities of daily living. Skilled care is more specialized and requires the services of a nurse or other health professional. The level of care you need will depend on your circumstances, but you must remember that long-term care isn’t just for the elderly.

How Is Long-Term Care Related To Wealth Management?

Wealth management consists of managing your finances to help you achieve your financial goals. It involves creating a plan that considers your current situation, future objectives, and risk tolerance. As we mentioned, a crucial part of wealth management is risk management, which is why long-term care is often a topic of conversation between wealth managers and their clients.


The costs of an unexpected long-term care need can significantly impact your financial situation. For example, the average price is over $94,900 per year if you need to go into a nursing home. If you need in-home care, the costs can also add up quickly. These costs can put a severe dent in your savings and make it challenging to achieve your financial goals. Therefore, considering long-term care as part of your wealth management strategy is very helpful.

Different Long-Term Care Strategies

The most common ways to approach long-term care are self-insuring, buying insurance, and using government programs.


Self-insuring means paying for your care out of pocket, which is often impossible for most people because the costs can be very high. However, if you have enough savings, self-insuring may be an option. Starting a fund that you only use for long-term care expenses can help make this possible.

Buying Insurance

Buying insurance is another way to pay for long-term care. The two main insurance policies are traditional long-term care insurance and life insurance with a long-term care rider. Traditional long-term care insurance policies will benefit you if you meet the policy’s definition of needing long-term care. Life insurance policies with a long-term care rider will pay benefits to you if you need long-term care and meet the policy’s definition of being chronically ill.

Using Government Programs

The last option is to use government programs like Medicaid or Medicare. Medicaid is a needs-based program that will pay for long-term care if you meet specific eligibility requirements. Medicare doesn’t pay for custodial care but will pay for some skilled care if you meet certain conditions.


If you’re not sure which strategy is right for you, talking to a wealth manager can help. They can assess your situation and help you create a plan that meets your needs.

Benefits Of Long-Term Care

Get Help Paying For Long-Term Care Costs

Long-term care insurance has a lot of advantages. Perhaps the most obvious is that it will help you pay for long-term care costs if you need it. These costs can be very high, so having insurance can help ease the financial burden.

Preserve Your Assets 

Another benefit of long-term care insurance is that it can help preserve your assets. If you don’t have insurance and need to go into a nursing home, your savings may be depleted quickly. Losing your savings could strain your family and force them to make difficult decisions. Having insurance can help protect your assets and give you confidence.

Maintain Your Independence

Finally, long-term care insurance can help you maintain your independence. If you need assistance with daily life activities, such as bathing, dressing, and eating, having insurance can help you get the care you need without relying on family or friends.

Who Needs Long-Term Care?

Most people will need long-term care at some point in their lives. About 70% of people over 65 will need long-term care. A few different factors can increase your risk of needing long-term care, including your age, health, family history, and lifestyle.


You’re more likely to need long-term care if you have chronic health conditions, such as diabetes or heart disease. If you have a family history of needing long-term care, you may also be at a higher risk. Lastly, if you have an active lifestyle and live alone, you may also be at a higher risk.

Understanding Long-Term Care Insurance

Long-term care insurance policies typically cover custodial and skilled care costs. Most policies have a daily benefit amount that will help cover the costs of your care. Some will also have a maximum benefit amount, the total amount the policy will pay out over its lifetime. Both of these benefit amounts can vary depending on your chosen policy.


Your policy will also have a waiting period, which is the amount of time you must wait before benefits are paid out. This waiting period can range from 30 days to several years, depending on the policy. You’ll be responsible for paying for your care during this time, but once the waiting period is over, the insurance policy will begin paying benefits.


The last thing to be specified in your policy is the expiration date. After this date, your policy will no longer pay benefits. Most policies have an expiration date of age 85 or 90, but some may be as short as age 65. Remember that it’s essential to understand and feel comfortable with your policy details before purchasing it.

The Cost Of Long-Term Care Insurance

Long-term care insurance costs vary depending on your age, health, and chosen policy. Generally speaking, younger people and those in good health will pay lower premiums because they’re less likely to need care. The type of policy and the benefit amount you choose will also affect your premium. For example, policies with longer waiting periods or shorter coverage periods will typically have lower premiums.

Nesso Wealth – Your Trustworthy Wealth Management Advisors

If you’re looking for a reliable wealth management advisor in Connecticut who can help you with your long-term care needs, consider Nesso Wealth. We pride ourselves on our experience and dedication to helping our clients grow and protect their wealth. We provide comprehensive wealth management services tailored to each individual’s unique circumstances.


Our solutions include risk management, tax planning, retirement planning, estate planning, and more. Our experts are always there to answer any questions about your finances. At Nesso Wealth, we believe that wealth management isn’t a one-size-fits-all proposition. We take the time to know our clients, understand them, and educate them on the most convenient options for achieving their objectives.



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