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Blog > Advance Planning > What is Asset-Based Long-Term Care (LTC)?

What is Asset-Based Long-Term Care (LTC)?

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February 9, 2022 Advance Planning

What is Asset-Based Long-Term Care?

Asset-based long-term care is a type of life insurance that can be used to help pay for long-term care. If there are funds left after the death of the policy owner, the beneficiaries will receive a death benefit that can help with funeral expenses or to simply help with their personal finances.

How does Asset-Based Long-Term Care Work?

This type of plan works by using a life insurance policy or annuity to fund the asset-based long-term care plan. This plan will then cover certain costs related to long-term care like paying for nursing home or hospice care. If you never end up needing to receive long-term care, the death benefit to your beneficiaries will be much greater. 


There are a number of benefits that are associated with using an Asset-Based Long-Term Care plan, however, these benefits will depend on your situation. Possible benefits include:

  • Fund with Variety of Assets: You can fund this plan with savings, retirement accounts, home equity, or a whole life insurance policy (depending on your situation)
  • Benefits Pay Out Tax-Free: If the payments from the Asset-based long-term care plan go towards the individual’s care expenses, the payments will be tax-free.
  • Plan Grows: The assets you put in your plan will continue to grow with interest.
  • Potential death benefit: Your loved ones could receive any leftover funds from the plan after the policy owner’s death.

Traditional LTC vs Asset-Based LTC

Traditional LTC may be a cheaper option but compared to Asset-Based LTC, there will be no death benefit paid out and asset-based plans will mostly be funded via a life insurance policy. Otherwise, these two options are quite similar in other benefits including monthly benefits and funding it with excessive assets.

When to get Asset-Based Long-Term Care

The best time to start looking and funding asset-based long-term care is right now! The younger and healthier you are, the more advantageous long-term care insurance can be for your situation..

Advance Planning

If you are wondering if asset-based long-term care is for you, you may want to look into other advance planning strategies to see if other plans would provide a greater financial incentive to you.


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