What if I Never Use the Benefits of My Long-Term Care Insurance Policy?

The question is often asked about what happens to any unused Long-Term Care Insurance benefits. It is a good question, but it has multiple answers.

If you purchase Long-Term Care Insurance and you never need long-term care ... what happens? 

We generally don't ask this question about our homeowners' or auto insurance, but it sometimes gets asked with LTC Insurance. 

If you never use your benefits, that meant you never needed long-term health care. Many people would consider that a blessing since the risk of needing extended care is high. But - you paid premiums every year.

Want More Than Peace of Mind? You Can Get Your Money Back With The Right Policy.

Nonetheless, there are options for anyone who wants something more than peace of mind when purchasing Long-Term Care Insurance. 

Return of Premium Riders

There are policies available that offer a return of premiums paid following your death. Usually, the insurance company will subject any benefits paid by the policy from the total amount of premiums paid throughout the years. However, some companies have 'full return of premium' options available.

The premium cost will be higher for the ability to get money back if you are lucky never to need care; however, it's worth the additional peace of mind for some people.

Hybrid Long-Term Care Insurance

Asset-based Long-Term Care Insurance (hybrid) will offer a death benefit. 

Hybrid policies combine either life insurance or an annuity with a qualified rider for long-term health care. Keep in mind that many policies that claim they will cover extended care are not 'long-term care.' 

Only a policy that meets federal guidelines under U.S. Code 7702(b) can be called 'long-term care.' These hybrid policies contain the benefits and consumer protections you need when planning for the costs and burdens of aging - Hybrid Long-Term Care and Short-Term Care Options | LTC News.

Hybrid policies are expensive but remember; you will either receive long-term care benefits, a death benefit, or a combination of both.

Is a Hybrid Policy with a Death Benefit Worth the Cost?

Is the higher premium worth the cost? That is a personal decision; however, a qualified Long-Term Care Insurance specialist can discuss these options and the pros and cons of these options.

Many consumers like the idea of a guaranteed benefit no matter what happens. Other consumers like the idea of paying one premium and being done - knowing that they will either receive tax-free long-term care benefits or the death benefit for their loved ones. 

Most consumers decide that traditional Long-Term Care Insurance makes the most sense, especially if the policy has spared spousal/partner benefits.

However, some people decide that a hybrid policy gives them the knowledge that their money will either be used to provide them access to quality long-term care options or provide their beneficiaries with the death benefit.

Speak with a specialist who has expertise with all these products. 

If the insurance agent only discusses hybrid products without discussing traditional plans, partnership policies, and shared spousal benefit options, you may want to find a specialist who understands all the available long-term care planning solutions. 

Shared Spousal Benefits

Shared spousal benefits are another option. With this type of policy, the premium does not get returned at death, but unused benefits go to the other spouse.

If one spouse exhausts all their benefits, they can use the other partner's policy benefits. However, if one spouse dies, 100% of the unused benefits go to the survivor even though their premium disappears. While this option does not return the premium, the unused benefits go to the survivor. 

Some insurance companies offer a third benefit account that can be shared between spouses/partners.

In either case, the policyholders get extra flexibility. The likelihood of both spouses/partners not using their long-term care benefits is much lower than just an individual.