Permanent Life Insurance with Long-Term Care Coverage

Clifford PendellWritten by Clifford Pendell
asian mother and daughter smiling for camera Life insurance provides financial protection to your family after you pass away, while long-term care insurance provides financial assistance for your long-term care needs.

As the cost of long-term care continues to rise, many people wonder which option will provide them and their families with the best security.

The good news is, if you’re exploring both options, there’s an affordable hybrid product available. Continue reading our insider's guide to permanent life insurance with long-term care to learn more.

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    Life Insurance Explained

    The purpose of life insurance is to protect your family from financial distress if you are no longer alive to provide for them. When someone dies while coverage is in place, the insurance company will pay a death benefit (typically a lump sum of money) to their named beneficiary.

    There are two common types of life insurance. The first is term life insurance that typically lasts for 10 to 30 years. During this period, your coverage and rates do not change. The second option is a guaranteed universal life insurance policy.

    With these policies, your rates will remain the same until age 90, 95, 100, 110 or even 121. These policies are designed to protect your loved ones for your entire life, so they are ideally for leaving an inheritance behind, maximizing a pension, funding a trust, or estate planning.

    If you have dependents that count on your income to maintain their lifestyle, or if you have debt, a life insurance policy is probably a necessity. However, if you’re expecting your traditional life insurance to cover your long-term care costs, you'll probably need to find another option.

    While some life insurance policies provide living benefits, most policies won't provide any financial benefits until after you pass away. With the rising cost of long-term care, many people purchase are purchasing long-term care turn to prevent their loved ones from footing these expenses.

    Long-Term Care Insurance Explained

    Long-term care insurance provides aid to people with chronic illnesses or other medical conditions that prevent them from maintaining their daily lifestyle.

    This could include assistance with simple activities like preparing meals to advanced care from skilled professionals like therapists or nurses.

    Whether the insured needs in-home care or full-time nursing home support, these services come with a hefty cost. If you don’t have the financial resources to afford these extra costs, long-term care could put you in a bind. Or, even worse, the financial burden could fall onto your loved ones.

    For Example: In 2022, a semi-private nursing home room averaged $7,908 a month, while private nursing home rooms were more than $9,034. These costs are expected to continue rising in the future, and as lifetime expectancy increases, more of us will need some form of long-term care.

    While many Americans assume Medicare will pay for these expenses, unfortunately they’re wrong. For eligible retirees, Medicare may only pay for short-term nursing home stays or temporary at-home care, and coverage eligibility comes with strict qualification policies.

    If you haven’t set money aside in anticipation of these costs, long-term care coverage may seem like a viable option. While it may help you pay for some of your long-term care expenses, it can be expensive. Similar to life insurance, if you purchase early in life, a policy may be affordable.

    If you wait to purchase a policy when your health is not as good as it is today, you may not be able to qualify for coverage. The insurance companies base your qualifications (and your rates) on your health conditions and age, so it's always best to lock in a policy when you're young and healthy.

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    Life Insurance with a Long-Term Care Rider

    Many insurance companies offer riders or add-ons when you buy your life insurance policy. However, only a handle of highly-rated providers offer affordable permanent life insurance with a long-term care rider. This means that a long-term care benefit is built into your life insurance policy.

    Long-term care riders are rarely offered with term life insurance policies. In fact, as of 2023, Prudential is the only carrier we're aware of with this option (Living Needs Benefit). Traditionally, long term care riders we're only available with permanent policies like universal life, or indexed universal life.

    Thankfully in 2016, AIG and United of Omaha released Guaranteed Universal Life policies that offer long-term care coverage. Unlike traditional universal life or indexed universal life, which requires investing, with GUL insurance, no investments are required, and your rates are guaranteed not to change.

    There are other life insurance providers that offer long-term care riders, and while these benefits may appear to be comparable on the surface level, there are some key factors that differentiate the value of these riders from one company to the next. These factors can include:

    • Discounted benefit amount when claims are made
    • Indemnity or reimbursement benefit types
    • How the insurer calculates the benefit (usually the determination for the amount comes at the time of purchase)
    • There’s an extra charge to add this rider
    • Insured’s condition must be permanent in order to receive benefit
    When shopping for a long-term care rider, you want to ensure you understand the various policy rules, regulations, and fine print. While many of these riders may be attractive options, some of the top picks include American General (AIG), Protective and Prudential.

    These insurers don’t discount the benefit amount at the time of your claim and don’t require permanent conditions for eligibility*. To learn more about long-term care, please see, "What You Need to Know About Purchasing Long Term Care Insurance," or call us at 855-247-9555.

    Assessing Your Long Term Care Needs

    According to the U.S. Department of Health and Human Services, people who are turning 65 today have a 70% chance of needing some type of long-term care during their remaining years. While life insurance is important when you’re young and have dependents, long-term care insurance is something you'll need later in life.

    For most people, the best time to purchase long-term care insurance is in their mid-50s or earlier. The rates will only continue to climb as you age, and many insurers won’t provide coverage if you have a major health condition such as Alzheimer’s disease.

    To determine the amount of long term care insurance you need, their are a few factors you'll want to consider before finalizing your policy. We've briefly outlined each of these terms below and provided an explanation of their purpose.

    Daily Benefit Amount - This is the amount of money that your insurance provider will reimburse you for each day of care you receive. Most providers offer a minimum of $50 and a maximum of $300 per day. The amount you decide to purchase should depend on your budget and state of residence.

    Our Advice: If you live in a creatively expensive state like Maryland, Massachusetts, Hawaii, or California, you'll need to consider a higher daily benefit amount than someone who resides in a state with a lower cost of living.

    Elimination Period - The elimination period or waiting period is the amount of time that must pass before your long-term care benefits kick in. Most companies offer an elimination periods that are as short as 30 days or as long as six months, which means you will not be reimbursed for the cost of your care during that time.

    Our Advice: If you have a large savings set aside, you may be able to save a few dollars each month by selecting a shorter waiting period. For most people, however, a 30 to 90 day waiting period is usually ideal.

    Maximum Lifetime Benefit - The maximum lifetime benefit of a long-term care policy is the maximum dollar amount that your policy will payout during your lifetime. The larger your policy's maximum lifetime benefit is, the more expensive your policy will be.

    Our Advice: Determining the best maximum lifetime benefit for your situation can be difficult, but most people want to ensure that their policy will provide enough money to cover their daily benefit amount for at least 2 to 3 years.

    If you need help determining your daily benefit, elimination period, or maximum lifetime benefit, give us a call. Our agents offer at least 10 years of experience and we've helped thousands of clients with their long-term care needs. Toll-Free: 855-247-9555

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      The Bottom Line

      If you are considering traditional life insurance, long-term care coverage, or both; the sooner you explore your options, the better prepared you’ll be.

      Securing permanent life insurance with long-term care coverage while you are young and healthy could save you a lot of money in the future.

      To review your options, your best bet is to partner with a life insurance expert that has your interest in mind. Independent life insurance agencies like JRC have a comprehensive understanding of what insurers can offer and can quickly identify the best life insurance providers for your needs.

      To learn more about purchasing permanent life insurance with long term care coverage, give us a call today at 855-247-9555. You can request a free quote below to instantly compare rates from 63 life insurance providers.

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      Written by:

      Clifford Pendell

      Clifford Pendell

      Managing Partner and Co-founder

      Cliff is a licensed life insurance agent and one of the owners of JRC Insurance Group. He has helped thousands of families of businesses with their life insurance needs since 2012 and specializes with applicants who are less than perfect health. In his spare time he enjoys spending time with family, traveling, and the great outdoors.

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