Why a 70-Year-Old Couple With $3.4 Million Sold Their Long-Term Care Policies and Self-Funded a $400,000 Reserve Instead

A 70-year-old married couple with $3.4 million in assets faces a 27% long-term care premium increase on policies held since age 58. They have paid $10,600 annually for 12 years, totaling $127,200. Their assets include a traditional IRA, a Roth IRA, a brokerage account, and cash. The decision centers on whether to keep paying rising premiums, drop coverage, take reduced coverage, or self-insure by setting aside a dedicated reserve. The example self-funding plan moves about $400,000 into a reserve invested 50/50 in stocks and bonds, aiming for growth to roughly $832,000 by age 85, while acknowledging that return assumptions must be realistic.

"“If you have $3 million plus, you can self-insure. That middle ground is where it gets muddy, where you have assets but the insurance feels like a constant drain.”"

"“The couple has held policies since age 58, shelling out a combined $10,600 annually for a total of $127,200 over 12 years. The carrier just slammed them with a 27% premium hike, a common sting as major insurers have aggressively hiked rates since 2010.”"

"“The combined policy limit is roughly $584,000, assuming $200 per day for four years per spouse. The self-fund strategy moves $400,000 from the brokerage into a dedicated reserve, balanced 50/50 between stocks and bonds. At a 5% expected real return, that pot grows to about $832,000 by age 85, the median age for a first claim.”"

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