Life Insurance with Long-Term Care
Life Insurance with Long-Term Care Riders
Linked-Benefit Long-Term Care Policies
Both are permanent life insurance policies that can be used during your lifetime if you need long-term care at home or in a facility. They both share the following features and the differences are compared below:
➤ If you never need care, the cash value of the policy passes to your estate as a tax-free death benefit.
➤ The plans can build cash value and have a Return of Premium option.
➤ Cash Indemnity plans are available.
➤ Can be funded from your IRA.
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Compare Life Insurance with LTC Riders
Life Insurance with a Long-Term Care Rider
How It Works
A rider accelerates the death benefit so it can be used for long-term care.
Premiums are flexible and can be guaranteed with some plans.
Why It Might Work For You
A good choice if your most concerned with leaving a legacy or providing for loved ones when you pass, but still want access to the death benefit if care needs arise.
Often a better fit for those at younger ages.
Things To Consider
No inflation protection or increase of benefits beyond the Death Benefit amount.
Long-term care benefits paid reduce the death benefit.
Linked-Benefit LTC Policy
How It Works
Provides an extension of LTC benefits beyond the Life Insurance coverage, including inflation option and can have unlimited benefits.
Premiums are guaranteed to never increase.
Why It Might Work For You
A good choice if you are primarily concerned with long-term care coverage but would like a death benefit if little or no LTC is needed.
Joint plan covering both spouses available.
Eliminates the need to liquidate a large amount of personal assets in a down market.
Things To Consider
Typically funded with existing assets, such as CDs, IRAs, cash value of a whole life policy, or other assets to be used as a 10-pay or one-time premium payment.
Some plans offer recurring premiums, often higher than a traditional LTC policy, partly because they cover two risks.
Advantages of Life Insurance with Long-Term Care
Guaranteed Level Premiums
Guaranteed level premiums can be a strong advantage of Hybrid Life Insurance with LTC and Linked-Benefit polices. Consider the following:
- Knowing that premiums can never change allows you to avoid unexpected premium increases
- Payment can be as a Single Premium or spread out over several years
- Guaranteed level premiums are generally not available with traditional long-term care insurance
Estate Planning Benefits
Life insurance has many uses in estate planning, including:
- Estate liquidity to pay taxes
- Wealth accumulation
- Income replacement
- Debt repayment
Because hybrid long-term care insurance policies are built on a life insurance policy, any unused policy value passes tax-free to your named beneficiaries.
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Our specialists offer objective guidance on a wide range of life insurance with long-term care products and strategies. You’ll get professional service on topics such as:
✓ Choosing from a variety of long-term care insurance products
✓ Suggestions for the insurance company best suited to your situation and goals
✓ Assistance with health qualifying for coverage
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About the Author: Mike Berger
Reviewed by: Craig Matesky