Why Suze Orman Is Wrong About Long-Term Care Insurance for Retirees With Over $2 Million

Long-term care insurance is presented as family protection, with premiums described as steep. For a 65-year-old couple with $2.4 million in retirement assets, the cost of coverage can be compared with the likely care liability. Couple premiums for hybrid life-LTC coverage can run $5,000 to $8,000 per year combined, while standalone policies can run $3,500 to $5,500 per year. Over 20 years, cumulative premiums can total $70,000 to $160,000, which could grow to roughly $130,000 to $300,000 if invested at a 6% return. Average lifetime care use of 2 to 3 years at $7,000 to $10,000 per month implies $170,000 to $360,000 in current dollars, with inflation likely increasing that amount. Keeping funds in a portfolio preserves estate value if no claim occurs, while premiums paid to an insurer do not.

"“Every parent in their 50s and 60s owes it to their kids to consider long-term care insurance as family protection. I know the premiums are steep.”"

"Start with what the policy costs. Per current pricing for a couple at 65, hybrid life-LTC coverage runs $5,000 to $8,000 a year combined. Traditional standalone policies come in cheaper, at $3,500 to $5,500 a year. Either way, the cash leaves the household every year until a claim or death."

"Stretch that out 20 years, to age 85, when the typical LTC need hits. Cumulative premiums total $70,000 to $160,000. Redirect those same dollars into a portfolio earning 6%, and they grow to $130,000 to $300,000. That 6% assumption is reasonable in context. The 10-year Treasury yields about 4.5% today, so a bond ladder alone closes much of the gap, and a balanced portfolio with equity exposure has historically cleared the rest over 20-year stretches."

"The self-insurance pot funds the expected liability. If neither spouse ever needs extended care, the money stays in the estate. Premiums paid to a carrier do not."

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