More financial professionals are revisiting older permanent life insurance policies as long-term care costs rise, hybrid solutions gain traction, and consumers look for ways to reposition existing assets without triggering taxes.
By Louis Slagle, guest contributor
Few planning conversations create more emotional hesitation than long-term care (LTC). Most people understand the possibility exists, but many still push the topic aside because it feels expensive, uncomfortable, or too far away to address right now. Eventually, though, concerns about healthcare costs, independence, and the protection of family members become impossible to ignore.
| Louis Slagle |
Today, about 70% of people turning 65 will need some form of LTC support during retirement, and care costs continue climbing. One 2025 Cost of Care Survey found the national median annual cost for assisted living reached $74,400, while a private nursing home room climbed to nearly $130,000 annually.
Many consumers understand those risks in theory, yet a surprising number still haven't reviewed how existing assets could help address them. Older permanent life insurance policies often become part of that conversation.
Some policies purchased 15, 20, or even 30 years ago were designed around priorities that looked very different at the time. Income replacement may no longer carry the same urgency after children are grown and retirement approaches. Cash value accumulation may have become less important than creating flexibility for future care needs. In other cases, policy performance hasn't matched original expectations, leaving consumers frustrated or unsure what to do next.
Those situations can create a meaningful opportunity to revisit whether the policy still fits the individual's current goals.
Why 1035 exchanges are getting renewed attention
In many cases, a 1035 exchange is worth considering, especially when an older policy no longer aligns with current retirement or healthcare priorities.
Section 1035 allows consumers to transfer cash value from one permanent life insurance policy into another life insurance policy or annuity without immediately triggering taxes on gains. When used strategically, the exchange can reposition an older asset into a solution designed to address today's retirement concerns rather than priorities from decades ago.
In my experience, the strongest conversations rarely begin with product comparisons. They usually begin with planning questions.
What worries someone most about aging?
How would an extended care event affect retirement income or family finances?
Has anyone reviewed what Medicare covers for LTC expenses?
Would repositioning an underutilized policy create more flexibility later in retirement?
Those conversations usually resonate because they focus less on products and more on what someone is trying to accomplish.
Consumers are looking for flexibility, not just coverage.
More LTC conversations are becoming part of broader retirement income planning instead of being treated as separate issues.
Many people understand how quickly a healthcare event can unravel even a well-constructed retirement strategy, especially when care expenses continue rising faster than many households expect.
According to LIMRA research, only about 3% of Americans over age 50 have LTC insurance coverage despite widespread concern about future care expenses. Meanwhile, hybrid LTC solutions continue to gain traction as consumers seek options that deliver multiple forms of value.
Many people respond positively when they realize existing assets may already provide part of the solution. A policy that no longer aligns with current priorities may still hold significant strategic value. In some situations, repositioning the policy can help address LTC exposure while preserving some level of death benefit protection, reducing future premium obligations, and creating additional leverage for future care expenses.
Conversations around hybrid solutions often feel more approachable when consumers understand they may be able to reposition existing value rather than take on an entirely new expense during retirement.
Another factor driving these conversations is the emotional reality families face when LTC planning gets delayed too long. Thoughts about protecting spouses, preserving retirement assets, avoiding financial strain on adult children, and maintaining personal independence often become far more motivating than discussions focused strictly on policy mechanics.
Ethical policy reviews matter more than ever.
Many retirees have older policies they haven't reviewed in years, and some no longer remember why they were originally purchased.
Others assume changing coverage automatically means surrendering the policy and generating taxes. Simply helping consumers understand what options exist can create tremendous value, even when no changes are ultimately made.
Financial professionals have an important responsibility to approach these conversations carefully and ethically.
A 1035 exchange should never become an automatic recommendation or a replacement-driven sales strategy. Updated underwriting, surrender schedules, fees, and product complexity all require thoughtful evaluation and transparent discussion.
Consumers are becoming more aware of LTC planning challenges, and the market continues to evolve quickly to meet that demand. An Ernst & Young and LIMRA survey found 63% of individuals expressed a need for LTC-focused insurance solutions, fueling continued growth in combination products.
Often, people need someone who can help connect their existing assets with the retirement and healthcare concerns they're facing today.
Older policies may hold more value than people realize
Not every permanent policy should be repositioned, and not every person needs a hybrid solution. Still, avoiding policy reviews altogether may cause people to miss opportunities to better align older assets with today's retirement needs.
Many consumers purchased permanent coverage decades ago and never revisited whether the policy still matched their retirement goals or healthcare needs. A thoughtful review can uncover opportunities to:
Improve flexibility.
Address LTC exposure.
Reduce future premium strain.
Create more usable protection from assets they already own.
A well-positioned 1035 exchange can help transform an older policy from a stagnant asset into a more practical tool for modern healthcare and retirement planning realities, particularly when long-term care planning has become a growing priority.
For many people, meaningful value may already exist inside a policy that hasn't been reviewed in years.
Louis Slagle is Senior Vice President of Life Insurance Distribution & Strategic Growth at TruChoice Financial, an AmeriLife company.