The death benefits received from a life insurance policy lends the much needed financial support to the family of the insured person. It’s usually arranged as an income replacement option for the named beneficiary or the family of the insured, in case an earning member faces an untimely death.
However, urbanization has crept into families, and as relations grow distant, individuals often need to set priorities. Apparently people get more concerned about their own well being, and need to choose between paying for their life insurance and opting for a long term care policy.
Long term care mainly provides for the medical and non-medical facilities of the insured as his or her ability to live independently wanes away.
What makes one choose between the two?
Read along to know the possible reasons for which an individual needs to choose between the two forms of insurance protection.
• Certain pros of long term care insurance make the individuals go for it, instead of a life insurance policy. Life insurance lends financial assistance to the named beneficiaries after the insured passes away. Thus, it doesn’t come to be of any use for the insured individual directly in his lifetime.
• Long term care insurance pays for the expenses of medical care, when the insured is unable to earn after a certain age. Thus, it directly comes to the assistance of the insured, when he or she needs it the most, i.e. at an old age.
• Paying for both can be a burden for an individual. When the time comes that an individual has to make a choice, he or she will evidently go for the long term care insurance. Instead of leaving a fortune for the beneficiary, the insured rationally opts for long term care which pays for the assistance for the elderly people.
• The need for life insurance is the most when the insured is aged around 20 – 40 years, and others are financially dependent on him. When he or she approaches a late age and the financial obligations lessen, it’s time to pay attention to one’s own self. Without long term care, an individual will have to bear the costs of his or her own care. Eventually, the assets and savings might be used up to pay for the expenses of medical care and assistance.
Combining coverage with a single policy
Both life insurance coverage and long term care are equally crucial. For those who are unable to decide which is more important between the two, the combination policies act as savior. Instead of buying standalone policies offering either life insurance coverage or financial assistance for the long term care, an individual may choose an insurance product which offer dual benefits. The below mentioned options have been popularized to serve the demand in the market:
1. Life insurance policy with a rider for long term care – The long term care riders are combined with the whole life policies. The rider allows the insurance holder to use a certain percentage of the death benefits for long term care assistance. The unused amount is paid to the beneficiary after the insured passes away. If the insured dies a premature death and doesn’t need any long term care, the beneficiary is entitled to receive the full death benefit from the policy.
2. Asset-based life insurance policy – This form of policy offer an option to the insurance holder so that he can choose between long term care or life coverage. The premiums for the policy is usually paid as a lump sum amount and at one go. They provide whichever benefit you need at the time. The amount is paid to the beneficiary, if long term care is not required for the insured. The policyholder can even get back the total premium amount if he or she feels that the insurance protection is pointless.
Whether you can continue paying for both life insurance and long term care depends on the cash flow. The linked policies are considered helpful since they offer a combination of both.
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