With the life expectancy steadily increasing in the United States, an average American is expected to live well in to his 80s, 90s or possibly even longer. Improving nutritional knowledge and advances in disease management and healthcare will further accelerate the rise in life expectancy from the next decade on.
Therefore, it goes without saying that life insurance or long-term care insurance is important even for seniors over 65. A study conducted in 2015 show that almost 50% of all individuals turning 65 will require long-term care.
Long Term Care Insurance Vs Life Insurance:
Seniors are often confused by so many variables in the policy documents. All they want to know is: Is there any advantage to buying long-term care insurance instead of life insurance? Is life insurance cheaper than long-term care insurance? Is long-term care insurance really reliable?
These are pretty important questions and there is no simple “this one is better than that” answer for your questions. There are advantages as well as disadvantages with both the options. You can also talk to your insurance agent or a financial manager. If you are inclined towards opting for a life insurance, then make an informed decision and check the resources at https://www.lifenetinsurance.com/ , you can also download a free informative eBook about life insurance for seniors.
Pros & Cons:
Between the ages of 65 and 70, a $400,000 long-term care policy is usually more expensive than a $400,000 life insurance policy. Another advantage of life insurance is the premiums that you pay are guaranteed to stay the same for life. Whereas, the long-term care insurance premiums will invariably rise exponentially. The increase will be drastic if there are clauses about inflationary increases mentioned in the policy.
Another very important difference is there is no surety that long-term care insurance will pay off, as you might never need long-term care. On the other hand, life insurance will pay off, as we all will die eventually. With the federal Medicaid program in the US, the government will pay for the long-term care of elders, whose assets are down to the poverty levels. However, if the federal government pays for your long term care, then it will come after the remaining assets after the death. However, the life insurance proceeds is always paid to the designated beneficiary and the federal government cannot touch that money.
While there are several benefits for the life insurance, there are certain cons too, as it doesn’t provide any benefits to manage long-term care costs; though there are certain policies that might allow tapping your benefits early. Whereas, long-term care insurance always pays for long-term care costs as and when they are incurred. Most policies pay for care anywhere; be it assisted living, hospital, home or nursing home.
Another benefit of long-term care is, it offers inflationary benefits, whereas, life insurance offers no such feature. That means $400,000 of coverage purchased today when you are between 65 and 70 years of age will exactly pay $400,000, when you die. But $400,000 worth of long-term care insurance purchased at the age of 65 with a nominal 3 percent inflation rider will pay out 722,444 by the age of 85 when you might actually need the long-term care.