If you received a large inheritance, sold a business, settled a lawsuit, or signed NIL contracts between 2024 and 2026, you now face a question that most Americans never have the resources to answer well: should you buy long term care insurance, self insure, or build a hybrid strategy?

1. Start Here: Should You Even Buy Long Term Care Insurance After a Windfall?

A financial windfall alters the risk landscape for long term care planning. With $1M, $3M, or more in new wealth, you have options that most people lack. Over 90% of Americans lack LTC insurance coverage, and most Americans are not financially prepared for long term care needs. Your windfall puts you in a different position; you can choose to transfer risk, absorb it, or split it.

The decision is not "rich people don't need LTC insurance" versus "everyone must buy it." Long term care insurance primarily serves to protect against large, uncertain expenses that can erode a retirement nest egg, drain charitable giving plans, and burden loved ones. Utilizing a portion of a financial windfall can help fund long term care insurance while keeping the rest invested for retirement and legacy.

At Third Act Retirement Planning, we typically model three paths for windfall recipients: no LTC coverage (full self-funding), a traditional LTC policy, and a hybrid life/LTC or annuity/LTC strategy. We then compare how each path affects the probability of maintaining lifestyle, leaving a desired inheritance, and meeting giving goals across a 30-year horizon.

2. Clarify Your Windfall and Life Situation First

Before requesting a single insurance quote, document these specifics:

• Windfall size and source. Write down the amount and origin: a $1.2M inheritance received in 2025, a $3.5M business sale closed in 2024, or $800K in NIL contracts spread over 2024 through 2027. Note how much is already earmarked for debt payoff, a home purchase, or charitable giving. If you need a framework for organizing what windfall money means and how to deploy it, start there.

• Age and marital status. Whether you are in your early 40s, 50s, or early 60s changes premiums, underwriting odds, and how long your money must last. Being a single person versus married versus part of a blended family changes who might serve as a caregiver and who depends on your estate.

• Current personal finances. Summarize existing retirement savings and investments, pensions or Social Security estimates, current health insurance, and any group LTC benefits through an employer.

• Priorities after the windfall. List your retirement age target, responsibilities toward aging parents, college costs for children, charitable goals, and desired legacy to loved ones.

• Write it down. This inventory drives how much coverage you need and whether care insurance fits your calling to steward the windfall wisely.

3. Understand What Long Term Care Actually Looks Like Today

Long term care is not hospital care. It is help with Activities of Daily Living (ADLs): bathing, dressing, eating, toileting, transferring in and out of a bed or chair, and continence. It also includes supervision for cognitive impairment such as Alzheimer's disease.

• Typical long term services in 2024 through 2026 include home health aides visiting 3 to 5 days per week, adult day health programs, assisted living facilities, memory care units, skilled nursing homes, and physical therapy sessions in residential settings.

• Health and Human Services data shows that about 70% of Americans who reach age 65 will need some form of LTC services, often for 2 to 3 years, with some needing 5 or more years. The average duration of long term care is about 2 to 3 years. Average life expectancy for 65-year-olds is 19.2 years, and the 2010 census reported 1.9 million people aged 90 or older; the population living long enough to face care needs keeps growing.

• Medicare does not cover most long term care services. Medicare generally does not pay for most ongoing custodial long term care costs, which is the category that dominates LTC spending. This gap is why private coverage or self-funding is necessary.

• Care often starts at home and progresses to facility-based settings. Insurance can give flexibility to pay for home-based care rather than only institutional options.

• Concrete example: A 78-year-old widow in Georgia needs 4 hours per day of home care for 24 months, then moves to assisted living. At $35 per hour, home care totals roughly $102,200. One year of assisted living at $6,500 per month adds $78,000. Total: approximately $180,000 in current dollars, before inflation or supplemental services.

4. Know the Real Cost of Care in Dollars, Not Just Percentages

Long term care costs vary drastically by region and facility type. Here are 2024 and 2025 national benchmarks:

• A home health aide averages about $33 per hour according to the Federal LTC Insurance Program's 2024 care survey, which works out to roughly $51,480 per year at 30 hours per week. CareScout's 2025 survey found nonmedical home care at 44 hours per week costing $6,673 per month in many metros. Care costs may exceed $100,000 per year in high-cost regions.

• The average annual cost for a private nursing home room is $127,750 based on 2024 survey data ($348 per day). Some industry estimates place the figure closer to $87,600 per year depending on geography, room type, and data source. A semiprivate nursing home room averages about $112,420 per year.

• Assisted living one-bedroom units average $5,511 per month nationally, or about $66,132 per year.

• A three-year stay in a private nursing home can exceed $350,000 in many states once you factor in healthcare cost inflation and add-on services like memory care.

To understand the cost of long term care insurance relative to your area, look up 2025 figures on the Genworth Cost of Care Survey or CareScout Cost of Care Survey for your specific metro area. Run numbers for both at-home care and facility care, assuming 3 years of need as a baseline and 5 years as a stress test.

