Self Insured Long Term Care is a common phrase—but it’s misleading. There’s no such thing as “self-insuring”; there’s only self-funding. Insurance spreads risk across many people. Self-funding puts 100% of the risk—and the bill—on you. A smarter approach is to transfer part of that risk using traditional LTC insurance or modern hybrids, so your care doesn’t derail your retirement or burden your family.

Start With Three Crucial Questions

  
• Where would I want to receive care—at home, assisted living, or a facility?
  
• Who would I want providing that care—family, private caregivers, or professionals?
  
• How would I pay for it—cash from my portfolio, or a dedicated insurance benefit?

Why “Self-Insuring” Fails in Practice

Self-funding extended care exposes your assets to open-ended costs and market risk. Consider the realities:

  
• High likelihood: Roughly 70% of people over 65 will need some form of long-term care.
  
• Underprepared: Only a small fraction of Americans carry LTC coverage.
  
• Escalating costs: Home care at $33–$35/hour can exceed $200,000 for four years of part-time care—before inflation.

Paying those expenses out-of-pocket can force withdrawals at the worst possible time, jeopardize spouse income, and shrink the legacy you intended for heirs.

Why Long-Term Care Insurance Works

LTC insurance creates a dedicated pool of tax-advantaged dollars for care. It protects income, preserves assets, and spares loved ones from becoming default caregivers. Depending on your goals, you can choose:

  
• Traditional LTC Insurance: Maximum leverage per premium dollar for pure care benefits.
  
• Hybrid LTC (life or annuity with LTC riders): If care isn’t needed, remaining value passes to beneficiaries.
  
• Single-Pay LTC Strategies: Reposition a portion of cash or low-yield assets into immediate, contractually guaranteed care benefits. See Single Pay Long Term Care Insurance.

Real-World Framing: Portfolio vs. Policy

Self-funding: To net $200,000 for care after taxes, you may need to liquidate $250,000+ depending on your tax bracket and market conditions. If withdrawals coincide with a downturn, the damage compounds.

With LTC coverage: A modest, predictable premium or single deposit can unlock a multiple of benefits, indexed to inflation, available when you need them—no forced selling.

Tax Advantages & Policy Design

Premiums may receive favorable tax treatment in certain situations (e.g., HSAs, business deductions), and benefits are generally received tax-free when used for qualified care. For a deeper dive, review Tax Advantages of Long-Term Care Insurance and Hybrid Policies.

How Diversified Insurance Brokers Helps

We’re an independent fiduciary agency licensed nationwide. We shop top-rated carriers to engineer a plan that fits your budget and priorities—benefit amount, inflation protection, elimination periods, and shared spousal benefits. We also coordinate reviews with your beneficiary and estate planning. See our Annual Beneficiary Review Checklist.

Who Should Consider LTC Coverage Now?

  
• Pre-retirees and retirees who want to protect income streams for a spouse.
  
• High-net-worth families focused on legacy and tax efficiency.
  
• Anyone who wants to choose care setting (home vs. facility) without financial stress.

Next Steps

  
1. Clarify your preferences for care (place, people, funding).
  
2. Decide between traditional LTC, hybrid, or single-pay approaches.
  
3. Let us benchmark multiple carriers and lock in a plan while you’re healthy.

Related Topics to Explore

  
• Single Pay Long Term Care Insurance
  
• Tax Advantages of LTC & Hybrid Policies
  
• Annual Beneficiary Review Checklist