Broker Check

Boca Raton Office

1001 W. Yamato Rd

Suite 306
Boca Raton, FL 33431


Summer 2009

As a result of the need to protect against the financial strain an uninsured long term care event can present, more insurers are offering a new product: a life insurance policy with an “accelerated benefits rider” that promises to pay out all or part of the death benefit should you need it for long term care.

This combined approach (Life/LTCI Combo) tries to address the common concern, “What if I never need the long term care coverage?” If you never have a long term care need, then the death benefit of the underlying life insurance policy remains intact for loved ones. There is another advantage of this combination approach: since the chassis most often used by insurers is a guaranteed universal life insurance policy, it eliminates the concern of any future rate increases for your long term care insurance.

These products are most useful for clients who find it tough to pay for both stand-alone long term care insurance and life insurance, yet wish to protect themselves and their loves ones from both types of risks. The premium savings of the combination approach over separate policies can be significant depending on the terms of the policies. However, there are some pitfalls to consider about the Life/LTCI Combo before deciding what’s right for you.

First, if you’re intention is to leave assets to loved ones through life insurance, you may exhaust your death benefit on account of infirmity and nursing care.

Second, your Life/LTCI Combo policy won’t adjust for inflation. For example, a $250,000 life insurance policy with an accelerated benefits rider might pay 2% of the death benefit per month, or $5,000, towards long term care until the $250,000 is exhausted. This equates to a 4- year and 2-month benefit period in a traditional long term care insurance policy. However, unlike a traditional policy that can automatically increase by 5% per year to keep up with inflation, you cannot access any more than $5,000 per month in the Life/LTCI Combo policy.

Third, as a result of the Deficit Reduction Act of 2006, many states now offer LTC Partnership plans which give even more incentive for consumers like you to purchase stand-alone long term care insurance policies. The benefits of these partnership programs are to further protect your assets from Medicaid spend-down rules.

As we thankfully continue to live longer, we have a greater chance of needing care. In fact, 70% of Americans age 65 or older today will need some form of long term care1.

For more information about this article or any of the aforementioned concepts, products and/or services, please contact our office at 561-276-8710 and ask for Vicki or email us at

1 Source: “Americans Fail to Act on Long-Term Care Protection”, The American Society on Aging, May, 2003

Any tax advice contained herein is of a general nature and is not intended for public dissemination. Further, you should seek specific tax advice from your tax professional before pursuing any idea contemplated herein. This advice is being provided solely as an incidental service to our business as an (insurance professional, financial planner, investment advisor, securities broker).