Long-Term Care Annuity Case Study: $90,000 In, $318,000 of Care Benefits

Most people plan their retirement around the good stuff. Travel, grandkids, a little more time for the things you love. Almost nobody plans for the possibility that they will need help with daily living for a year or two before they go.

That is the gap I want to talk about today, and I want to use real numbers to do it. EquiTrust put together a case study on a 65 year old man named Mike, and it shows something most people have never heard of. A fixed index annuity with a long-term care rider can pay for care if you need it, and still grow for your family if you do not.

The Risk Nobody Plans For

Roughly 7 in 10 people who reach 65 will need some form of long-term care at some point. Long-term care is not medical care. It is help with the basics. Bathing, dressing, eating, getting around, using the bathroom.

Medicare does not pay for that kind of care. It covers a short stretch of skilled nursing after a hospital stay, and only while you are improving. The day to day help someone might need for years is custodial care, and Medicare stays out of it.

The national median cost in 2026 is around $6,483 a month for a home health aide, about $5,900 for assisted living, and over $10,000 a month for a private room in a nursing home. A single year of nursing care can run past $127,000. That is a retirement altering number for most families.

So the question is not whether care is expensive. It is who pays for it when the time comes. Your savings, your kids, or a plan you put in place ahead of time.

The Problem With the Old Way

Traditional long-term care insurance works, and I have placed plenty of it. But it has two drawbacks that make people hesitate.

First, premiums are not guaranteed forever. Carriers have raised rates on blocks of traditional LTC policies, and a policyholder in their 80s can face a decision they never expected to make.

Second, it is use it or lose it. If you pay premiums for 20 years and never need care, you got peace of mind and nothing else. No cash value, no death benefit, nothing for your family.

Those two things are why a lot of people who need coverage end up doing nothing at all. And doing nothing is a decision too, just the most expensive one.

What a Long-Term Care Annuity Actually Is

This is the part people have not heard of, and it is the reason I am writing this post.

A long-term care annuity is a fixed index annuity with a long-term care rider built in. One contract, two jobs.

If you never need care: the annuity stays an annuity. Your account value can earn index credits, and it does not lose value when the market drops. Growth is subject to the contract's caps and crediting method, so it is not a stock market ride. If you never use the care benefits, the money is there for retirement income or for your beneficiaries.

If you do need care: the rider unlocks a long-term care benefit base that is usually much larger than your account value. That is where the leverage comes from, and that is where Mike's case study gets interesting.

Meet Mike

Mike is 65. He has about $300,000 in retirement accounts and other assets. His concerns are the ones I hear from almost every client his age.

• Prepare for life's what ifs, including the chance he will need long-term care services - Avoid putting the burden of his care on his children - Preserve and grow his assets

Mike's plan is simple. He puts in a $50,000 initial premium, then adds $10,000 a year in years two through five. Total premiums paid over five years: $90,000. That is less than a third of his retirement assets, and the rest stays invested and untouched.

The Key Idea: Coverage Ratios

Here is the mechanic that makes this work, and it is the one thing to remember from this post.

When Mike's contract is issued, he is assigned a 315% Coverage Ratio based on his age and his underwriting class, which came back Preferred. That ratio is multiplied by his premium to set his long-term care benefit base.

His $50,000 initial premium gets a 3% roll-up and becomes a benefit base of $162,225 at the end of year one. He is getting roughly $3.24 of care benefit for every $1 he put in.

Now the part that separates this product from others. Many annuities with LTC riders apply the Coverage Ratio to the first year premium only. After that, additional premiums are credited dollar for dollar.

With Bridge by EquiTrust, the Coverage Ratio applies to every premium paid during the first five years. So each $10,000 Mike adds does not just add $10,000 to his benefit base. It adds $31,500.

That single difference is worth real money over time.

The Numbers Side by Side

Here is the comparison straight from the case study. One column is Bridge, where the 315% Coverage Ratio applies to premiums paid in years one through five. The other column is a hypothetical similar product that only applies the Coverage Ratio in year one. Both get the same 3% annual roll-up.

End of year | Premium added | Bridge benefit base | Other product benefit base

• 1: $50,000 initial | $162,225 | $162,225
• 2: $10,000 | $199,537 | $177,392
• 3: $10,000 | $237,968 | $193,014
• 4: $10,000 | $277,552 | $209,104
• 5: $10,000 | $318,323 | $225,677

By the end of year five, Mike has put in $90,000 and his long-term care benefit base is $318,323. The other product would have given him $225,677 on the same premiums.

The Difference When Care Is Needed

Fast forward. Six years later, Mike goes on claim and needs care. He uses his full long-term care benefit over a 60 month period.

Bridge pays $318,323. The alternative product pays $225,677. The difference is $92,646, and long-term care benefits paid for qualified care services come to you tax free, subject to the daily IRS maximum.

That is 41% more care benefit from the same $90,000 in premiums. In practical terms, it is roughly another year of quality care that Mike's family does not have to fund out of pocket.

Two More Things Working in His Favor

Wellness credits. Mike also earns credits through the NeverStop Health Coaching and Rewards Program built into the contract. Staying engaged with his health adds to his benefit base. It is a small nudge with a real payoff.

Growth he keeps either way. Remember the other half of this. If Mike never needs care, the annuity is still his. He has an income source for retirement, and whatever is left goes to his beneficiaries. He is not paying premiums for 20 years and hoping he gets nothing back.

Who This Fits

This approach tends to fit people in their late 50s to early 70s who have retirement assets to protect and no interest in traditional long-term care insurance.

• You want care coverage without a premium that can be raised later - You want your money to stay yours if you never need care - You have assets you would rather pass on than spend down on care - You can fund it with a portion of your assets and leave the rest invested

It is a weaker fit if you need the money fully liquid in the next few years, or if your priority is pure death benefit rather than care coverage. And it is not a fit at all if the premium would stretch your budget. A policy you cannot comfortably fund is not a plan.

What to Know Before You Decide

A few honest notes, because this is real money and a long commitment.

• Guarantees are based on the claims paying ability of EquiTrust Life Insurance Company - Long-term care benefits must be used for qualified long-term care services and are subject to the daily IRS maximum - Benefit base figures shown are before vesting - Premiums added after the fifth contract year increase the LTC benefit base dollar for dollar - The 3% annual roll-up is included, and it can be increased to 5% for an additional fee - Product features, availability, and costs vary by state

Mike's numbers are specific to his age, his health class, and his premium schedule. Yours will be different, and that is exactly why I run the illustration instead of quoting a brochure.

Let's Run Your Numbers

If you have retirement assets you want to protect from a care event, this is worth 20 minutes of your time. I can show you what a Coverage Ratio looks like at your age and health class, what it does to your care benefit over five years, and how it stacks up against traditional long-term care coverage.

I have been helping families with life and retirement planning since 1996. I represent the leading carriers and I shop the market for my clients, so you get a real comparison instead of one company's pitch.

You can also run your own long-term care cost numbers first, then call me at 214-272-2769 or schedule a quick review. No pressure, and no obligation.

SJL Insurance Agency. Based in Texas. Licensed in 40+ states. Serving clients coast to coast.

Case study figures and product details provided by EquiTrust Life Insurance Company, West Des Moines, Iowa. Bridge is a fixed index annuity with a long-term care rider. Guarantees are based on the claims paying ability of the issuing company. This is general information, not investment advice. Ask for complete product details, including costs, exclusions, reductions, and limitations before you decide.

Learn more about long-term care planning and annuities on our site.