You might think that the true benefit of your life insurance policy is something you’ll never see. After all, your reason for buying the coverage is to provide a payout to loved ones — your beneficiaries — once you’re gone.
And yes, the death benefit certainly is a key feature of your policy. But it’s not the only one. If you have life insurance with a long-term care benefit, your policy might serve your needs in a very important way while you’re still alive.
Look closer.
What Is Life Insurance with Long-Term Care Benefits?
Life insurance with long-term care benefits, or LTC, is also known as a hybrid life insurance policy. That means it offers benefits and financial protection in at least two areas. There’s the traditional death benefit, but you also get long-term care benefits if you are diagnosed with a major medical condition or become seriously ill.
Another term for this sort of coverage is long-term care rider, as the LTC benefit is added to a traditional life insurance policy. You might also hear the term accelerated death benefits (ADBs), or living benefits. This is a policy that enables the policyholder to access part of the death benefit while still alive, but hit with a qualifying disability.
How Hybrid Life Insurance Policies Work
Part of the mechanism works for Georgians just like any other life insurance policy. Once you decide you need life insurance in Georgia, you purchase coverage by face value. The policy’s face value is the amount that will be paid out to your beneficiaries when you die, as long as you continue to pay the premiums to keep the policy active. So if you buy a policy with a $500,000 face value, that’s the amount your beneficiaries will receive.
But hybrid life insurance — policies with long-term care benefits built in — give the policyholder an extra advantage. If you become disabled and in need of long-term care, you can access part of that $500,000 death benefit (or whatever the face value) while you’re still alive, but in need of continuing assistance. Your coverage will pay for home healthcare services, private nursing care, a nursing home, or an assisted living facility.
When you die, whatever funds remain will be paid out to your beneficiaries just like any other life insurance policy.
Key Features to Look for in a Policy with Long-Term Care Benefits
Make sure you know the payoff structure if long-term care benefits are needed. Your plan might only keep a portion of the policy for that purpose, so there’s always something remaining for your beneficiaries.
This is important since assistance of this type can be quite expensive in Georgia and elsewhere, and a life insurance policy could be quickly drained if more than a portion of it is used for your care.
Also, make sure the face value is high enough to accommodate your extended assistance if you need it, but with enough remaining in death benefits for loved ones.
The Benefits of Combining Life Insurance and Long-Term Care
The high cost of long-term care can quickly wipe out the assets of families. That’s why having the financial protection of a hybrid plan with long-term care benefits built in can be so valuable.
And with both benefits co-existing in one hybrid life insurance policy, you’ll only have one policy to keep track of, one bill to pay when the premium is due.
And if you don’t ever need the benefit, the cash value you’ve accumulated all goes toward the death benefit for loved ones. So your coverage is never wasted. Every penny of unspent face value will go to your beneficiaries.
When to Start Shopping for Coverage
The best time to get life insurance in Georgia is as soon as possible. Especially if you’re relatively young and in at least fairly good health. (And remember, you’re always younger today than you will be next month or next year or 10 years from now.)
Underwriters are all about risk management. They want to write coverage for policyholders who are likely to pay into their benefits for decades rather than having to pay out long-term care or death benefits almost immediately. So you’re of greater value to insurers if you’re young and healthy, and that’s when your coverage is at its cheapest.
But no matter your age or physical condition, you’re likely a better risk today than you’ll be next year. So contact your agent today, no matter how old you are.