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Is Long Term Care Life Insurance Right for You?

Carer caring for senior man

By Byron Udell | May 4, 2020

Did you know that 70 PERCENT of people over age 65 will need long term care? And there’s a 91 PERCENT chance that either you or your spouse will need long term care…at some point. That’s why there is Long Term Care Insurance.

Since the early 1970s, Long Term Care insurance has helped many families financially deal with the high cost of long term care. A traditional Long Term Care policy can help you pay some of the high medical costs that are associated with delivering this type of special care (home health care, assisted living expenses, nursing home confinement, etc.), which can run as high as $150,000 a year.

Long Term Care (LTC) is defined as needing assistance with the basic Activities of Daily Living (ADL), which include:

• Eating
• Dressing
• Bathing
• Toileting
• Continence
• Transferring

How does it work?

With an LTC rider, the life insurance death benefit is like a pot of money.  It can be used for LTC or it goes to your family (a win-win) when you die. Watch Byron as he explains how this product can help save you, and your nest egg.

As Bryon stated, traditional Long Term Care coverage on its own is expensive and premiums can and do increase from time to time, as they are not guaranteed. Plus, since these policies don’t accumulate cash value there’s no partial refund or cashback should you decide to cancel the policy. And if you want to get the best rates, you need to buy this type of product when you’re young and healthy.

However, while traditional Long Term Care insurance has its drawbacks, there are other options.

Long Term Care Coverage as a Rider

The choice is yours; however, here are some compelling reasons why you should explore purchasing long term care insurance in the form of a rider added to your life policy:

  • Live-in care can cost $200 a day and a nursing home can be up to $300 a day (and that’s today; it’ll only cost more years from now)—that’s as much as $219,000 a year if both you and your spouse need care simultaneously. Without long term care insurance, that financial burden could fall to your kids or other loved ones (that is, after your savings have been completely wiped out!)
  • Standalone long term care insurance can be costly, and the rates can increase at any time; LTC rider premiums are guaranteed NOT to increase as long as your policy is in force.
  • There’s a 90-day waiting period before traditional long term care insurance policies will begin paying your benefit. This is NOT the case with many LTC rider policies.
  • Premiums could be WASTED if you buy a standalone policy and never file a claim.
  • A long term care rider is a surprisingly affordable addition to a traditional life insurance policy.

Long Term Care Products

Several insurance carriers offer products that are more flexible for consumers concerned about planning for their possible future LTC needs. They’re called “hybrid” policies. A hybrid policy combines the best parts of two different types of products into a single policy.

A Long Term Care/Life Insurance hybrid policy can pay for long-term care that regular health insurance or Medicare doesn’t cover. Sales of such hybrid polices have doubled since 2008, to more than $2.4 billion in 2016, according to the Life Insurance and Market Research Association (LIMRA).

Two basic LTC hybrid policies

Life insurance with an Accelerated Death Benefit Rider – This type of hybrid policy doesn’t technically deliver long-term care coverage. It hastens the delivery of your life insurance policy’s death benefit, so YOU can personally prosper from it, instead of your beneficiaries. The benefits of this particular type of rider are essentially the same as a standard, separate Accelerated Death Benefit policy. This specific type of rider is not offered by all insurance carriers.

Life insurance with LTC Rider – This type of hybrid policy does offer LTC-style benefits but costs more. Policies are available in both single-premium and pay-as-you-go designs. The healthier you are, the less you’ll pay in premiums. If you don’t end up using the LTC benefits, the pot of money those policies create is simply paid out to your beneficiaries at your death.

These LTC riders generally are only available with Permanent Life policies, such as Universal Life, Indexed Universal Life, and Whole Life.

Now that you’ve got the facts, call us at 800-442-9899 and speak to a real person! (yes, we’re old school.) You have enough things to think about, so we’ve taken the stress out of shopping for life insurance.

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