Then tie the results back to your windfall: would those costs, paid out of pocket, jeopardize your retirement, charitable giving, or intended inheritance?

5. Decide Your Strategy: Self-Fund, Insure, or Blend?

Analyzing opportunity cost is important when considering the use of financial resources for long term care. There are three clear strategic paths for someone with new wealth.

• Self-funding. Set aside part of the portfolio for long term care expenses. Self-insuring may be suitable for individuals with a liquid net worth exceeding $2 million to $3 million. For a $3M portfolio, that might mean earmarking $400,000 to $800,000 in a separate account or mental bucket. The risk: a prolonged care need (5+ years for one or both spouses) could consume the fund and cut into retirement savings.

• Transferring risk. Buy long term care insurance or hybrid life insurance with LTC riders so an insurance company pays a defined pool of LTC benefits if you require long term care. Those with substantial assets may still find value in insurance to protect a spouse or maintain lifestyle choices. For high-net-worth individuals, LTC insurance is a tool for financial optimization rather than merely a risk protection mechanism.

• Blended strategy. Keep most assets invested while using a portion of the windfall to purchase modest but meaningful LTC coverage that caps out-of-pocket exposure. This is the approach Third Act Retirement Planning recommends most often; we run Monte Carlo or scenario analyses to quantify how each approach affects the probability of maintaining lifestyle and leaving a desired legacy.

Do not jump straight to product shopping. Choose which strategic direction aligns with your risk tolerance and stewardship goals first.

6. How Much Coverage Should You Consider After a Windfall?

A windfall often means you need less than full cost coverage but still benefit from a sizable benefit pool. Here is how to size it:

• Estimate likely annual long term care costs in your area. For example, assisted living plus memory care in a mid-cost metro might run $110,000 per year in 2035 dollars after inflation.

• Subtract reliable income sources in that future year. Social Security, pension, rental income, and a sustainable portfolio withdrawal (say 3.5% to 4% of remaining assets) form your baseline. The difference is your "LTC income gap."

• The goal of LTC insurance after a windfall is often to cover that gap, not the entire bill. LTCI policies may cover in-home care and nursing facilities, but you do not need every dollar covered if your portfolio can handle part of the load.

• Examples: A 55-year-old with a $2.5M portfolio may target coverage of $5,000 to $7,500 per month for 3 to 5 years. A 45-year-old with a $4M windfall may choose a smaller daily benefit plus stronger inflation protection, knowing the money has decades to compound. For more on how to invest an inheritance alongside insurance decisions, the two conversations should happen together.

• Higher-net-worth families can often afford intentionally higher deductibles (longer elimination periods) and shorter benefit durations, because they can bridge short gaps with liquid assets.

7. Understand the Main Types of Long Term Care Insurance You'll Be Offered

Three product categories dominate the LTCI market today. Each provides long term care coverage differently.

Traditional long term care insurance offers stand-alone policies with a monthly benefit, a defined benefit period (e.g., 3 or 5 years), and inflation protection options. Traditional LTC policies often have guaranteed renewable premiums, meaning the insurance company cannot cancel the policy as long as you pay. But "guaranteed renewable" does not mean the premium payment amount stays fixed; LTCI insurers can file with state regulators for class-wide rate increases. Traditional LTC insurance may include rising premiums and a use-it-or-lose-it design: if the policyholder dies without ever filing a claim, premiums paid are gone. Traditional LTC insurance sales dropped 65% from 2000 to 2010, and fewer carriers now issue these traditional policies.

Hybrid life insurance with LTC riders combines LTC coverage with life insurance benefits. These policies are typically funded with a lump sum or limited premium payment schedule. If you never need care, a death benefit passes to loved ones. If you do need care, the policy accelerates or extends that death benefit to pay for LTC services. Hybrid and life combination products have seen significant increases recently, reflecting the LTCI market's shift. Hybrid policies often have a surrender value if you change your mind, and some offer return-of-premium features. The trade-off: hybrids typically deliver lower pure LTC leverage per premium dollar because part of your initial investment funds the life insurance chassis. For windfall recipients exploring broader coverage, see our guide on insurance for high net worth individuals.

Annuity/LTC combos use fixed rate or indexed annuities (not variable annuities, which carry market risk) that multiply the account value for qualified LTC expenses. These can be useful when someone has non-qualified windfall money and prefers tax-deferred growth. The annuity's account value serves as the base; if LTC is needed, the insurance policy pays a multiple of that value toward care.

LTC insurance can cover in-home care and nursing home costs across all three product types. Third Act Retirement Planning does not receive commissions from product sales (fee-based advisory), so we compare these objectively within a broader financial plan.

8. Medical Underwriting: Will Your Health Let You Secure Coverage?

Timing matters. Insurance carriers require health screening to determine top eligibility for long term care insurance. Most LTC policies require medical underwriting for approval, and waiting too long may lead to disqualification due to health issues.

• How it works. The insurance company reviews health questionnaires, prescription records, medical history, and sometimes conducts cognitive screening, especially for applicants over 60. Most hybrid LTC products require simplified medical underwriting, which is faster but can be stricter on certain red-flag conditions.

