Asset-Based Long-Term Care Insurance
If an asset based long term care plan is triggered, funds from the whole-life policy or annuity are applied toward long-term care expenses. Any value that’s left over gets paid out to heirs as a death benefit.
As with just about any insurance product, there are coverage caps, but the caps are usually significantly higher than the present cash value of the asset at the time the policy is issued. So, you have a lot more money for long-term care expenses than if you just surrendered an existing whole-life policy and earmarked the cash for nursing home costs.
Because the asset used for the plan retains its independent value, ABLTC plans are sometimes referred to as “combination plans” or “linked-benefit plans,” depending on the specific insurer and product.
Medicare and Long-Term Care
While Medicare is often listed as an option to pay for long term care on many websites, keep in mind Medicare WON’T pay for most LTC services. Medicare pays for medical care for senior citizens and younger people with disabilities.
Medicare does not pay for custodial care, which is not medical care which essentially makes up for over 90 percent of LTC.
Custodial care is when you need help with the things you do every day: getting out of bed or a chair (transferring), using the toilet, managing bathroom hygiene, bathing/showering, dressing, or eating. Most people who require long term care after suffering from a stroke or cognitive impairment such as Alzheimer’s or dementia need custodial care.
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