Does long term health care insurance have a cash value?


Let us provide you with a background of long term health care insurance first.

Long term health care insurance proves very useful when you need help in paying for the cost of long term care. After all, being admitted in a nursing home or assisted living facility, hiring a caregiver to help you at home or even have a nurse visit you regularly for five or so years would mean a considerable strain on you and your family's finances. You may even be forced to liquidate your assets (i.e. sell your car, or your home) just to pay for the long term care.

Thus, this insurance comes handy when you get sick and need care for a long time. However, what happens when you don't need long term care? Does this mean that you lose all the premiums for long term health care insurance thus far?

This doesn't need to be the case. Insurance companies have come up with hybrid long term health care insurance policies that enable customers to benefit from their policy, even if they will not require admittance to a long term health care facility. Some of these hybrid policies make use of a cash value.

These hybrid policies are:

  • Life insurance with long term care. You can buy life insurance that has the option to provide long term care. This policy will build up cash value with the condition that a portion of that cash value should be paid towards the insured's long term care, if ever this is needed. When this happens, the expenses for long term care can eat up into the cash value. In the event of your death, the proceeds your beneficiaries may receive will be smaller. But still, this policy is like having the best of both worlds, getting both life coverage and long term care, if ever the need arises. There are also versions of this policy that allow you to accelerate the death benefit - that means you get a portion of your death benefit even before your demise. This will be used for paying for a nursing home or any other care facility.
  • Long term care insurance with annuity. This builds up a cash value. As long as you don't take anything out for long term care, the annuity grows.  When the annuity matures, it will pay out n monthly annuity payments up to a certain duration.

With these hybrid policies, people can still get some value from the premiums they paid if they decide to walk away from the policy.

Before you decide on getting the hybrid, it is best to ask a financial adviser to help you see what your needs are. Remember, each person has specific needs.

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