SCENARIO CALCULATOR · BETA
Self-Insure vs LTC Insurance Breakeven
Model whether self-insuring for long-term care expenses beats carrying an LTC insurance policy from this point forward, given your numbers. Outputs a scenario analysis with editorial commentary, not a personal recommendation.
YOUR INPUTS
Configure scenario
Ready
Adjust your inputs on the left and click RUN SCENARIO ANALYSIS to see the breakeven analysis.
Why this calculation matters
For many high-net-worth individuals the question isn't can I afford it? but is this the most efficient use of capital? Self-insuring requires earmarking a portion of your portfolio for the bad case. LTC insurance, while carrying a recurring premium cost, provides leveraged catastrophic protection.
Our calculator shows both: the expected-value comparison and the catastrophic-protection gap.
EDITORIAL DISCLAIMER
Outputs are illustrative scenario analysis based on disclosed assumptions, not personal recommendations. Underlying assumptions about returns, longevity, future cost of care, and premium increases may not reflect your actual experience. Confirm against your specific policy schedule and an independent fiduciary advisor's review before any decision. Full disclaimer.
Methodology Notes (formulas + assumptions) expand_more
Cash flows are nominal; discount rate is nominal.
All projections compound future dollars at (1 + cost_inflation)year and discount at the nominal rate (1 + real_return + general_inflation)year. Default: 4.5% real return + 3.0% general inflation = 7.5% nominal discount.
Hazard curve is age-dependent (Gompertz).
Annual hazard of needing LTC follows h(t) = a × exp(0.10 × age), with a calibrated per user so cumulative claim probability over remaining life expectancy equals 70% (HHS 2022). The curve produces yearly claim-onset probabilities that increase with age.
Median duration, not mean.
Central case uses sex-adjusted MEDIAN care duration (M: 1.6y, F: 2.7y per HHS) — not the often-cited 2.4y mean, which is pulled by the long right tail. Stress case uses 5.0y (~90th percentile). The reported "mean" is reference only.
Period-of-payment, not lump-sum.
Both insurance benefits (Path A) and out-of-pocket care costs (Path B) are calculated year-by-year over the claim period and discounted separately. This avoids understating PV at long horizons.
Tax adjustments (when enabled).
Premium deduction (if itemizing) capped per IRS Pub 502 age-based limits ($1,790-$5,960 for 2026). Benefits tax-free up to per-diem cap of $420/day (Rev. Proc. 2025-25); only daily benefit exceeding this cap is taxable. Investment growth on saved premiums (Path B) taxed at effective rate based on account type: taxable (0.7× marginal), tax-deferred (full marginal), tax-free (0).
Catastrophic protection gap.
The "stressed-bad-case scenario" combines 90th-percentile duration (5.0y) × 75th-percentile state cost (1.25× state baseline) × earliest-likely onset (10th-percentile of calibrated hazard). Output is the PV residual cost the policy does NOT cover — your wealth needs to cover this if you self-insure. NOT a true joint statistical percentile (Monte Carlo deferred to v2).
Sources cited.
SSA Period Life Table 2024 · HHS "How Much Care Will You Need?" 2022 · Genworth Cost of Care Survey 2024 · IRS Pub 502 + Rev. Proc. 2025-25 · SOA LTC Insurance Section reports. Full methodology page.
Found a math error? Email editor@longtermcaredesk.com. Verified corrections posted publicly with date and nature of the correction. We invite scrutiny.