• Conditions that cause decline or surcharges. Recent cancer (within 2 to 5 years of treatment), insulin-dependent diabetes with complications, prior stroke, Parkinson's disease, ALS, severe rheumatoid arthritis, and moderate dementia will often result in denial.

• Age and premium trajectory. LTC insurance premiums increase 2 to 4% annually after age 50. Premiums jump 6 to 8% annually after clients turn 60. Purchase LTC insurance in your mid-50s for better rates and higher approval odds. Long term care insurance is more affordable when purchased early, before health declines narrow your options.

• Full vs. simplified underwriting. Full medical underwriting involves detailed records review but sometimes allows more flexibility for nuanced medical histories. Simplified underwriting (common in hybrid products) uses a shorter questionnaire but may automatically decline applicants with any flagged condition.

• Preparation. Review your medical records and prescription history with a financial planner or independent insurance specialist before submitting applications. This lets you apply to carriers most likely to approve your health status.

9. Key Policy Design Decisions: Deductibles, Duration, and Inflation

These design choices determine both the premium payment and the level of protection the policy provides.

• Elimination period. Think of this as the deductible measured in days. Common options: 0, 30, 90, or 180 days before LTC benefits begin. A medical event triggering a claim starts the clock. Windfall recipients can often afford a longer elimination period (90 to 180 days) to reduce annual premiums, since they have liquid assets to cover the initial gap.

• Benefit period. Typical choices: 2, 3, 5, or 6 years. The vast majority of real-world claims last 2 to 4 years, so 3 to 5 years is a common target. Longer periods cost more and are less necessary for high-net-worth families who can self-fund beyond the insured window.

• Monthly or daily benefit. A $200/day benefit equates to roughly $6,000 per month. Match this to your local cost estimates rather than picking arbitrary round numbers. If assisted living in your metro costs $7,200 per month, a $5,000 benefit plus your other income may still cover the full cost.

• Inflation protection. A 3% compound inflation rider grows a $6,000 per month benefit to approximately $10,800 per month over 20 years. A 5% compound rider would push it to roughly $15,920. "No inflation" options save on premiums but leave you exposed if you do not need care for 15 to 25 years; the benefits provided will cover a shrinking share of the true cost of care.

• Shared care for married couples. Pooled benefit structures let spouses access each other's benefit periods. If one spouse uses only 1 year of a 5-year pool, the other can draw on the remaining 4 years. This is attractive for couples in their 50s after a business sale or inheritance.

10. Evaluating Premiums Against Your New Personal Finances

A windfall does not mean you should overspend on insurance. Stewardship means right-sizing the premium relative to what your assets produce.

• Rule of thumb. Target total LTC or hybrid LTCI premiums at 5% to 10% of expected annual portfolio income, not of the whole portfolio. A family with a $3M portfolio yielding 4% earns roughly $120,000 per year; 5% to 10% of that is $6,000 to $12,000 per year in annual premiums.

• Smaller windfalls. Someone with an $800,000 inheritance might cap LTCI premiums at $2,500 to $4,000 per year. The average annual premium for a $165,000 benefit policy is $950 for males and about $1,500 for females at age 55; policies with inflation protection or richer benefits cost more.

• Payment structure. Distinguish between ongoing premiums (payable for life or to age 65) and single-premium or 10-pay designs funded directly from the windfall. A lump sum approach eliminates future cash-flow strain but ties up capital. When creating a sustainable spending plan after an inheritance, insurance premiums should be one explicit line item.

• Stress-testing rate increases. Premiums for traditional LTC insurance have risen since 2010; Milliman's 2024 survey found average approved increases of 28%, with requests averaging 56%. Annual premiums typically increase 2 to 4 percent with age. Model scenarios where premiums rise 40% to 60% on traditional policies and confirm that raising premiums at that level would not derail retirement or giving goals.

• Tax considerations. Part of LTC premiums may be tax-deductible for some business owners or under certain state rules. For the LTC portion of hybrid policies, deductibility is limited by age-based IRS caps. Tax-efficient funding from the right account type should be part of the planning conversation.

11. Integration with Estate, Life Insurance, and Legacy Goals

Long term care expenses late in life can consume assets that would otherwise pass to heirs or charities. For estates under $10M, an uninsured three-to-five-year care need can reduce an inheritance by 20% to 40%.

• Hybrid life insurance with LTC riders addresses this directly. If the policyholder dies without using LTC benefits, the death benefit goes to loved ones. If care is needed, benefits provided for LTC reduce the death benefit proportionally. Either way, premiums paid are not "wasted." Reviewing existing long term care insurance policies can clarify their value amidst increased wealth.

• Existing life insurance. Review current policies: term life that may be convertible to permanent coverage, permanent policies that can add LTC riders, or redundant other insurance policies that can be repurposed to fund LTC solutions.

