Today’s blog post continues the series about buying long term care insurance as a strategy for planning ahead for long term care. My post of May 22, 2014 discussed whether to buy long term care insurance at all. My post of May 29, 2014 suggested looking for a stable, proven insurer. My post of June 5, 2014 described how to identify a proven, stable Long Term Care insurance company. My post of June 12, 2014 discussed the importance of protection against inflation. My post of June 19, 2014 suggested planning to use insurance to pay for four or five years of long term care. My post of June 22, 2014 suggested a daily rate to choose when purchasing long term care insurance. My post of July 10, 2014 advised to look carefully at the list of Activities of Daily Living that can trigger coverage from the long term care insurance policy. My post of July 17, 2014 described the differences between a “period of time” kind of coverage and a “pile of money” kind of coverage. My post of July 25, 2014 advised to make sure that the long term care insurance includes coverage for cognitive impairment. My post of July 30, 2014 described the differences between tax-qualified and non-qualified policies. My post of August 5, 2014 discussed the value of long term care insurance policies that qualify for the Partnership program. The introductory post in the series on planning ahead for long term care costs appeared on May 15, 2014.
Today’s post discusses insurance policies that combine long term care insurance coverage and life insurance coverage.
Some insurers offer a hybrid insurance product that provides long term care coverage and life coverage on the same policy. If the insured person needs long term care at some point, this hybrid policy will pay out to cover those long term care costs. If, though, the insured never needs long term care, the policy pays out upon the insured’s death as a life insurance policy.
Some potential buyers of such a product might wish that the death benefit wasn’t lost by use of the long term care benefit. What those potential buyers don’t realize is that the costs of long term care routinely use up life insurance policies (at least cash value policies, such as whole life, universal life, etc.) The cash values or surrender values of these cash value life insurance policies are considered available resources to pay for long term care, so these policies’ value is routinely used up by long term care costs. As a result, hybrid life/long term care policies suffer the same loss of death benefit as “regular” life insurance policies when the insured needs long term care, but, at least, the hybrid policy had provided long term care insurance that allows the insured to protect his or her other assets (as described in my My post of June 19, 2014 that suggested insuring for a four year or a five year stay in a nursing home.)
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