Self-funding can be reasonable when assets, income, liquidity, and family goals can withstand a long or overlapping care event. Insurance can be useful when transferring part of that uncertainty protects a spouse, preserves choices, or prevents a forced sale of assets.
Self-funding is a funding decision
Saying ‘we will self-fund’ should lead to a specific account, a liquidation order, and an explanation of what the surviving spouse keeps. If the answer is ‘the portfolio,’ ask what happens in a bad market or when both spouses need care.
The advantage is flexibility and no premium. The disadvantage is retaining the full risk and the full coordination burden.
Insurance is not all-or-nothing
You can insure a layer of the risk and retain the rest. Benefit amount, duration, inflation protection, elimination period, and policy type all change the premium and the amount of risk transferred.
The goal is not to buy the maximum policy. It is to leave the family with a plan they can actually carry out.
- Self-funding with illiquid assets
- Premiums that would strain retirement cash flow
- A plan that ignores the healthy spouse
Model the care event, the no-care event, and the two-spouse event. Then decide which risks you want to keep.
Check the source
Regulator and government reading behind the plain-English explanation.