Can I Use My Life Insurance Death Benefits Toward Long-Term Care

If you are actively in the process of preparing for assisted care or retirement or are merely considering it as an option, you will be glad to know that your life insurance policy can be an asset when it comes to long-term care. Long-term care as you likely already know—or will soon learn—is extremely expensive. Therefore, you want to know all your options when it comes to managing this major yet often necessary financial expense.

Why Long-Term Care is Such a Burden on So Many

As previously mentioned, long-term care is a huge expense. In fact, according to a Genworth study, the median annual cost for residing in an assisted living facility in 2020 was an astounding $51,600. A private room in a highly skilled nursing home is more than double that cost. Therefore, it’s obvious that this is an immensely expensive cost that most if not all seniors will have to come up with at some point. Thankfully, there is long-term care insurance—which you shouldn’t assume you can’t afford—which can be added on as a rider to your existing life insurance policy.

What is a Long-Term Care Rider?

A long-term care rider is a life insurance policy feature that allows you to receive a portion of the life insurance death benefit while you are still alive. The death benefit can then be used to pay for long-term care expenses. While the accelerated death benefit requires a terminal illness diagnosis to be activated, a long-term care rider can be used when a diagnosis of a chronic illness leaves you unable to take care of yourself.

How Does a Long-Term Care Rider Work with Your Life Insurance Policy?

Typically, the addition of a long-term care rider to a life insurance policy will pay for services that help you perform specific Activities of Daily Living (ADLs). If you find yourself at a point in life where you cannot complete ADLs, then you may require an at-home caregiver or residence to a long-term care facility. This is where a long-term care rider can typically pay and provide coverage for these large expenses.

How to Add Long-Term Care Insurance to Your Life Insurance Policy

Many life insurance providers today offer combination life insurance policies that attach long-term care benefits to a life insurance plan. These riders can provide useful protection if you end up needing certain medical services in your later years that you otherwise could not afford. Simply ask your insurance provider or financial advisor about options in doing this to see if it would be an appropriate solution for your particular situation.

Long-Term Care Should Always Be Considered

If you are reading this, then you are on the right path as you consider how to practically afford long-term care. However, before pursuing purchasing a long-term care rider onto your life insurance policy you should, as we stated earlier, consult with your insurance provider and any financial advisors as well for proper guidance and expertise.


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