Long-Term Care Insurance: Estate Planning Tool?
It’s no secret that Social Security and Medicare won’t necessarily provide everything you need to live comfortably in your later years. While some people may have a retirement plan of some sort, a lot of people fail to consider coverage for the gaps in Medicare coverage. Long-term care coverage is one of the options that can help you sleep a little easier at night.
Basically, long-term care insurance covers a wide variety of needs that traditional health insurance, including Medicare, does not cover. Long-term care insurance will cover in-home care, adult or elder daycare, or extended stays in a nursing home or similar facility. It offers protection for people who are injured or ill, and need help with the basic activities of daily living, like toileting, dressing, transferring, eating, and bathing or are cognitively impaired.
Long-term care costs real money, and unfortunately the policies are prohibitively expensive for many Americans. Due to serious miscalculations concerning the number of anticipated claims, policyholders saw huge premium increases in the mid-2000s. Policies today are still expensive, but thanks to new long-term care insurance products, financial advisors now see these policies as potentially powerful estate-planning tools.
Shortcomings of Traditional Long-Term Care Policies
Traditional long-term care policies worked like your automobile insurance—you paid your premiums on a continual basis, regardless of whether you actually ever made a valid claim. As a result, there was a real risk that you could pay a significant amount of money for something that you might never use. To guard against this risk, some companies offered a “return of premium” rider that would give back to the policyholder any premiums they paid but didn’t use.
Which leads to the second shortcoming—the cost. Again, premiums exploded in recent years as insurance companies seriously underestimated the number of valid claims that policyholders would bring. In addition to paying for something that you’ll possibly never use, you may wind up paying way more than you budgeted for just to keep your current policy in place.
Features of Hybrid Long-Term Care Policies
Primarily because of the cost, long-term care policies quickly fell out of favor. However, new hybrid products have features that address some of the shortcomings associated with traditional long-term care policies and provide estate planning options.
- Death benefit: Many hybrid long-term care policies include a death benefit that the company pays if you never need the long-term care features. Some policies pay a death benefit based on a percentage of the policy value even if the long-term care benefit was fully exhausted. The advantage here is obvious—the policy still retains some value even if you never use the long-term care benefit.
- Return of premium: This is the same concept as a “return of premium” rider mentioned above: The insurance company will return to you a percentage of your premiums if you haven’t used your benefits. This is potentially available even if you simply change your mind and decide to cancel the policy.
- Guaranteed premiums: Many hybrid policies include a guarantee that the premium will remain the same so long as the policy remains in place. In light of the huge increases in premiums seen with traditional long-term care policies, this is a significant advantage.
Make no mistake, these hybrid policies aren’t cheap, but these updated features have renewed consumer interest in long-term care insurance for estate-planning purposes.
How Long-Term Care Insurance Can Protect Your Estate
Long-term care can cost a lot of money, but what is the alternative? The cost of the policy was previously difficult to justify when you weighed it against the possibility that you may not ever use the long-term care benefits and that you would see dramatic increases in your premium. In the past it simply didn’t make sense to drain your estate to pay for insurance you might never need.
Hybrid long-term care policies allow you to budget a set amount for your long-term care needs. The real advantage, however, is the death benefit. This could work in tandem with other life insurance policies, and is essentially a refund of your premiums if you never use the long-term care policy. While the policy may be expensive, it does provide coverage that carries much less risk than the older traditional long-term care policies.
How DarrasLaw Can Help
DarrasLaw offers nationwide representation for all of your long-term care and disability insurance needs. Our experienced disability and long-term care attorneys can help you choose the right policy, understand the fine print, and assist you and your family with the claims process.
Every long-term care policy is different, and you must understand exactly what you’re paying for. DarrasLaw’s stellar long-term care attorneys take the time to walk you through what long-term care insurance will or will not cover, identify specific requirements that you need to meet, and highlight any potential issues or pitfalls. This type of insurance is an important decision for you and your family, so we take the time to answer all of your questions and make sure you fully understand your long-term care coverage and benefits.
We also help our clients with every aspect of the claims process. Insurance companies have a long history of denying long-term care benefits that their policyholders paid for. We help our clients timely and properly file their valid claims to give them the best chance of a long term care claim approval. If you receive a denial, we have decades of experience in litigating against long-term care insurance companies to get our clients the insurance benefits they paid for and deserve. We know how to fight the insurance companies and we know how to win.
Contact a Top-Rated Long-Term Care Insurance Attorney at DarrasLaw Today
DarrasLaw is an award-winning and nationally recognized litigation firm that helps people with their individual and group long-term disability and long-term care insurance needs. DarrasLaw’s team of highly experienced attorneys has over 100 years of combined litigation and claim knowledge helping people protect their futures and their families. We can help if you’re still considering whether a long-term care insurance policy is right for you or if you already have a policy and received a wrongful delay or denial of your valid claim. Call us at (800) 458-4577 or contact us online to schedule a free policy analysis and free claim consultation with one of DarrasLaw’s top-rated long-term care attorneys.