If you have been thinking about who is going to take care of you when you get old and what will happen to your family if you die, we applaud you because most people don’t plan this far ahead. Although they should since 3 quarters of Americans need some form of long-term care at one point or another in their life. Now, as far as dying is concerned I think it is safe to say everyone knows the odds are not in your favor. There may be a way to kill two birds with one stone by getting a life insurance policy with a long-term care rider. Many people don’t like to get long-term care by itself since it can be costly and may seem like a huge waste of money if you don’t end up needing the policy. This is probably the reason the demand for life insurance policy with long-term care add-on has been growing. In this article will review everything you need to know before you decide which is the best route to go with.
Getting the right long-term care coverage
When considering to protect yourself with a long-term care insurance plan you actually have a few options like stand alone, Accelerated Death and Long-Term Care Rider. Let’s take a look to see what each one has to offer.
Stand Alone Plan
This is an option that is independent of any other policy and is also the most expensive. With a stand-alone plan, you’ll receive a monthly benefit that you pick initially if you ever been confined to a nursing home, home care, assisted living facility or any other facility where you need help with daily functions. You can also select an option where you can have the benefits increase based on inflation. The downfall of this plan is that your rates may change, there are no benefits if you don’t use the coverage and it can be more costly. However, the policy will not eat up into your life insurance plan like an add-on long-term care with life insurance, which is quite important if you prefer to keep things separate.
Accelerated Death Benefit
Beware of this option because it is something that certain companies offer at no extra cost when you buy a life insurance policy with them. This option will accelerate a certain percentage of your death benefit if you have a critical illness with the inability to take care of yourself. The amount advanced is capped and will be deducted from your total death benefit. Although, this is by far the best option if you can’t afford to have one of the other options it can leave you short since you may not get enough money to pay for care.
Long-Term Care Rider
By far one of the best options you can go with. In this scenario, you’d purchase a permanent life insurance policy that accumulates cash value with a long-term care insurance policy added on top of it. With this policy, the cost is much more affordable than a stand-alone plan and you can have a fixed benefit paid out monthly. Just like the accelerated death benefit, this option will also utilize your death benefit if you require long-term care which is a small downfall since a stand-alone plan wouldn’t influence your policy at all.
The big benefit is the fact that you can have cash value growth which is better than a stand-alone plan that simply disappears. Your monthly payment is also locked in if you buy a life insurance policy with guarantees and you can complete one qualifying process for two types of insurance plans by going with this option.
No matter which variation you pick to get your long-term care benefit you need to exercise strict due diligence on your part. Make sure that you are provided with a policy illustration and unlike your instructions for your toaster please do read the fine print. Long-term care options have a lot of small variables that may be different from policy to policy and prove to be quite important down the line.
*There are many different life insurance options you can choose but the one you need for this rider is a permanent type of plan.
Doing it like an insurance agent would
If you knew all the ins and outs of how these policies work you would do things differently from other people. So you may be wondering how would a total pro approach this situation? Well, you’re about to find out in these steps:
- Work with an independent agency– By working with an agency that has access to all the top rated companies you’re ensuring to get yourself the most competitive rate based on your overall health and lifestyle.
- Go for a permanent policy with solid cash value and LTC Rider– Make sure that the permanent life insurance plan you pick has solid cash value growth with a Long Term Care Rider and the best ones are going to be Indexed Universal Life or Variable Univeral Life Policies. You also want to make sure that you select an option B for the death benefit which adds the cash value to the death benefit. This will ensure that you protect yourself from inflation, give your family more money when you die and have a bigger pile to pull from if you require long-term care.
- Pay the policy off fast– What many people don’t know is that you can pay for your life insurance policy with one large payment or even 10 to 20 payments rather than monthly. The shorter the amount of payments you make the more of a discount you get and faster the compounding of a cash value plan starts as well. For example, a recent client who is a 48-year-old female wanted to have both life and long-term care insurance and we were able to help her get a $500,000 permanent life insurance policy that can also be used as long-term care insurance with a one-time payment of $113,000. This means that no matter what happens she will have both life insurance and long-term care for the rest of her life without having to pay a penny. Not only she saved a ton by making a one-time payment but she has also started compounding her cash value right away and leverage her money instantly by turning 113k to 500k. If you can afford this go with what you can afford a 10 pay, 20 pay or even annual pay is better than monthly.
If you follow these three steps you’ll really put things in your favor and ensure that you’re getting the best deal along with a peace of mind since the likelihood of death or assisted living is very high.
Let InsureChance Work for you!
If you have enjoyed the article and would like to get the same results as our clients, we can help. Here at InsureChance, we have partnered up with over 60 top rated insurers in order to give you the ability to shop the entire marketplace. We also have extensive experience with preexisting conditions and can help get you covered if you have had a hard time getting covered. In addition to that, you’ll be working with veteran agents who can help you go the best route and also provide lifetime support. If you’re ready to move forward please give us a call at 888.492.1967!
