YOU ASK:

What's better to have: long term care insurance or life insurance?

WE ANSWER:

These two are different types of insurance that serve different needs.

Life insurance will pay upon the death of the insured. On the other hand, long term care insurance will pay for expenses related to your requiring long term care. This may be obtained through a nursing home, in-home care or any other care facilities that one may need for a long period of time.

Life insurance protects the family from financial loss upon the breadwinner's death. However, with today's medical and technological advances, one can survive even a severe injury or medical condition. This may mean, though, that one will need long term care in order to recuperate or even just to prolong and improve the quality of life.

In the event that one is disabled and will need long term care, the expenses may be so great that the family is faced with financial distress and this may even lead to the foreclosure of the home or the need to declare bankruptcy. With long term care insurance, this can be avoided, since the insurance will pay for in-home care, nursing home care or hospice care.

However, there are also some instances where you can get life coverage and long term care coverage in one policy. In this case, a portion of the cash value will go towards the expenses needed for long term care. When one needs long term care for a considerable number of years and makes use of the cash value, there may be very little cash value left when the person passes away. The expected proceeds from the life insurance may decrease.

In our opinion, it is best that you get a balance of both insurance policies so that you can prepare for both contingencies - death or a long term illness or injury. If you can afford only one, we would recommend that you take the life insurance policy.

With a life insurance policy, you still have the option to opt for a life settlement. This is when you sell you policy to a third party and that third party will continue with the premiums and get the life insurance proceeds upon your death. You can also go for the non-forfeiture option, which is to surrender the policy for its cash surrender value. This way, you can still have money in case you get disabled.

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