It has been said that 70% of Americans will require some form of care in their later years. These are services that are not covered under Medicare, nor any supplemental plans. The biggest issue with people that bought these plans is that once again, the insurance industry did not know how to price a product that involved the cost of aging. Therefore, people are experiencing double-digit rate increases annually to keep their policies in force. Either that, or reduce the benefits in their policy to try to offset the rate increases.
A viable solution for many is through the use of life insurance plans that offer either a Long- Term Care or Chronic Illness rider. This helps offset the dilemma above so that it’s a three-prong approach to using the life insurance policy. If you live, you potentially have access to the cash values in a tax-free way. If you die, obviously the face amount of the policy is paid to your beneficiaries. However, in the event you need care, and can qualify for the rider to kick in, upwards of 80-90% of the face amount of the policy becomes an available “living benefit” for those long-term care needs in a tax-free way.
The premium of the life insurance policy, if structured correctly will never suffer those increases of traditional long-term care policies, and there’s no wasted money like traditional LTC policies where if you don’t use the coverage, you lose all of those dollars paid into it over all the years you had it. If you live, access the cash values tax-free. If you need care, access the death benefit tax free, and when you die, the remaining face amount is paid to your loved ones 100% tax free.
No wasted dollars as every dollar paid into the policy over it’s lifetime is paid back to you the owner as living benefits or paid to your beneficiaries as a death benefit.