UNITED STATES—Dear Toni: You have written about other options for long term care in the past and have discussed life insurance with living benefits. This confuses me because I thought all life insurance plans were the same. I was only aware of term and whole life.

How does this new type of life insurance help one with a long-term care issue?  Currently, my mother has been diagnosed with Alzheimer’s and at 75, is in the early stages, and her Alzheimer’s can last for years. Would she be able to apply for one of these new living benefit policies? Thank you for all you do to help us understand these complicated Medicare issues…Sally from Tampa, FL.

Hello Sally: With 10,000 Baby Boomers turning 65 every day for the next 15+ years, the insurance industry has designed new products for those concerned about long term care issues, but do not want to spend their hard-earned retirement dollars on a long-term care policy they may never use. And so, life insurance with living benefits was born.

Life insurance with livings benefits is a life insurance or annuity policy with accelerated benefit riders such as terminal, critical, or chronic illness benefits or has death benefits (tax free).  Many insurance companies are offering these benefits because people want protection for a long-term care need and if they never have that need, they have coverage for death benefits.

Benefit riders include:

  • Terminal Illness Rider: Insured has an illness or condition that is expected to result in death within 24 months or less.
  • Chronic Illness Rider: Eligible insured is unable to perform 2 of the 6 activities of daily living (ADLs) or required constant supervision to protect from threats to health or safety due to severe cognitive impairment.
  • Critical Illness Rider: Specific critical illness such as heart attack, stroke, invasive cancer, and many more critical illnesses.

The face amount of the policy determines what the living benefits are based on and the severity of the condition will determine the percentage paid. Accelerated benefit riders are not a long-term care policy.

To qualify for a life policy with living benefits, one must answer health questions and meet underwriting requirements. Many want to wait to qualify because they do not see the need while they are healthy.

Unfortunately, I do not believe that your mother will qualify for a policy because she will not pass the underwriting.  Usually having Alzheimer’s is a kick out question. Therefore, one should plan early.

Different life insurance companies have different face amounts for their living benefits riders with maximum amounts to make a claim. Living benefits are becoming the new way for various long-term care issues to be paid for instead of draining your 401K or life savings.

There are four ways which the Pandemic has affected issuing a traditional long-term care policy as written from www.Elderlawanswers.com:

  1. Qualifying for a Long-Term Care Policy: Because older individuals are at a higher risk for Coronavirus this is changing the underwriting process and placing additional restrictions on qualifying when testing positive for COVID-19.
  2. Raising premiums: Positive testing for COVID-19, may change rates for plans being issued not already issued plans.
  3. Moving out of Nursing Homes: Be sure that “at home care” is included in your long-term care plan.
  4. At home care: Home care workers are charging more for services during the Pandemic and while social distancing with masks of course.

2021 Confused about Medicare and LTC Zoom webinar is Thursday, May 27 at 4 p.m. Visit www.tonisays.com to sign up for Toni’s new webinar event.

Toni King, Medicare author/advocate is giving a $5 discount to the Toni Says® readers on the new 2021Medicare Survival Guide® Advanced book at www.tonisays.com. Have a Medicare question? Call 832-519-8664 or email info@tonisays.com.