If you have traditional long-term care insurance, you don’t receive a benefit from the coverage if you die without ever needing long-term care.
However, some types of long-term care insurance let a surviving spouse or partner utilize unused benefits.
Other policies provide partial return of the premium, if the original policyholder dies without using the benefits. These variations are more expensive than traditional life insurance.
The two most popular options will provide a payout for you if you need long-term care, or you will be covered for long-term care in a hybrid policy that goes along with another type of coverage.
Yahoo Finance’s recent article entitled “What Happens if You Don’t Use Long-Term Care Insurance as a Senior?” takes a look at how each of these two most popular alternatives works.
Annuities With Long-Term Care Benefits.
Some fixed and indexed annuities can come with contracts that provide you with an extra payout, if it is determined that you need long-term care.
As soon as it is confirmed that you need long-term care, the annuity starts to pay out a higher monthly benefit that is a multiple of whatever premiums you’ve paid already.
Hybrid Long-Term Care Insurance.
You can get a life insurance policy that serves as a hybrid for both life and long-term care insurance. Medical underwriting is typically less rigorous than it is for traditional long-term care insurance. You can also even get access to lifetime or unlimited long-term care benefits in this type of policy.
Many purchasers of long-term care insurance die before making any claims under the policy. If they purchased traditional long-term care insurance coverage, this means they have paid their premiums without receiving any financial benefit. Hopefully, these options can help you get more out of your policy.
Look for policies with shared spousal benefits that let a surviving spouse make use of any unused benefits. Return of premium policies offer another option to get benefits from unused long-term care insurance policies. However, these policies are significantly more expensive.
Talk with a Fiduciary Financial Professional to learn more about these options, and check with an experienced Elder Law Estate Planning attorney to see how these policies fit in to your overall estate plan.
Reference: Yahoo Finance (June 1, 2022) “What Happens if You Don’t Use Long-Term Care Insurance as a Senior?”