It sounds a bit unpleasant, but accelerated death benefits policies are quickly making their way into mainstream long term care insurance options. Devised to solve a number of quagmires, these policies address concerns of many seniors who worry that traditional long term insurance policies may never be used, thereby making it a waste of money at a time when they’re keeping a close eye on their finances. To address those realistic concerns, insurance companies have found a way to make it a better solution.
Combining Long Term Care and Life Insurance Policies
Insurance companies are profit-driven, so naturally, it has to benefit them if they’re going to offer it to consumers. The problem was it was often only those insurance companies that ever benefited from the paid premiums.
Now, though, these new policy features, known as “accelerated death benefits” or ADBs, are serving the purpose for many seniors in need of a bit of cash flow.
There already exists an additional benefit for those willing to pay a higher premium on their insurance policies. It allows for cash advances under certain circumstances. Until now, those circumstances were in a finely drawn window of opportunity. The new ADBs have been broadened via new policies.
Accelerated Death Benefits
Provided you buy one of the newer policies, consumers can now take advantage of the cash advance option under a broader scope. According to the U.S. Department of Human and Health Services website for long term care, those reasons for a cash advance now include a terminal diagnosis or a life threatening diagnosis; the anticipated need for long term care services that will likely be for an extended period of time; or becoming confined permanently to a nursing home with an inability to perform Activities of Daily Living, or ADL. Those include dressing yourself, bathing or feeding yourself.
Points to Remember
Keep in mind, generally speaking, the most you can receive is half of the benefit. There are some policies that allow you to withdraw the full face value, but it depends on the insurer. Also, there may be some restrictions on how much can be used for covering nursing home and at home care. Most policies don’t require health screenings, either if it’s part of a policy you already have.
Also, any withdrawals you’ve made are deducted from the payouts made to your beneficiaries. That’s an important consideration for your overall estate planning efforts.
Finally, remember that not all policies are created equal. Benefits your neighbor has may not be applicable to your own policy, so be sure you understand the small print and what it ultimately means in your daily life.
Your estate planning lawyer can also help provide clarity and can work with you to be sure the policy is right for your specific needs. It comes down to your needs being met to ensure a high quality of life. If you’d like to learn more, we invite you to contact our offices today to speak to one of our experienced legal advocates.
Daniel DeBruyckere
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