Life Insurance with Long Term Care

There are many options when it comes to paying for your long term care needs. There are traditional long term care policies, hybrid or combination long term care policies that combine long term care and life insurance, long term care annuities (recently developed thanks to the Pension Protection Act), or lastly you could self insure and pay out pocket. This post is going to focus on life insurance with long term care benefits, also known in the industry as hybrid or combo policies.
Basically, these policies are life insurance that has a long term care benefit attached with it. These polices are gaining popularity as they evolve because they are much more self completing plans. By self completing, I mean a plan that has a benefit no matter the outcome. If you need long term care, the benefit is there, if you don't use LTC and pass away the death benefit is there, or lastly if you use a combination of LTC for a short period and then pass the policy can pay out for both events.
The 2 main types of Life Insurance with Long Term Care are life insurance polices with long term care riders and hybrid long term care life insurance policies.

1. - Life Insurance with Long Term Care Rider - Accelerates the death benefit of the life policy in the case of a long term care event. For example, a $250,000 death benefit on a life policy that will accelerate and pay out up to $5,000 a month for facility or home care until $250,000 is used or the person passes away, whichever comes first. If only $100,000 was used for long term care the policy has a residual death benefit of $150,000.

2. - Hybrid long term care / life insurance -  To put it in car terms the "chassis" of the policy is life insurance and the policy has a long term care benefit attached to it. These polices are different in that most do not allow you to pay ongoing premiums on a long term basis, such as a life pay scenario. These polices work best with a lump sum dump in or annual premium payments up to 10 years (10 pay) or less. The best way to explain is with an example. A 62 year old female, can deposit $100,000 into this type of policy and immediately have a life insurance benefit of $150,000 if she passes, or a long term care benefit of $500,000. The long term care benefit would pay her up to $7,000 a month for 6 years if she needed home care or facility care. These policies allow for easy access to the money deposited and have minimal to usually no fees for withdrawing the money or surrendering the policy if you have an emergency and need your money back. These are truly self completing plans, if you die, need long term care or just your money back its all there. 


You can now fund both of these types of policies in a variety of ways: from cash value of other life insurance or annuity policies, CD rollovers, out of ordinary income, lump sum deposits from savings, IRA's or old 401K's.


Not many people are aware these policies exist, as I present them I get great reactions from clients to have these types of policies as an option. As you learn more about How to Pay for Long Term Care, keep these life insurance with long term care combo policies in mind, they offer a lot of value. No matter what State you live in, I would be happy to email you a free quote on any these polices, no sales pressure. Funding your long term care is an important need to fill as you age, the #1 cause of bankruptcy today are medical expenses. Contact Me for a Free Quote or Any Questions. My name is Ryan Thomas.

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