What Happens If I Never Need Long-Term Care?
It depends on the type of policy. With a traditional long-term care policy, if you never need care, the premiums you paid generally aren’t returned. With a linked-benefit policy, like the coverage Staying Power offers, a death benefit goes to your beneficiaries if you never use the long-term care benefit.
Why do people ask this?
It’s a common hesitation: paying premiums for years for coverage you might never use. It’s worth weighing against the other side of the odds: someone turning 65 today has almost a 70% chance of needing some type of long-term care services, according to the Administration for Community Living. (LongTermCare.gov)
How do traditional and linked-benefit policies differ?
A traditional policy covers long-term care only. A linked-benefit, or hybrid, policy combines long-term care coverage with life insurance, so a benefit is paid whether or not you need care. See How Does Long-Term Care Insurance Work?. The NAIC notes these are also called “hybrid,” “linked benefits,” or “combo” policies. (NAIC Shopper’s Guide)
What if I use some of my benefits?
With the coverage we offer, even if you use some or all of your long-term care benefits, a guaranteed minimum death benefit is still paid to your beneficiaries. Benefits paid for long-term care reduce the death benefit, down to that guaranteed minimum. The NAIC gives a general example for policies of this type: with a $100,000 death benefit and $60,000 used for care, the beneficiary would receive $40,000. (NAIC Shopper’s Guide)
What if I can’t keep paying premiums?
With the coverage we offer, if you stop paying scheduled premiums, the portion of the long-term care benefit you’ve already paid for is locked in as a reduced paid-up benefit.
What if I change my mind?
The coverage we offer has a cash surrender value, so the policy remains a liquid asset. How much you’d receive depends on the refund-of-premium option you choose when you buy.
Staying Power is a licensed insurance agency that explains how this works before you decide.
To see what coverage could look like for you, answer a few questions.
Related reading: Long-Term Care Insurance for Couples and Paying for Long-Term Care Insurance.
Frequently asked questions
Is the death benefit taxable?
Life insurance death benefits are generally paid income tax-free to beneficiaries. Talk with a tax advisor about your situation.
Do I get my premiums back if I cancel?
With the coverage we offer, you’d receive the policy’s cash surrender value, which depends on the refund-of-premium option you selected.
What is a linked-benefit policy?
A policy that combines long-term care coverage with life insurance, so a benefit is paid whether or not you need care.
