A real-world case study showing how a $346,000 single premium delivered $24,000/month in lifetime LTC coverage — and a guaranteed $400,000 death benefit if care is never needed.
Case study is illustrative. Client details have been generalized to protect privacy. Individual results will vary.
This couple had accumulated significant wealth over decades of professional careers. With a $10 million estate and four children they hoped to provide for, their primary concern was not whether they could afford long-term care — they could. Their concern was whether they should use their own assets to fund it, or whether there was a more efficient structure that preserved the estate while providing first-class coverage.
They had considered setting aside $1 million as a self-insurance reserve. On closer analysis, that approach had serious drawbacks — and a properly structured single-premium hybrid policy proved dramatically superior.
| Policy Detail | Figure |
|---|---|
| Single premium paid | $346,000 |
| Immediate cash surrender value | $118,916 |
| Net cost after surrender value | $227,084 ($113,542 per insured) |
| Monthly LTC benefit — joint | $24,000/month |
| Monthly LTC benefit — per insured | $12,000/month |
| Annual LTC benefit — joint | $288,000/year |
| Benefit period | Lifetime |
| Death benefit if care never needed | $400,000 |
| Guaranteed gain over premium paid | +$56,636 |
The policy pays $24,000 per month jointly ($12,000 per insured) for as long as care is needed — with no benefit cap or lifetime limit. Whether one spouse or both require care, coverage continues for life. The couple's estate remains intact; the policy absorbs every dollar of care cost.
The guaranteed death benefit of $400,000 passes to the four children income-tax-free — exceeding the $346,000 premium by $56,636. The couple's estate is larger than if they had self-insured, and the children receive a guaranteed inheritance regardless of whether LTC was ever used.
The couple initially considered setting aside $1 million as a dedicated LTC reserve. That approach was rejected for three reasons:
A self-insurance reserve of $1 million must be held in conservative, accessible instruments — effectively earning little while waiting to be needed. With a hybrid policy, $346,000 in premium immediately converts to $24,000/month in lifetime LTC coverage and a $400,000 death benefit. The remaining $654,000 is free to remain invested and growing.
If the $1 million reserve is never needed for LTC, it passes through the estate at death — potentially subject to estate taxes that could consume $400,000 or more of its value. The hybrid policy's $400,000 death benefit, by contrast, passes to beneficiaries income-tax-free and outside the taxable estate in many structures.
For clients whose income flows through a C-corporation, LTC premiums paid by the corporation may be fully deductible as a business expense — while benefits received by the insured remain tax-free. This creates a significant additional tax advantage unavailable to self-insurers. The attorney in this case study was eligible to explore this structure.
"For $346,000, this couple secured $24,000 a month in lifetime care coverage — and a guaranteed $400,000 for their children if care is never needed. That is a win-win structure by any measure."
— Withbert W. Payne, CPA, CA, CGMA
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Request an Illustration →Disclaimer: The case study presented on this page is illustrative and based on a generalized client profile. Specific policy figures including premiums, cash surrender values, monthly benefits, and death benefits are drawn from actual policy illustrations but are not guarantees of future performance. Individual results will vary based on age, health, carrier underwriting, premium amount, and policy design at the time of application. Tax treatment of LTC benefits, death benefits, and corporate premium deductions is subject to current IRC provisions and individual circumstances — consult a qualified tax advisor before making any decisions based on tax considerations. Coverage availability and terms vary by state. This page is for informational purposes only and does not constitute an offer or solicitation to sell insurance. This is a solicitation for insurance.