Nansemond River Financial Services - Financial Planning, Investment & Insurance Planning

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Life Insurance & Long Term Care Combined

A few years ago I wrote a pair of articles for the SUFFOLK NEWS HERALD about the importance of being prepared when your health changes as you age.  The articles included facts and figures about the cost of Long-Term Care (LTC) in America and the options available to address the reality of it.  One of the options was to purchase an insurance policy designed solely to pay for LTC expenses.  The advantage of an LTC policy is it pays for care whether received in the home, in a rehab facility, in an assisted living facility, and in a nursing home.  The primary disadvantage is it is a “use it or lose it” plan in most cases.  If the insured person dies without ever having received LTC benefits, the insurance carrier keeps all the premiums paid, and pays nothing on behalf of the insured.  This could be potentially thousands, even tens of thousands of dollars that ends up being a big ZERO return on investment.  For this reason, buyers of pure LTC policies remain relatively few.

The better news is an option has emerged that means a benefit will be paid one way or another.  Life insurance carriers are adding Accelerated Benefit Riders to certain newly issued policies that specifically permit access to the death benefit to pay for the LTC needs of the person insured.  A formula is used to determine the annual amount of the death benefit available to pay for LTC expenses, and is based upon a percentage of the death benefit (generally about 24% per year), and the person’s age at the time of qualification for LTC benefits.  Most often qualification is met when the person is unable to perform two of the Activities of Daily Living (ADLs) without assistance.  The ADLs are:  eating, dressing, bathing, toileting, continence, and transferring (e.g. from the bed to a chair).  Since the vehicle is life insurance, premiums are reasonable, and if the policy is retained by the purchaser, the death benefit is going to be paid out on either an accelerated basis, or in total at the death of the person insured.  Finally, there is no requirement that LTC services be provided by a licensed professional; a family member can be the caregiver and still receive the benefits.

In a recent case, a healthy 63 year old female purchased a life policy with a $260,000 death benefit.  If she were to need LTC at age 75, her maximum benefit would be $4,160 a month (she could opt for less).  The monthly premium for her is $261.64.  It was kept low because she owned an old cash value life insurance policy that did not have the capacity to pay LTC benefits, so she transferred the cash value into the new one.  She has the peace of mind that there is life insurance in place for her loved ones when she dies, and if her health changes and she needs LTC, she has a revenue source for it as well.

When a family member requires LTC, it is traumatic enough from an emotional perspective.  Adding the financial burden can devastate a lifetime of savings.  If you would like to find out how a life insurance policy like this could benefit you and your family, please call me at (757) 539-9465, or email me at  It would be my pleasure to help you.