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Policy Matters



Your clients probably take their cars in for regular maintenance. Hopefully they do the same with their bodies.

Because the better you maintain something, the longer it will last. And as we all know, innovation is making it easier to maintain both our vehicles and our lives.


Innovation is also making it harder to maintain a nest egg and manage the costs of care. Let’s take a look at some projected retirement healthcare costs for a 65-year-old couple:

  • $260,000 Fidelity Investments’ 2016 Retirement Assessment Survey
  • $404,253 HealthView Services

And this is just everyday healthcare; not long term care. Only 18% of workers feel very confident they will have enough money to pay medical expenses in retirement.5


So we find ourselves at an important crossroads of health and wealth, and one where fee-only financial advisors (FOFAs) can have a tremendous impact on their clients’ lives: The longevity curve.

  • 70% of Americans who reach age 65 will eventually need LTC
  • The median age is increasing in most parts of the country6

    • Two-thirds (66.7%) of the counties in the U.S. experienced an increase in median age in 2016.

      • Two counties had median ages over 60: Sumter, Fla. (67.1 years) and Catron, N.M. (60.5 years)

Some of the most common reasons people need LTC stem from conditions that not long ago were untreatable or resulted in death much sooner.

Cancer Facts in the U.S.7:

  • Annual new diagnoses: 454.8 per 100,000
  • Roughly 39.6% of Americans will be diagnosed with some form of cancer during their lifetime
  • There are 13 million cancer survivors alive today and the numbers are growing due to advances in detection and treatment
  • The 5-year relative survival rate for all cancers diagnosed 2004-2010 is now 68% (up significantly from 49% in 1975-1977)

Alzheimer’s Facts in the U.S.8:

  • An estimated 5.5 million people are living with Alzheimer's (5.3 million of them are 65+). By 2050, this could reach 16 million.
  • Every 66 seconds, someone develops Alzheimer's disease. Because of the increasing number of people 65+, by mid-century it will be every 33 seconds.
  • By the end of 2017, Alzheimer’s and other dementias will cost $259 billion. By 2050, these costs could rise as high as $1.1 trillion. This includes more than 4-fold increases both in government spending under Medicare/Medicaid and in out of pocket spending. And there’s a lot of baby boomer generation still to come.
  • Medicare/Medicaid are expected to cover $175 billion (67%) of the total healthcare and LTC payments for people with Alzheimer's or other dementias
  • Out of pocket spending is expected to be $56 billion
  • Alzheimer’s is the fifth leading cause of death and a leading cause of disability and poor health

Chronic conditions (like diabetes and high blood pressure) facts in the U.S.4:

  • In 2014, almost 20% of baby boomers 55–64 had some type of diabetes
  • Type 2 diabetes disproportionately affects the elderly. (2012 data)

    • Six times more people age ≥65 (25.9%) were living with diabetes than people age 20–24 (4.1%)
    • In the LTC population, it ranges from 25% to 34%
    • This has contributed to unsustainable growth of healthcare costs
      • The estimated total cost of diabetes was $245 billion
      • Average medical expenditures for people with diagnosed diabetes were 2.3 times higher than among people without diabetes
      • LTC costs for people with diabetes were estimated at $19.6 billion

Given those staggering numbers and the volatility of our financial markets, your clients are looking at ways to protect (much less grow) their hard-earned retirement funds; to live comfortably while they live longer. Can they do it? Yes... if they plan correctly. And what are their rewards for this planning?

  • Quality of life

    • Seniors account for 21% of Americans who travel
  • Legacy
  • Independence
  • Peace of mind

    • 47% of people age 40-50 fear the cost of care more than dying
    • 84 million of America’s working-age adults can't afford to pay for the expenses associated with LTC
  • There’s no place like home

    • 50.6% LTC users receive services at home
    • 70% prefer to stay at home
  • Choice (of where/how to get care)

    • Homemaker
    • Home health aide
    • Adult day healthcare
    • Assisted living facility
    • Semi-private nursing home
    • Private nursing home
  • Quality care (monthly median rates)

    • Adult day healthcare: $1,517
    • Homemaker services: $3,994
    • Home health aide: $4,099
    • Semi-private nursing home room: $7,148
    • Private nursing home room: $8,121
  • Asset protection

Your clients want to enjoy retirement without making drastic lifestyle changes, relying on help from others, or accepting a substandard level of care. Planning for the income to make that retirement vision a reality boils down to three important unknowns:

  1. How long they’ll live
  2. How their investments will perform over time
  3. How much they’ll spend annually in retirement

They want the greatest lifestyle benefit with the lowest amount of risk. LTCi policies and combination policies (Life/LTCi or Annuity/LTCi) can help them effectively manage those risks.

Think of long term care spending risk like you think of investment risk. A significant drop in the market can wreck the value of your client’s retirement nest egg. But they accept some volatility with the hope for higher returns. And they diversify their portfolio for some protection. Healthcare spending risk is even more volatile. Retiree spending stays level in most categories (and sometimes even declines) as we age. Healthcare expenses, however, typically increase with age (especially long term care) and as their costs outpace their income, the volatility can devastate your client’s nest egg.

While we may spend less on our cars as they last longer (because they’re being manufactured better: improved emission standards and electronics made with more stringent requirements), it’s clear that our expenditures on long term care will continue to grow as we all last longer.

Learn more in our e-brochure Long Term Care by the Numbers. 

  • 5 EBRI, 2015
  • 6 US census bureau
  • 7 American Cancer Society 
  • 8 Alzheimer’s Association


Term Life Insurance | Low-Load Universal Life (Individual & Survivorship) | No Lapse Guaranteed Univeral Life (Individual & Survivorship) | Long Term Care Insurance | Disability Insurance | Critical Care Insurance | Low-Load Variable Annuity | Immediate and Fixed Annuities | Low-Load Variable Universal Life | Hybrid Life/LTCi | Hybrid Annuity/LTCi

(We recommend low-load permanent life insurance and annuities when possible)

(Not all policy types available in all states)

For a list of current providers, visit the Advisor Tools section of our website and click on "Insurance Companies We Work With".

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