Long Term Care: Alternatives For Paying For

Life insurance provides alternative means of paying for long term care:

• Cash Value: If your life insurance policy has a "Cash Value" benefit, you can borrow against it to pay for long term care. To determine if your policy has such a provision, look for a term such as "Cash Value" or "Loan Amount."
• Accelerated Death Benefit: Some life insurance policies permit you to use a large portion of the death benefit while you are alive. This type of feature is known as an Accelerated Death Benefit. (You may have an Accelerated Death Benefit with respect to your policy even if it's not stated in the policy).
  • There is no restriction on the purpose for which the money can be used, so it can be used for nursing home or other long term care.
  • Any money you use from your life insurance policy will reduce the amount of the death benefit the beneficiary will get. For example, if your life insurance policy has a $100,000 death benefit, and if you use $35,000 for long term care, $35,000 will be deducted from the benefit payable to your beneficiaries at your death. They will only receive $65,000 ($100,000 less $35,000).
  • You can tap the death benefit of a whole or universal life insurance policy to cover long term care expenses tax-free.
• Long Term Care Rider: There are life insurance policies with a Long Term Care addition ("Rider")
  • Generally, a death benefit is decreased by the amount actually spent on long term care. The insurer pays you the actual charges for long term care services as you receive them. There is often a cap, meaning that the policy does not pay more than a certain percentage of the policy's death benefit per day or per month. If you don't have such a rider on your life insurance policy, ask your insurer if one can be added.
  • There are also policies which pay money in addition to your death benefit without decreasing the amount of the death benefit.
• Sale Of A Policy
  • You may be able to sell your Life Insurance policy either as a Viatical Settlement , a Senior Settlement or a Life Settlement. To learn more, see: New Uses Of Assets: Life Insurance, Sale of Life Insurance.

 

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