• Estate coordination. Coordinate LTC decisions with wills, revocable trusts, and beneficiary designations. If one spouse needs expensive care, the surviving spouse and children must remain financially secure. Our guide on estate planning for new millionaires covers how to structure these pieces together.

• At Third Act Retirement Planning, we integrate LTC choices with estate and charitable giving plans, sometimes pairing donor-advised funds or charitable trusts with LTC coverage to protect financial resources while honoring generosity goals.

12. Protecting Loved Ones from Caregiver and Financial Burden

Family dynamics can influence decisions regarding long term care insurance and care logistics. The emotional and financial toll on family members is real and measurable.

• Caregiver cost. Adult children commonly reduce work hours or leave jobs entirely to provide unpaid care when parents have no long term care plan. This jeopardizes their own retirements and financial security.

• Clarity reduces guilt. Having a clear LTC funding strategy, whether insurance, set-aside assets, or both, relieves loved ones from making rushed decisions about your care under crisis conditions.

• Family conversations. Hold a structured meeting with your spouse and adult children where you explain how the windfall will be used to secure your care and protect their inheritance. Cover your preferences: desire to age in place, standards for facilities, and what role you do or do not want family members to play.

• Stewardship as love. From a biblical-stewardship perspective, thoughtfully planning for your own long term care needs is an act of responsibility toward the people you care about most.

• Document preferences. Write a care letter or memorandum stating your wishes: home-based care as long as safely possible, specific facility standards if institutional care becomes necessary, and who holds decision-making authority.

13. Comparing Insurers and Policy Features with a Fiduciary Lens

The financial strength of insurance providers is crucial for long term commitments such as long term care insurance. A policy is only as reliable as the insurance company behind it, and some contracts will not pay claims for 20 to 30 years.

• Financial ratings. Check carrier ratings from A.M. Best, Moody's, and S&P. Prioritize companies with strong claims paying ability (A rating or better) and established histories in long term care or life insurance markets. The National Association of Insurance Commissioners publishes complaint ratios and regulatory actions that can reveal carrier-level problems.

• Premium history. Look for LTCI insurers with fewer and more moderate rate increases over the past 10 to 20 years. Only 6.9% of LTC insurers have never raised premiums; the rest have filed for increases at least once. Regulatory filings, independent reports, and publications like the Wall Street Journal have covered these patterns.

• Contract features to compare. Non-forfeiture benefits (some benefit even if the policy lapses), waiver of premium during a claim, marital or spousal discounts, shared care riders, built-in inflation protection options, and whether claims payments are made as reimbursement or cash indemnity.

• Multiple quotes. Get policy illustrations for the same benefit structure from several carriers. Seeing cost and feature differences side by side reveals which carrier offers the best fit, not just the lowest premium.

• Third Act Retirement Planning acts as a fiduciary, evaluating how any LTC or care insurance solution fits the client's overall plan rather than prioritizing commissions or brand names.

14. How Third Act Retirement Planning Helps Windfall Recipients Decide

We specialize in helping people who have come into sudden wealth make decisions that serve both their future and their values.

• Discovery call. We review the windfall amount, current assets, health profile, family situation, and long term retirement and legacy goals.

• Personalized projection. We build a retirement and care projection with specific long term care cost assumptions, showing how self-funding versus various insurance designs affects financial security over a 25- to 35-year horizon. Low income scenarios, high-care-duration scenarios, and early-death scenarios are all tested.

• Honest assessment. We evaluate whether any LTC strategy is needed at all. If assets are truly sufficient, we may recommend no LTC insurance and formal self-funding with appropriate safeguards.

• Product narrowing. If insurance is appropriate, we narrow options (traditional LTC, hybrid life insurance with LTC riders, or annuity/LTC) to those that best match the client's age, health status, and values, and we may compare that input with guidance from an experienced specialist, such as a vice president at an insurance agency or carrier.

• Biblical wisdom. Our guidance is informed by principles of stewardship, contentment, and generosity, helping clients use their windfall in ways that serve both their long term care needs and their calling.

15. Action Steps: What to Do This Month After Your Windfall

Here is what you can accomplish within 30 to 60 days:

• Gather data. Collect windfall statements, existing life and disability policies, employer benefits summaries, current retirement savings balances, and any prior LTC quotes.

• Look up local costs. Use the Genworth or CareScout care survey tools to find 2025 cost estimates for home health aides, assisted living, and nursing homes in your area.

• Write down preferences. Note your desire to age in place, feelings about relying on family caregivers, and concerns about use-it-or-lose-it insurance. These preferences shape which product type, if any, fits best.

• Meet with a fiduciary advisor. Schedule a conversation with a fee-based advisor like Third Act Retirement Planning who understands long term care, medical underwriting, and sudden-wealth planning.

• Set a deadline. Commit to deciding on a clear LTC strategy within 90 days of receiving the windfall. Whether that decision is self-funding, purchasing coverage, or deliberately postponing with a specific date to revisit, having a deadline prevents drift. The windfall gives you a window to act; that window narrows as health declines and premiums climb.

