70% of Americans over 65 will need some form of long-term care. California is among the most expensive states for it. Two structurally clean ways to fund it from a property or business sale, without liquidating other assets at the worst possible time, and without the “use it or lose it” trap of old-school standalone LTC policies.
At 3% inflation, today’s $11K/month nursing home is ~$15K/month in 10 years and ~$20K/month in 20 years. Over a typical 3-year care episode 15 years from now, that’s ~$650K out of pocket on the nursing-home path alone.
1 ACL.gov, ~70% of people turning 65 will need LTC services in their remaining lifetime. 2 Genworth 2024 Cost of Care Survey.
You sell the $2M property at age 65. You retire. You feel financially set. Then at 78, your spouse has a stroke. Or you get diagnosed with something requiring intensive care. Or one of you develops dementia and needs memory care for 4–7 years. The bill arrives at exactly the wrong time, the market just dropped, your retirement portfolio is down 30%, and you’re selling investments at a loss to fund $12K/month of care.
The LTC funding question isn’t “will I need this?” The question is: which bucket of money pays for it, and how do we set that bucket up at sale closing so it’s there when you need it?
From a single sale, there are two structurally clean ways to earmark dollars for LTC. Most clients use one or the other; some stack both.
The Structured Installment Sale (§453) pays you a guaranteed monthly stream from an A-rated insurance carrier for 5–40 years. On a $2M California sale structured over 20 years at typical carrier rates, that’s ~$8,000–$11,000/month. That’s within $1K–$3K of the typical California in-home LTC bill, and roughly equals the assisted-living facility cost. The carrier doesn’t care if you’re healthy or in a memory-care facility, the payment shows up either way.
Asset Care is a whole life insurance policy from OneAmerica (The State Life Insurance Company) that lets you access 100% of the death benefit to pay for qualified LTC, plus an optional Continuation of Benefits rider that extends LTC coverage beyond the policy face amount, up to lifetime/unlimited. Tax-free under §7702B for qualified LTC expenses, tax-free under §101 as a death benefit if LTC is never triggered.
The key feature: there's NO “use it or lose it”. If you never need LTC, your heirs receive the tax-free death benefit. If you need LTC, the policy pays out. If you need cash for an emergency, the policy has a guaranteed cash surrender value. Premiums are guaranteed never to increase.
Leverage: ~3.4× on LTC dollars, ~1.13× on death benefit. Coverage period: 2 years Acceleration of Benefits (uses the face amount) + 4 years Continuation of Benefits rider = 6 years total LTC coverage. Year-10 cash surrender value: $77,500.
Leverage: uncapped on LTC dollars (lifetime coverage), ~0.91× on death benefit. Coverage period: 2 years AOB + LIFETIME COB rider = unlimited LTC coverage as long as you live, qualified, and need care. Year-10 cash surrender value: $62,389. Trade-off vs Plan A: lower monthly LTC limit and lower death benefit in exchange for the lifetime continuation.
Plan A vs Plan B, how to choose:
The most elegant version of Way 1 + Way 2 combined: structure the bulk of your sale through SIS, then use a portion of the SIS monthly payments to fund a 10-pay Asset Care policy. Spread the premium over 10 years (smaller annual outlay than single-pay), keep the cash carve-out for liquidity, and get the leveraged LTC benefit when the policy completes paying. Your monthly carrier annuity covers retirement living AND the 10-pay LTC premium AND eventually covers the LTC bill itself if needed.
Traditional LTC insurance (Genworth, John Hancock, Mutual of Omaha standalone LTC) has a fatal flaw: use it or lose it. You pay premium for 20+ years. If you never need LTC, the premium is gone, pure cost. Plus traditional LTC carriers have repeatedly raised in-force premiums by 50-200% over the past 15 years, breaking the original economics for retired policyholders.
Asset Care fixes both problems:
| Question | SIS Stream | Asset Care 4-yr | Asset Care Unlimited |
|---|---|---|---|
| $100K outlay produces | Same income stream regardless | $339K LTC pool + $113K DB | Unlimited LTC + $91K DB |
| Monthly LTC ceiling | ~$5K–$11K (from SIS payment) | $4,712/mo | $3,793/mo |
| Coverage period | Pays for full SIS term | 2 yrs AOB + 4 yrs COB = 6 yrs | 2 yrs AOB + lifetime COB |
| If you never need LTC | Funds retirement normally | $113K tax-free DB to heirs | $91K tax-free DB to heirs |
| Inflation protection | Up to 3% COLA on SIS | Optional 3-5% rider available | Optional 3-5% rider available |
| Underwriting | None (sale closes) | Full medical + APS | Full medical + APS |
| Tax treatment of LTC | §453 installment tier rules | Tax-free under §7702B | Tax-free under §7702B |
| Premiums can be raised | N/A (sale-funded, fixed) | NO, guaranteed never increase | NO, guaranteed never increase |
| Cash surrender value | None (non-commutable) | $77,500 at year 10 | $62,389 at year 10 |
The LTC tax-leverage calculator models Asset Care specifically: input your age, health class, premium amount, estimates the LTC benefit pool, the death benefit if unused, and effective leverage. Cross-checks against a hypothetical “self-insure from a MYGA” alternative so you see the breakeven.
A 65-year-old couple sells a $3M California property. The cleanest stack:
What that buys: ~$11K/month SIS stream for 20+ years (general retirement income; naturally covers LTC if it triggers) PLUS $339K–unlimited of leveraged Asset Care LTC pool (kicks in tax-free if either spouse needs care) PLUS $400K liquid cash PLUS death benefit safety net to heirs if neither spouse triggers LTC. One sale event, three funded buckets.
I’m a California-licensed insurance & annuity producer (NPN 20602398). On an LTC-funding case my role:
We map your sale, your health status, and your family’s LTC exposure to the right structure. No pitch, if neither SIS nor Asset Care fits, I’ll tell you that.
213-414-2808 Open the LTC calculator →