Hope For Long Term Care Insurance

Every great once in a while, the interests of an insurance company and a policyholder coincide and we all say, “Hallelujah!”

Much of the general public isn’t aware that such a coincidence of interests is a possibility. More and more Baby Boomers are wondering how to protect themselves against the vagaries of old age. The good news is that we are living longer, sometimes healthier lives. The bad news is that the cost of caring for older people is fast expanding. Solutions are hard to come by.

Add to this that long term care insurance, as we knew it just a few years ago, is a thing of the past. The cost of such insurance has exploded and many companies are just not writing it any more. What to do?

One solution receiving an upsurge in interest is a new, modified method of paying for long term care protection – using life insurance benefits to help pay the high cost of living in a senior residence or a nursing home.

Generally the way it works is that the policyholder uses a part of a life insurance death benefit now to help pay his or her assisted living or nursing home costs. It is a trade-off between the life insurance benefit and the burden of present living costs.

So, what the insurance company pays for the policyholder to live in a nursing home today is subtracted from what the policyholder’s beneficiary would get tomorrow on the policyholder’s death. Of course, there is a reduction in the total benefit to sweeten the pot so the insurer will have an interest in making the deal.

By means of this method, cash-strapped senior policyholders are able to meet their heightened living costs by deducting them from their eventual life insurance payout. Such a system can be tough on beneficiaries but it certainly eases the sometimes harsh burdens of later years for their benefactors.

The arithmetic of such a deal is complicated with the parties having to weigh the relative values of present circumstances, i.e., age, health, payment amounts and payment schedule, among other items before coming to a decision. The closer death seems, the more likely the insurance company will be to cooperate to get a reduction from the policy death benefit.

As people grow older, they should consider such a program with their life insurance carriers, so as to stretch their resources to make them last as long as possible.

But, it is not recommended that the ordinary policyholder go into a negotiation with an insurance company without some independent expert help who has no ax to grind.

Your insurance agent or broker may not be your best bet because of commission or relationship issues.

Get help from some one knowledgeable who has nothing to gain or lose because of the advice.