How to Evaluate Long Term Care Insurance After a Windfall

If you received a large inheritance, sold a business, settled a lawsuit, or signed NIL contracts between 2024 and 2026, you now face a question that most Americans never have the resources to answer well: should you buy long term care insurance, self insure, or build a hybrid strategy?

1. Start Here: Should You Even Buy Long Term Care Insurance After a Windfall?

A financial windfall alters the risk landscape for long term care planning. With $1M, $3M, or more in new wealth, you have options that most people lack. Over 90% of Americans lack LTC insurance coverage, and most Americans are not financially prepared for long term care needs. Your windfall puts you in a different position; you can choose to transfer risk, absorb it, or split it.

The decision is not "rich people don't need LTC insurance" versus "everyone must buy it." Long term care insurance primarily serves to protect against large, uncertain expenses that can erode a retirement nest egg, drain charitable giving plans, and burden loved ones. Utilizing a portion of a financial windfall can help fund long term care insurance while keeping the rest invested for retirement and legacy.

At Third Act Retirement Planning, we typically model three paths for windfall recipients: no LTC coverage (full self-funding), a traditional LTC policy, and a hybrid life/LTC or annuity/LTC strategy. We then compare how each path affects the probability of maintaining lifestyle, leaving a desired inheritance, and meeting giving goals across a 30-year horizon.

2. Clarify Your Windfall and Life Situation First

Before requesting a single insurance quote, document these specifics:

• Windfall size and source. Write down the amount and origin: a $1.2M inheritance received in 2025, a $3.5M business sale closed in 2024, or $800K in NIL contracts spread over 2024 through 2027. Note how much is already earmarked for debt payoff, a home purchase, or charitable giving. If you need a framework for organizing what windfall money means and how to deploy it, start there.

• Age and marital status. Whether you are in your early 40s, 50s, or early 60s changes premiums, underwriting odds, and how long your money must last. Being a single person versus married versus part of a blended family changes who might serve as a caregiver and who depends on your estate.

• Current personal finances. Summarize existing retirement savings and investments, pensions or Social Security estimates, current health insurance, and any group LTC benefits through an employer.

• Priorities after the windfall. List your retirement age target, responsibilities toward aging parents, college costs for children, charitable goals, and desired legacy to loved ones.

• Write it down. This inventory drives how much coverage you need and whether care insurance fits your calling to steward the windfall wisely.

3. Understand What Long Term Care Actually Looks Like Today

Long term care is not hospital care. It is help with Activities of Daily Living (ADLs): bathing, dressing, eating, toileting, transferring in and out of a bed or chair, and continence. It also includes supervision for cognitive impairment such as Alzheimer's disease.

• Typical long term services in 2024 through 2026 include home health aides visiting 3 to 5 days per week, adult day health programs, assisted living facilities, memory care units, skilled nursing homes, and physical therapy sessions in residential settings.

• Health and Human Services data shows that about 70% of Americans who reach age 65 will need some form of LTC services, often for 2 to 3 years, with some needing 5 or more years. The average duration of long term care is about 2 to 3 years. Average life expectancy for 65-year-olds is 19.2 years, and the 2010 census reported 1.9 million people aged 90 or older; the population living long enough to face care needs keeps growing.

• Medicare does not cover most long term care services. Medicare generally does not pay for most ongoing custodial long term care costs, which is the category that dominates LTC spending. This gap is why private coverage or self-funding is necessary.

• Care often starts at home and progresses to facility-based settings. Insurance can give flexibility to pay for home-based care rather than only institutional options.

• Concrete example: A 78-year-old widow in Georgia needs 4 hours per day of home care for 24 months, then moves to assisted living. At $35 per hour, home care totals roughly $102,200. One year of assisted living at $6,500 per month adds $78,000. Total: approximately $180,000 in current dollars, before inflation or supplemental services.

4. Know the Real Cost of Care in Dollars, Not Just Percentages

Long term care costs vary drastically by region and facility type. Here are 2024 and 2025 national benchmarks:

• A home health aide averages about $33 per hour according to the Federal LTC Insurance Program's 2024 care survey, which works out to roughly $51,480 per year at 30 hours per week. CareScout's 2025 survey found nonmedical home care at 44 hours per week costing $6,673 per month in many metros. Care costs may exceed $100,000 per year in high-cost regions.

• The average annual cost for a private nursing home room is $127,750 based on 2024 survey data ($348 per day). Some industry estimates place the figure closer to $87,600 per year depending on geography, room type, and data source. A semiprivate nursing home room averages about $112,420 per year.

• Assisted living one-bedroom units average $5,511 per month nationally, or about $66,132 per year.

• A three-year stay in a private nursing home can exceed $350,000 in many states once you factor in healthcare cost inflation and add-on services like memory care.

To understand the cost of long term care insurance relative to your area, look up 2025 figures on the Genworth Cost of Care Survey or CareScout Cost of Care Survey for your specific metro area. Run numbers for both at-home care and facility care, assuming 3 years of need as a baseline and 5 years as a stress test.

