Friday, March 1, 2013

Funding Long Term Care Policies through Life Insurance

There are basically two ways how to finance a LTC policy through a life insurance plan. Interested policyholder may either use life settlements or the accelerated death benefits rider. Though these options may be the last resolves into finding ways to fund long term care, they are still worth looking at especially if the insured has waited too long and was denied coverage for long term care.

Accelerated Death Benefits

With this insurance rider, the policyholder is allowed to receive cash advances against his death benefit in case he is diagnosed with a terminal illness. In order to qualify and start receiving benefits from this rider, the insured must be diagnosed with a terminal illness, as stated by the Interstate Insurance Product Regulation Commission. The insured must be terminally ill, with death expected within the next 24 months or less. 
Other situations where the insured may be qualified for benefits include:
  • ·         If he or she has to undergo major organ transplant
    ·         He or she needs to be in continuous artificial life support
    ·         Have a medical condition which requires permanent confinement in an institution
    ·         Be diagnosed with an illness that, without treatment, would result to a limited life span
    ·    A demand for long term care assistance, especially with activities of daily living, such as eating, dressing, bathing, toileting. 

Beneficiaries of the insured can still get cash benefits in the time of death of the insured. These will be reduced amounts based on the pre-determined percentage of the life insurance contract, which usually ranges from 25 percent to 95 percent. 

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