The Landings & Bay Colony

22

P

lanning for retirement begins when
you are still working and accumulating

wealth. In addition, once you’ve retired,
the planning process continues to ensure
you don’t outlive the assets you set aside
during your working years. You probably
have investments for growth and income,
qualified plans, cash reserves set aside
for emergencies and life insurance to

create a legacy and efficiently provide for your
beneficiaries. One item that shouldn’t be overlooked in this
process is planning for the potential need for long-term
care (LTC).

When you think about LTC, you may initially think elder
care; but, that’s not necessarily the case. There are many
life events that could trigger an unexpected need for LTC
services. An accident, injury, illness or just the infirmity of
growing older could create an LTC need. Expenses
associated with LTC may be a financial risk that could
impact your savings, retirement, family and your legacy.

Rationale

The U.S. Department of Health and Human Services
projections estimate that 70 percent of Americans who
reach the age of 65 will need some form of long-term care
in their lives for an average of three years.1 Preparation

should be part of a well thought out financial plan, as LTC
expenses may potentially impact your retirement lifestyle,
compromising the amount of assets that you wish to pass
on to the next generation.

The above graph shows the different types of assets in a
typical retirementoriented portfolio, which may be at risk in
case of a LTC event. Your specific asset allocation may
differ based on your individual needs.

Potential solution

The graph below illustrates how moving some of your
“cash reserves” into a single premium payment “hybrid”
longterm care policy2 may allow you to immediately help
protect the remainder of your portfolio—specifically those
assets earmarked to generate retirement income—from 
LTC expenses.

A “hybrid” LTC policy is a universal life insurance policy
with a LTC benefit feature. In many cases, the hybrid LTC
policy may provide you with up to four times your premium
payment as a tax-free reimbursement for potential long-term
care expenses. The below case study provides an
illustration of how a “hybrid” LTC policy might work.

Hypothetical case study

Mary is a healthy 65-year-old non-smoker, enjoying
retirement. She set aside $300,000 in the cash portion of
her $1 million retirement portfolio in case she should ever

Financially Speaking

Protect Your Retirement and 

Legacy Assets

By Darran Blake, Sr. Vice President-Wealth Management, UBS Financial Services

Life insurance to 
create a legacy

Other

Investments/
qualified plans

Crash
reserves

Designated for
long-term care costs

Life insurance to 
create a legacy

Other

Investments/
qualified plans

Crash
reserves