Then tie the results back to your windfall: would those costs, paid out of pocket, jeopardize your retirement, charitable giving, or intended inheritance?

5. Decide Your Strategy: Self-Fund, Insure, or Blend?

Analyzing opportunity cost is important when considering the use of financial resources for long term care. There are three clear strategic paths for someone with new wealth.

• Self-funding. Set aside part of the portfolio for long term care expenses. Self-insuring may be suitable for individuals with a liquid net worth exceeding $2 million to $3 million. For a $3M portfolio, that might mean earmarking $400,000 to $800,000 in a separate account or mental bucket. The risk: a prolonged care need (5+ years for one or both spouses) could consume the fund and cut into retirement savings.

• Transferring risk. Buy long term care insurance or hybrid life insurance with LTC riders so an insurance company pays a defined pool of LTC benefits if you require long term care. Those with substantial assets may still find value in insurance to protect a spouse or maintain lifestyle choices. For high-net-worth individuals, LTC insurance is a tool for financial optimization rather than merely a risk protection mechanism.

• Blended strategy. Keep most assets invested while using a portion of the windfall to purchase modest but meaningful LTC coverage that caps out-of-pocket exposure. This is the approach Third Act Retirement Planning recommends most often; we run Monte Carlo or scenario analyses to quantify how each approach affects the probability of maintaining lifestyle and leaving a desired legacy.

Do not jump straight to product shopping. Choose which strategic direction aligns with your risk tolerance and stewardship goals first.

6. How Much Coverage Should You Consider After a Windfall?

A windfall often means you need less than full cost coverage but still benefit from a sizable benefit pool. Here is how to size it:

• Estimate likely annual long term care costs in your area. For example, assisted living plus memory care in a mid-cost metro might run $110,000 per year in 2035 dollars after inflation.

• Subtract reliable income sources in that future year. Social Security, pension, rental income, and a sustainable portfolio withdrawal (say 3.5% to 4% of remaining assets) form your baseline. The difference is your "LTC income gap."

• The goal of LTC insurance after a windfall is often to cover that gap, not the entire bill. LTCI policies may cover in-home care and nursing facilities, but you do not need every dollar covered if your portfolio can handle part of the load.

• Examples: A 55-year-old with a $2.5M portfolio may target coverage of $5,000 to $7,500 per month for 3 to 5 years. A 45-year-old with a $4M windfall may choose a smaller daily benefit plus stronger inflation protection, knowing the money has decades to compound. For more on how to invest an inheritance alongside insurance decisions, the two conversations should happen together.

• Higher-net-worth families can often afford intentionally higher deductibles (longer elimination periods) and shorter benefit durations, because they can bridge short gaps with liquid assets.

7. Understand the Main Types of Long Term Care Insurance You'll Be Offered

Three product categories dominate the LTCI market today. Each provides long term care coverage differently.

Traditional long term care insurance offers stand-alone policies with a monthly benefit, a defined benefit period (e.g., 3 or 5 years), and inflation protection options. Traditional LTC policies often have guaranteed renewable premiums, meaning the insurance company cannot cancel the policy as long as you pay. But "guaranteed renewable" does not mean the premium payment amount stays fixed; LTCI insurers can file with state regulators for class-wide rate increases. Traditional LTC insurance may include rising premiums and a use-it-or-lose-it design: if the policyholder dies without ever filing a claim, premiums paid are gone. Traditional LTC insurance sales dropped 65% from 2000 to 2010, and fewer carriers now issue these traditional policies.

Hybrid life insurance with LTC riders combines LTC coverage with life insurance benefits. These policies are typically funded with a lump sum or limited premium payment schedule. If you never need care, a death benefit passes to loved ones. If you do need care, the policy accelerates or extends that death benefit to pay for LTC services. Hybrid and life combination products saw significant increases recently, reflecting the LTCI market's shift. Hybrid policies often have a surrender value if you change your mind, and some offer return-of-premium features. The trade-off: hybrids typically deliver lower pure LTC leverage per premium dollar because part of your initial investment funds the life insurance chassis. For windfall recipients exploring broader coverage, see our guide on insurance for high net worth individuals.

Annuity/LTC combos use fixed rate or indexed annuities (not variable annuities, which carry market risk) that multiply the account value for qualified LTC expenses. These can be useful when someone has non-qualified windfall money and prefers tax-deferred growth. The annuity's account value serves as the base; if LTC is needed, the insurance policy pays a multiple of that value toward care.

LTC insurance can cover in-home care and nursing home costs across all three product types. Third Act Retirement Planning does not receive commissions from product sales (fee-based advisory), so we compare these objectively within a broader financial plan.

8. Medical Underwriting: Will Your Health Let You Secure Coverage?

Timing matters. Insurance carriers require health screening to determine top eligibility for long term care insurance. Most LTC policies require medical underwriting for approval, and waiting too long may lead to disqualification due to health issues.

