If you are thinking about taking out a life insurance policy, you might be wondering if it is possible to get long term care coverage tacked onto the policy.  Indeed, it is possible to purchase life insurance with a long term care rider. Unfortunately, the overwhelming majority of Americans will need long term care in the future.

long term care riderSadly, the cost of private and semi-private long term care facilities typically runs between $70,000 and $150,000 per year.  Multiply this annual cost times three or four and the aggregate cost of long term care becomes egregiously high. This is precisely why it is sensible to consider taking out a life insurance policy with long term care benefits unless other plans are in place.  However, it is a mistake to purchase any old life insurance policy or do business with an insurance provider with anything less than a stellar reputation. Take a look at the long term coverage options and prices and it is easy to understand why so many people are hesitant to pay for this safety net.

Long Term Coverage Rider Types

There are three primary ways to purchase long term coverage: an annuity with a long term care benefit, a stand-alone long term care policy and a life insurance policy with a long term care rider.  A life insurance policy with a long term care rider is referred to as a hybrid life insurance policy.

Hybrid Life Insurance can Cover the Cost of Long Term Care

All sorts of different life insurance options are available, some of which include long term care benefits.  As an example, hybrid life insurance provides long term care benefits in the premium. Hybrid life insurance policies also have the potential to include long term care coverage that provides living benefits for illnesses, strokes, cancer, and other maladies not covered through the long term care insurance.  This coverage is provided in addition to the life insurance death benefit.

Why Long Term Coverage is Necessary

Nearly everyone should have at least some form of long term coverage.  The vast majority of people will require this coverage at some point down the road.  However, the types of coverage, costs, and policy nuances differ based on the insurance provider.  Do not commit to long term care coverage with life insurance until you have met with an unbiased experienced agent to choose long term care coverage.

The Downside to Long Term Care Coverage

The primary downside to taking out a long term care insurance policy is the cost.  It is certainly possible you will end up spending tens of thousands of dollars on this coverage yet not use any of it.  This policy is necessary to cover the cost of home health care, assisted living, nursing homes, and other long term care costs.  Yet there is a chance you will never need such services and pass away peacefully without requiring extensive medical assistance.

What to do if You do not Have Long Term Care Coverage With Life Insurance

Those who do not have long term care insurance will still have some options available to help cover the cost of long term care.  It might be possible to tap into your life insurance cash benefit to cover the cost of your long term care. Contrary to popular opinion, it really is possible to surrender a life insurance policy for cash value.  This means you will rescind ownership of the policy as well as the death benefit for payment of the policy’s cash value. In some situations, a life settlement is sensible. Take this route and you will sell the life insurance policy to an independent party for fair market value.  The proceeds will be used to cover the cost of a long term care plan. The only caveat is most businesses that offer such an option mandate a death benefit of at least $50,000. If you are interested in a life settlement, do not pursue it until you are in need of long term care in order to maximize your payment.

Another option is to take out a loan from your life insurance policy’s cash accumulation.  Though you cannot take out a loan for the entire cash value of the policy as doing so would cause it to lapse, it is possible to take the majority of the cash value in a loan that you pay right back to yourself with interest tacked on.  However, if your healthcare needs are greater than the money in the policy, the policy will be forfeited as every single dollar is required for ongoing care. Alternatively, if your healthcare needs are less than the policy’s cash value, it might be more sensible to take out a loan.  This strategy allows you to retain some of the death benefit while still covering the cost of long term care.

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