Asset based long term care insurance appeals to savers who dislike paying premiums for coverage they might never use. Here is how it works.
How asset based coverage works
With asset based long term care insurance, you reposition a lump sum, often from savings, a CD, or an annuity, into a single policy that links life insurance or an annuity with long term care benefits. The policy leverages your deposit into a larger pool of care coverage, frequently several times the amount you put in. If you need care, the policy pays benefits; if you never do, your heirs receive a death benefit; and many plans let you surrender for a return of your principal. Premiums are typically guaranteed. This certainty is the draw. A 1-800-MEDIGAP advisor can model the leverage for you.
Who should consider asset based long term care?
It suits people with a chunk of savings sitting in low-yield accounts who want that money to do more without losing it. Because your principal is protected and benefits are guaranteed, it removes the use-it-or-lose-it worry of traditional policies and the rate-increase risk too. It is less ideal for those who lack a lump sum to reposition or who need the cash readily liquid. The leverage and tax treatment vary by carrier and product, so professional guidance helps. Call 1-800-633-4427 and 1-800-MEDIGAP will compare asset based options for your savings.