• How it works. The insurance company reviews health questionnaires, prescription records, medical history, and sometimes conducts cognitive screening, especially for applicants over 60. Most hybrid LTC products require simplified medical underwriting, which is faster but can be stricter on certain red-flag conditions.

• Conditions that cause decline or surcharges. Recent cancer (within 2 to 5 years of treatment), insulin-dependent diabetes with complications, prior stroke, Parkinson's disease, ALS, severe rheumatoid arthritis, and moderate dementia will often result in denial.

• Age and premium trajectory. LTC insurance premiums increase 2 to 4% annually after age 50. Premiums jump 6 to 8% annually after clients turn 60. Purchase LTC insurance in your mid-50s for better rates and higher approval odds. Long term care insurance is more affordable when purchased early, before health declines narrow your options.

• Full vs. simplified underwriting. Full medical underwriting involves detailed records review but sometimes allows more flexibility for nuanced medical histories. Simplified underwriting (common in hybrid products) uses a shorter questionnaire but may automatically decline applicants with any flagged condition.

• Preparation. Review your medical records and prescription history with a financial planner or independent insurance specialist before submitting applications. This lets you apply to carriers most likely to approve your health status.

9. Key Policy Design Decisions: Deductibles, Duration, and Inflation

These design choices determine both the premium payment and the level of protection the policy provides.

• Elimination period. Think of this as the deductible measured in days. Common options: 0, 30, 90, or 180 days before LTC benefits begin. A medical event triggering a claim starts the clock. Windfall recipients can often afford a longer elimination period (90 to 180 days) to reduce annual premiums, since they have liquid assets to cover the initial gap.

• Benefit period. Typical choices: 2, 3, 5, or 6 years. The vast majority of real-world claims last 2 to 4 years, so 3 to 5 years is a common target. Longer periods cost more and are less necessary for high-net-worth families who can self-fund beyond the insured window.

• Monthly or daily benefit. A $200/day benefit equates to roughly $6,000 per month. Match this to your local cost estimates rather than picking arbitrary round numbers. If assisted living in your metro costs $7,200 per month, a $5,000 benefit plus your other income may still cover the full cost.

• Inflation protection. A 3% compound inflation rider grows a $6,000 per month benefit to approximately $10,800 per month over 20 years. A 5% compound rider would push it to roughly $15,920. "No inflation" options save on premiums but leave you exposed if you do not need care for 15 to 25 years; the benefits provided will cover a shrinking share of the true cost of care.

• Shared care for married couples. Pooled benefit structures let spouses access each other's benefit periods. If one spouse uses only 1 year of a 5-year pool, the other can draw on the remaining 4 years. This is attractive for couples in their 50s after a business sale or inheritance.

10. Evaluating Premiums Against Your New Personal Finances

A windfall does not mean you should overspend on insurance. Stewardship means right-sizing the premium relative to what your assets produce.

• Rule of thumb. Target total LTC or hybrid LTCI premiums at 5% to 10% of expected annual portfolio income, not of the whole portfolio. A family with a $3M portfolio yielding 4% earns roughly $120,000 per year; 5% to 10% of that is $6,000 to $12,000 per year in annual premiums.

• Smaller windfalls. Someone with an $800,000 inheritance might cap LTCI premiums at $2,500 to $4,000 per year. The average annual premium for a $165,000 benefit policy is $950 for males and about $1,500 for females at age 55; policies with inflation protection or richer benefits cost more.

• Payment structure. Distinguish between ongoing premiums (payable for life or to age 65) and single-premium or 10-pay designs funded directly from the windfall. A lump sum approach eliminates future cash-flow strain but ties up capital. When creating a sustainable spending plan after an inheritance, insurance premiums should be one explicit line item.

• Stress-testing rate increases. Premiums for traditional LTC insurance have risen since 2010; Milliman's 2024 survey found average approved increases of 28%, with requests averaging 56%. Annual premiums typically increase 2 to 4 percent with age. Model scenarios where premiums rise 40% to 60% on traditional policies and confirm that raising premiums at that level would not derail retirement or giving goals.

• Tax considerations. Part of LTC premiums may be tax-deductible for some business owners or under certain state rules. For the LTC portion of hybrid policies, deductibility is limited by age-based IRS caps. Tax-efficient funding from the right account type should be part of the planning conversation.

11. Integration with Estate, Life Insurance, and Legacy Goals

Long term care expenses late in life can consume assets that would otherwise pass to heirs or charities. For estates under $10M, an uninsured three-to-five-year care need can reduce an inheritance by 20% to 40%.

• Hybrid life insurance with LTC riders addresses this directly. If the policyholder dies without using LTC benefits, the death benefit goes to loved ones. If care is needed, benefits provided for LTC reduce the death benefit proportionally. Either way, premiums paid are not "wasted." Reviewing existing long term care insurance policies can clarify their value amidst increased wealth.

• Existing life insurance. Review current policies: term life that may be convertible to permanent coverage, permanent policies that can add LTC riders, or redundant other insurance policies that can be repurposed to fund LTC solutions.

