Long-Term Care Insurance Hack for Unmarried or Surviving Spouses

Long-Term Care Insurance Hack for Unmarried or Surviving Spouses

Long-term care insurance can be expensive, and this is particularly true for single women.

However, we have developed an innovative long-term care insurance strategy that allows two generations to benefit from a joint, lifetime, tax-free long-term care insurance policy. Many married or co-habiting couples invest in policies that offer coverage for both partners. Actuarial studies show that partnered people need less care for shorter periods of time. As a consequence, many companies offer discounts on long-term care coverage to couples. By and large, these discounts are offered only to couples marital of co-habiting relationships.

When one partner dies, let’s say for example the husband in a married couple, the widow will find that rates for long-term care insurance skyrocket. After all, life expectancy is longer for women and they are much more likely to use significant long-term care benefits.

Under our option, any two individuals who have an insurable interest in each other and an age difference no greater than 25 years can benefit from a discount similar to that offered couples. The product can be used by sibling, a parent and child, business partners or any two people who meet the age differential requirement and can demonstrate the insurable interest.

Take, for example, an unmarried woman of 65 and her adult child of 42. The joint equal age in this case (as determined by actuarial calculations beyond the scope of this article) is 54. The 65-year old mother will gain benefits by being insured as 54, getting more insurance for less money, and both covered individuals will have lifetime long-term care benefits. Should the long-term care benefits go unused, the policy will pay out a death benefit when the surviving insured passes on. In this example, we will assume that the daughter will outlive the mother. If neither mother nor daughter has exhausted the long-term care benefits, the remaining value will be paid out to the daughter’s beneficiary upon her death.

There are several options for funding a policy of this type. In one instance, the policyholders may pay a single premium that results in a set amount of coverage. This can be funded with a lump sum payment, or the insured individuals may propose a monthly payment for a specified number of years. In this case, the insured parties state their budget and receive coverage that is consistent with the desired payment. Alternatively, the insured parties may state the amount of coverage they would like to have, and the premium will be determined on that basis.

This type of co-insurance policy can result in significant savings for certain types of clients and offer the peace of mind that comes with knowing that health care expenses will be covered. In the realm of long-term care insurance, this product is unique.

To find out more on this Long Term Care strategy
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