How to Use Life Insurance to Pay for Long-Term Care Insurance
Life insurance pays benefits upon your death. Long-term care insurance, or LTC, is a derivative of life insurance that pays benefits if you require admittance into a long-term care facility or treatments during your lifetime. With costs of nursing home care on the rise, finding a way to prevent the financial burden on your estate or your loved-ones of paying for long-term care becomes a priority over leaving an inheritance. You can use your existing life insurance policy cash value to pay for a LTC policy.
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Instructions
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Call your insurance provider and discuss your insurance policy type. You need to have permanent insurance, such as a whole or variable life policy, to use it for LTC insurance. Term insurance has no cash value and does not qualify.
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Ask the representative whether your existing policy is capable of adding an LTC rider on the policy. An LTC rider allows you to maintain the permanent insurance death benefits while providing a resource for the alternative. You may need to satisfy certain health requirements and tests to qualify for an LTC rider.
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Obtain a quote from the representative to determine how much more the rider would cost, whether the LTC additional premiums can be paid with policy dividends or whether you can reduce the amount of death benefits to offset the premiums of the insurance.
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Obtain any paperwork and applications required by your insurance company to complete the rider or start the LTC policy.
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Complete the forms and send them back with any required medical information and records.
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Tips & Warnings
If your insurance policy does not allow you to add a rider, you may liquidate the cash value of the policy to purchase a separate LTC policy. You will have no death benefits, but will be covered for any living benefits needed in the event of terminal illness or other long-term medical needs.
The older you get, the more difficult it is to qualify and afford long term care. Plan early to obtain the desired coverage.
References
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