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The elephant in the room


Long term care is the elephant in the room few will address

According to, 70% of Americans 65 or older will require some kind of long-term care in their remaining years, With the median price of assisted living costing $4,500 a month and nursing home care at $9,000 a month few can absorb the financial impacts of a chronic illness or acute health emergency. While long-term care (LTC) insurance covers many of these expenses only 3.3% of 7.5 million Americans have long-term care insurance policy.

Long-term care insurance is designed to cover the costs associated with extended care, including in-home assistance, nursing homes, and assisted living facilities. This type of insurance provides a safety net for individuals who may require prolonged care due to age-related illnesses, disabilities, or chronic conditions.

The American Association for Long-Term Care Insurance (AALTCI) recommends individuals shop for long-term care insurance between the ages of 52-64 when premiums are less costly and serious health conditions typically are not present. The benefits of long-term care insurance include preserving personal assets, reducing the burden on family members, and ensuring access to quality care. It offers individuals the freedom to choose the care setting that suits their needs, whether it’s receiving care at home or transitioning to a care facility.


The typical potential reverse mortgage client will find LTC insurance premiums would place a significant burden on their monthly cash flow or are simply unaffordable. Yet, the financial exposure to the costs associated with extended care is significant and could wipe out one’s retirement nest egg.

Long-term care risks can be addressed with a reverse mortgage in one of two ways: (1) using the loan proceeds to pay for care as needed, or (2) financing LTC insurance premiums. Few reverse mortgage originators are well-versed in the complexities of long-term care insurance therefore finding a seasoned LTC insurance professional is crucial to better understand how such policies function.

While reverse mortgage loan proceeds can be used to purchase LTC insurance one major risk should always be addressed- the loan’s occupancy requirement.  If the policyholder is the sole borrower on the reverse mortgage relocation to a care facility for an extended period of time could trigger the loan becoming due and payable.

Reverse mortgages and long-term care insurance are two financial options that can provide peace of mind and security for seniors as they plan for their future. While reverse mortgages offer a way to access home equity and supplement income during retirement, long-term care insurance safeguards against the high costs of extended care. It’s essential to carefully evaluate individual circumstances, consult with professionals, and understand the terms and conditions of each option. By doing so, seniors can make informed decisions that align with their needs, ensuring a financially stable and worry-free future.

-Shannon Hicks


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  1. Good info that people really need to pay attention to.

    If one can’t qualify with a standalone LTCI policy, there are hybrid life insurance/LTCI policies that might work.

    My company recently rolled out such a policy and I was able to cover that missing part of my retirement plan. i sleep a little easier now that I have that covered.

    • Roger- this is great to hear. Innovation in hybrid policies is good for those priced out by traditional LTC insurance.

  2. Can reverse mortgage proceeds be used to purchase LTC insurance? Not in California.

    California Insurance Code Section 785.1(a)(2) states the following: “Except as provided in subdivision (b), individuals transacting insurance shall not receive compensation, commission, or direct incentive for providing reverse mortgage borrowers with a noncasualty insurance product that is connected to or a result of the reverse mortgage.”

    Subdivision (b) states: “This section does not prevent an agent or broker from offering title insurance, hazard, flood, or other peril insurance, or other similar products that are customary and normal under a reverse mortgage loan.”

    Few originators are familiar with state insurance laws restricted by reverse mortgages. Yet about 30% of all HECMs are originated on California collateral annually. As the saying goes ignorance is bliss UNTIL….

    In this industry generalizations too many times lead to false conclusions. Other states may have added similar laws since this law became effective in California on 1/1/2012, i.e., over a decade ago.

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