Long-term care insurance is supposed to ease fears about long-term health care, but advisors warn that it can do the opposite.

Long-term care insurance can increase rather than reduce risk in retirement, according to financial planner Melinda Kibler of Palisades Hudson Financial Group in Fort Lauderdale, Fla.

"Mathematics work against [long-term care insurance] because most people will need long-term care eventually," Kibler says. "For insurance to make economic sense, the risk must be spread across a pool of participants."

With other types of insurance, only a portion of the population collects, while the others continue to pay their premiums. That covers expenses paid out and keeps premiums manageable. However, since most buyers of long-term care insurance will eventually collect, Kibler notes that insurers will have to raise premiums. That will cause the healthier portion of the population to opt out, leaving a pool of less-healthy participants who all believe they will need to collect their insurance in the immediate future.

While a full spread of Medicare coverage can cost more than $3,900 a year, a study from the Center for Retirement Research at Boston College found 44% of men over 65 and 58% of women of the same age require some form of long-term care. That care is not covered by Medicare, which isn't great when the Federal Long-Term Care Insurance Program puts the average cost for an assisted living facility is $47,064 per year.

A report from Voya Financial notes that 41% of Americans rank health care as the expense they are most worried about, though 81% have not estimated the total amount health care will cost them in retirement. Though the majority of Americans (66%) estimate retirement health care expenses would cost $100,000 or less, the Employee Benefit Research Institute (EBRI) notes that a 65-year-old man would need $127,000 in savings to cover those expenses. Meanwhile, a 65-year-old woman would need $143,000 to have a 90% chance of covering health care expenses in retirement.

"Health care expenses can be difficult to project, especially when you are decades away from retirement," says Scott Thoma, principal and investment strategist for Edward Jones.

According to a recent report from financial firm HSBC, 76% of people surveyed see illness and health care costs as the biggest obstacles to overcome in retirement. Even if you're healthy, 61% say a partner's illness could also derail retirement plans. The survey of more than 18,000 workers and retirees in 17 countries found that 67% of those currently employed have no ideal what they'll spend on healthcare in retirement. Yet advisors suggest that some of the best insurance against long-term health care needs isn't insurance at all.

"Retirement can often invigorate and remind people of the importance of healthy lifestyle choices, but it is equally as important to consider adopting a healthy lifestyle in advance of retirement," says Michael Schweitzer, global head of sales and distribution at HSBC.

The Census Bureau predicts that the number of Americans aged 65 and older will grow to greater than 80 million by 2050. In that time, the number of people likely to require long-term care is expected to more than double from 12 million today to 27 million. Kibler notes that people with few assets can have their long-term care largely covered by Medicaid, while the wealthy will likely never need long-term care insurance because they have substantial savings. Those in the middle, however, are most vulnerable to long-term health costs and have few viable solutions.

Kibler suggests the following courses of action for those individuals:

  • Balance your savings: The best solution, Kibler says, is to invest in a comfortable mix of U.S. and foreign stock funds and bonds. Even investing in a fund pegged to the S&P 500 can be a low-risk ways of building your savings.
  • Don't give up your money: While you could give assets to adult children to make yourself eligible for Medicaid, there are strings attached to that strategy. You'll lose control of the assets you give up and you may face a penalty from Medicaid for giving up assets within five years of applying for benefits.
  • If you do give away assets, set up a trust: An irrevocable trust will protect your assets from divorce settlements and debt collectors if your heirs get into trouble later in life.
  • Consider life insurance: If you plan to leave money to heirs, a life-insurance policy will insure that there's money left over if the cost of your long-term care becomes excessive. While a term life-insurance policy can be inexpensive for middle-aged buyers, they can be far more costly for those over age 65 -- which makes whole-life policy a better bet.

"Nearly all major life events have financial implications," said Bill McManus, director of strategic markets for Hartford Funds. "It's easier to plan for and reach those financial goals when we can anticipate events, such as sending a child to college. However, it's just as important to plan for the unexpected."

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.