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Using Life Insurance to Pay for Long-Term Care and Other Expenses Related to Aging
One of the things I especially like to highlight during Life Insurance Awareness month is the flexibility of life insurance policies. Too few people understand how many different ways a life insurance policy can be used in order to enhance the overall financial plan of the insured. Today, I want to talk about how life insurance policies can be used to pay for long-term care and other expenses related to aging.
Combating the Expense of Long-Term Care Insurance
Long-term care expenses are a high-cost reality for most seniors. According to Longtermcare.gov, the average monthly stay in a nursing facility was $6,965 in 2010. Looking at this average and other long-term care costs, we all know we need insurance to help us deal with those potential expenses; however, for some individuals, the cost of a long-term care insurance policy—one that they might never need to use—is too high to fit their budget. For these individuals, a hybrid life insurance policy can offer a good compromise.
Many insurance companies offer special hybrid policies that combine life insurance benefits with long-term care benefits. In these policies, some of the benefits can be used to pay for long-term care expenses while still reserving some benefit for heirs. If the long-term care portion is never used, then the entire benefit goes to beneficiaries.
When a hybrid policy is not an option, some consumers choose to purchase a policy with an accelerated death benefit rider. These riders provide an advance of policy death benefits when the insured is diagnosed with a terminal illness or needs long-term care services.
You don’t need any kind of special policy design to use a life insurance policy to pay for long-term care expenses or other costs relating to aging, however. You simply need a permanent policy with cash value proceeds. You have the option of either borrowing from the proceeds to pay for long-term care expenses or selling the life insurance policy through a life settlement or viatical settlement.
Using life insurance as part of your long-term care planning can be a complex proposition, which is why it’s a good idea to contact a qualified agent who can help you determine the best policy plan for you. Additionally, an agent can help you choose a financially solid life insurance company with the best underwriting guidelines for your current health.
