Health insurance and Medicare don't pay for it. And over time, it could bleed even the wealthiest dry.

"Over the past five years, the cost to receive long-term care has risen at an annual rate of 1.7% for in-home care, 6.7% for assisted-living facilities and 4.5% for a private room in a nursing home," says Tracey Baker, vice president of CJM Wealth Advisors in Fairfax, Va. "In 2005, the median annual rate for a private nursing home room was $60,225, compared with the 2010 median annual rate of $75,190."

Many experts recommend LTC insurance to help cover rising costs. "This is something many people don't want to face," observes Terence Holahan, assistant director of long-term-care sales at Northwestern Mutual in Milwaukee, Wis. "But long-term care events can happen to anybody, at any age. By buying long-term care insurance, you're transferring the risk from yourself to the insurance carrier."

Shifting Financial Risk
To underscore his point, Holahan describes a couple that retires at age 65 with $3.8 million in assets. All goes well until age 80, when one of them develops Alzheimer's, has a stroke or is in a terrible car accident and from then on requires daily assistance. "Without long-term-care insurance, their assets will be completely depleted within six years," he projects. "But if the same couple had bought long-term-care insurance when they were 50, they would still have $3.5 million in assets when they reach age 100."

What's more, he says that knowing you've dealt with this potential liability pays a tremendous dividend in peace of mind. "You feel freer to spend your money as you wish. You don't have to worry about tying up assets in case of these kinds of occurrences," asserts Holahan.

LTC insurance doesn't come cheap, though, and critics contend the need for it is overblown. "LTC insurance is sold by playing upon people's fears," cautions Dr. Brian Knabe, a certified financial planner at Savant Capital Management in Rockford, Ill., and a practicing physician. "The truth is that most individuals will never spend a long period of time in a skilled nursing facility."

Don't Delay
At any rate, discussing long-term care with your clients-as part of overall long-range planning-is smart business for advisors, too. You may be liable for the consequences if they don't. "Later on, if your client needs to go into a nursing home and doesn't have insurance to help pick up the bills, you'd better have documented proof that you at least talked about it," warns Holtzman, the planner in Pittsburgh.

The cost of LTC insurance can be offset by ending disability insurance and reducing life insurance, things that a client frequently does after retirement anyway. "[Clients] can think of it as a reallocation of premium dollars," suggests Holtzman.

Advocates go so far as to say the sooner the better. First, eligibility tends to decrease with age, since someone who already has a serious, ongoing medical condition would be turned down. Second, LTC premiums rise with age. You can't exactly lock in a low rate if you're under 50, but you can come close. "The carrier would have to make a case with the state insurance commissioner to justify an across-the-board hike, so price jumps are rare," explains Holtzman.

Besides, there's no advantage in waiting. "I have clients in their 30s who take out a policy as part of planning for the future," says Holtzman. "It's not necessarily just for older people."