Should I get life insurance with a long-term care rider?


Q. I’m thinking about one of those life insurance policies that also has a long-term care insurance component. What are the downsides to this?
— Planning

A. Long-term care insurance is a very important part of your financial plan.

And the industry has changed a lot in the past decade.

Many of the traditional carriers have either limited the benefits available or pulled out of the market entirely, said Ed Gaelick, a Chartered Life Underwriter and Chartered Financial Consultant with PSI Consultants in Glen Rock.

He said he describes “traditional” as pure long-term care policies that have no value unless an insured becomes benefit eligible.

In other words, they are “use or lose” policies, he said.

As a result of the shrinking market, the life insurance industry got involved and created an optional long-term care (LTC) rider to be part of a whole life policy, he said.

“It is life insurance with a cash value and the policy provides the liquidity an insured may need should they qualify for LTC benefits,” he said. “In essence, the death benefit is `accelerated’ so you’d be spending down the accumulated cash value as well as the death benefit, and benefits are income tax-free.”

Gaelick said the biggest advantage is that it’s not a “use or lose” policy.

“Never need that benefit and you have a life insurance policy that has cash value,” he said.

Another big advantage is premiums could be guaranteed for life, he said.

“The biggest downside — your word — is the premium would almost certainly be a much bigger commitment than purchasing a traditional policy, yet premiums for traditional LTC products could increase in the future,” he said. “There are many insurance companies that offer this with dozens of products so make sure you consult with an experienced advisor.”

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This story was originally published on Nov. 16, 2023. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.