• Estate coordination. Coordinate LTC decisions with wills, revocable trusts, and beneficiary designations. If one spouse needs expensive care, the surviving spouse and children must remain financially secure. Our guide on estate planning for new millionaires covers how to structure these pieces together.

• At Third Act Retirement Planning, we integrate LTC choices with estate and charitable giving plans, sometimes pairing donor-advised funds or charitable trusts with LTC coverage to protect financial resources while honoring generosity goals.

12. Protecting Loved Ones from Caregiver and Financial Burden

Family dynamics can influence decisions regarding long term care insurance and care logistics. The emotional and financial toll on family members is real and measurable.

• Caregiver cost. Adult children commonly reduce work hours or leave jobs entirely to provide unpaid care when parents have no long term care plan. This jeopardizes their own retirements and financial security.

• Clarity reduces guilt. Having a clear LTC funding strategy, whether insurance, set-aside assets, or both, relieves loved ones from making rushed decisions about your care under crisis conditions.

• Family conversations. Hold a structured meeting with your spouse and adult children where you explain how the windfall will be used to secure your care and protect their inheritance. Cover your preferences: desire to age in place, standards for facilities, and what role you do or do not want family members to play.

• Stewardship as love. From a biblical-stewardship perspective, thoughtfully planning for your own long term care needs is an act of responsibility toward the people you care about most.

• Document preferences. Write a care letter or memorandum stating your wishes: home-based care as long as safely possible, specific facility standards if institutional care becomes necessary, and who holds decision-making authority.

13. Comparing Insurers and Policy Features with a Fiduciary Lens

The financial strength of insurance providers is crucial for long term commitments such as long term care insurance. A policy is only as reliable as the insurance company behind it, and some contracts will not pay claims for 20 to 30 years.

• Financial ratings. Check carrier ratings from A.M. Best, Moody's, and S&P. Prioritize companies with strong claims paying ability (A rating or better) and established histories in long term care or life insurance markets. The National Association of Insurance Commissioners publishes complaint ratios and regulatory actions that can reveal carrier-level problems.

• Premium history. Look for LTCI insurers with fewer and more moderate rate increases over the past 10 to 20 years. Only 6.9% of LTC insurers have never raised premiums; the rest have filed for increases at least once. Regulatory filings, independent reports, and publications like the Wall Street Journal have covered these patterns.

• Contract features to compare. Non-forfeiture benefits (some benefit even if the policy lapses), waiver of premium during a claim, marital or spousal discounts, shared care riders, built-in inflation protection options, and whether claims payments are made as reimbursement or cash indemnity.

• Multiple quotes. Get policy illustrations for the same benefit structure from several carriers. Seeing cost and feature differences side by side reveals which carrier offers the best fit, not just the lowest premium.

• Third Act Retirement Planning acts as a fiduciary, evaluating how any LTC or care insurance solution fits the client's overall plan rather than prioritizing commissions or brand names.

14. How Third Act Retirement Planning Helps Windfall Recipients Decide

We specialize in helping people who have come into sudden wealth make decisions that serve both their future and their values.

• Discovery call. We review the windfall amount, current assets, health profile, family situation, and long term retirement and legacy goals, and when specialized product insight is needed, we may coordinate with an experienced vice president at an insurance agency or carrier.

• Personalized projection. We build a retirement and care projection with specific long term care cost assumptions, showing how self-funding versus various insurance designs affects financial security over a 25- to 35-year horizon. Low income scenarios, high-care-duration scenarios, and early-death scenarios are all tested.

• Honest assessment. We evaluate whether any LTC strategy is needed at all. If assets are truly sufficient, we may recommend no LTC insurance and formal self-funding with appropriate safeguards.

• Product narrowing. If insurance is appropriate, we narrow options (traditional LTC, hybrid life insurance with LTC riders, or annuity/LTC) to those that best match the client's age, health status, and values.

• Biblical wisdom. Our guidance is informed by principles of stewardship, contentment, and generosity, helping clients use their windfall in ways that serve both their long term care needs and their calling.

15. Action Steps: What to Do This Month After Your Windfall

Here is what you can accomplish within 30 to 60 days:

• Gather data. Collect windfall statements, existing life and disability policies, employer benefits summaries, current retirement savings balances, and any prior LTC quotes.

• Look up local costs. Use the Genworth or CareScout care survey tools to find 2025 cost estimates for home health aides, assisted living, and nursing homes in your area.

• Write down preferences. Note your desire to age in place, feelings about relying on family caregivers, and concerns about use-it-or-lose-it insurance. These preferences shape which product type, if any, fits best.

• Meet with a fiduciary advisor. Schedule a conversation with a fee-based advisor like Third Act Retirement Planning who understands long term care, medical underwriting, and sudden-wealth planning.

• Set a deadline. Commit to deciding on a clear LTC strategy within 90 days of receiving the windfall. Whether that decision is self-funding, purchasing coverage, or deliberately postponing with a specific date to revisit, having a deadline prevents drift. The windfall gives you a window to act; that window narrows as health declines and premiums climb.