Planning for long term care is something most people seem to avoid. For a while, Long Term Care (LTC) insurance was affordable. Over the last several years, LTC insurance premiums have crept higher and higher. Insurance companies, in response to the problem, began to put out combination policies Life/Long Term Care Insurance.
There are drawback to these hybrid policies, such as length of coverage. What does LTC involve? When a person is no longer capable of performing two daily living activities, he or she is considered incapacitated. Help is needed to support the person’s life on a daily basis. You understand exactly what you are guaranteed when you purchase a LTC plan or a rider. LTC riders can be purchased separately and added to a Permanent Life Insurance policy or LTC riders can be purchased with a new Permanent Life policy, as well.
Your options will fall into five categories:
- Independent Long Term Care policy
- Combination Life/Long Term Care
- Use of Accumulated Death Benefit
- Life Settlement
- Viatical Settlement
Remember, this is not about borrowing money. It is not about paying debts or paying for your child’s education. Using insurance to pay for long term care must first meet certain conditions.
- Terminal illness
- Receiving a life threatening diagnosis (end stage cancer)
- Long Term Care needed for an extended time
- You are incapable of performing two daily activities—eating and dressing
Using the accumulated death benefit allows you access to the funds in advance, but remember the amount available is equal to the amount paid up until the present. The death benefit will continue to be reduced by the amount used in advance for long term care.
Life Settlements allow you to sell the policy at its present value, but you may be taxed on the proceeds.
Should you be terminally ill with a life expectancy of two years or less you may consider selling your policy to a Viatical Settlement company. This is considered selling your policy to a third party. Less than 50% of those who try to sell to a Viatical Settlement company succeed. Should you qualify, the Viatical company will make the monthly or weekly payouts and will be the sole beneficiary of the policy.
Call now and find out what your options are. An agent can help answer all your questions and find the best policy available.