Home Life insurance Life insurance basics Combination life insurance or long-term care: Make the right pick Combination life insurance or long-term care: Make the right pick Written by: Barbara Marquand | Reviewed by: John McCormick John McCormick John is the editorial director for CarInsurance.com, Insurance.com and Insure.com. Before joining QuinStreet, John was a deputy editor at The Wall Street Journal and had been an editor and reporter at a number of other media outlets where he covered insurance, personal finance, and technology. | Updated on August 17, 2023 Why you should trust Insure.com Quality Verified At Insure.com, we are committed to providing honest and reliable information so that you can make the best financial decisions for you and your family. All of our content is written and reviewed by industry professionals and insurance experts. We maintain strict editorial independence from insurance companies to maintain editorial integrity, so our recommendations are unbiased and are based on a comprehensive list of criteria. As the kids leave the nest and the mortgage gets paid off, the need for life insurance wanes for many people who have reached late middle age. You may find that long-term care protection is what becomes most important. You have a 60% chance of needing long-term care, according to the National Clearinghouse for Long Term Care Information. A 2019 study by the Urban Institute also found that 70% of adults will develop severe long-term care needs before they die with 48% receiving paid care. However, health insurance, including Medicare, generally doesn’t cover long-term care. Medicaid can offer some help with long-term care, but you have to qualify. Long-term care protection pays for assistance with basic activities, such as eating, getting in and out of bed, and bathing. The cost of care, whether it’s provided in a nursing home, assisted-living facility or at home, can reach tens of thousands of dollars a year and decimate your financial portfolio. Here are 8 long-term care insurance myths. “If you think you worry about your kids now, just wait until you get older and you worry that you’ll outlive your money,” warns Thomas Horner, president of Horner Marketing Services, a long-term care insurance agency in Cape Coral, Florida. Making an insurance policy switch So when should you drop life insurance and start pouring money into a long-term care policy? The answer depends on your situation and your cash flow. You might need both types of coverage, just one, or you might find the best option in a policy that combines long-term care and life insurance coverage. These plans are called combination life insurance. For most people, the need for life insurance is greatest when they’re in their 20s, 30s, and 40s, Horner says. Those are the prime years for paying a mortgage, starting families, raising children and saving money for the kids’ college education. You need life insurance if you have dependents who would suffer financially if you died. As couples reach late middle age, the financial obligations start to drop off. The kids graduate from college and become independent. The house often gets paid off. A nest egg grows, providing security for a surviving spouse. “Life insurance becomes less important to you because your obligations have been met,” Horner says. “The bigger risk is about needing long-term care at some point. Any assets you accumulate and any retirement you put away — all those assets are at risk.” If you don’t have long-term care insurance, you’ll have to pay for your own care — until you’ve exhausted your resources and qualify for Medicaid, the federal and state program for low-income families and elderly and disabled adults. Medicaid pays for long-term care at Medicaid-certified nursing homes. Having enough long-term care insurance or enough savings to pay for care on your own gives you more choice in the type of treatment you can receive and where you want to receive it. Very wealthy people may not need to purchase long-term care insurance because they can afford to pay for their own care. Here’s more about self-insuring for long-term care. Overlapping insurance needs You should start thinking about purchasing long-term care insurance in your 50s, before you develop health problems that could make it difficult to qualify for coverage or the best rates, Horner says. At this point, the need for life insurance and long-term care insurance may overlap, especially if your mortgage isn’t paid off and the kids haven’t graduated from college. “There is a strong need for both life insurance and for long-term care insurance,” Horner says. “It’s a matter of balancing the premium you pay toward those two risks.” The cost for long-term care coverage has been on the rise in recent years but has since stabilized between 2022 and 2023, with the American Association for Long-Term Care Insurance reporting that some prices are actually lower than those in 2022. “However,” says Jesse Slome, director of the AALTCI, “the spread between the lowest and highest prices for basically identical policy coverage has grown.” Eventually, you might drop life insurance altogether, or maintain a small policy for final expenses. For folks of relatively modest means who no longer support dependents, long-term care is a more important risk to manage, says Damon Bates, executive advisor and consultant at Bates Communication, a BTS company. Besides providing a financial backstop, long-term care insurance also reduces the emotional toll on loved ones when you need help with your day-to-day needs, Bates says. In some instances you should hang on to life insurance. For example, heirs might be forced to sell the family business or part of your estate to pay taxes if they don’t receive life insurance proceeds. Read more about whole life insurance. Combining life and long-term care insurance If you need both life and long-term care insurance, you can buy separate policies or invest in one product that combines benefits. A life insurance policy with a long-term care rider is one way to go, says Steve Casto, of API Financial Advisors in Omaha, Nebraska. That option is becoming more attractive as insurers reduce benefits, increase premiums and tighten up underwriting for traditional, standalone long-term care insurance policies, Casto says. Many insurers have gotten out of the long-term care insurance business and long-term care insurance options are dwindling. MassMutual is one option currently available. “MassMutual offers whole life insurance policies with long-term care riders that provide a benefit whether you need long-term care, never need care, or if you decide to cancel the coverage and receive the surrender value,” a MassMutual spokesperson tells Insure.com exclusively. “These policies provide three important guaranteed benefits: a pool of long-term care benefits, a death benefit, and a policy surrender value that increases over time. And while not guaranteed, policies are eligible to receive dividends.” CareChoice One is a whole life insurance policy with a long-term care rider that MassMutual offers. However, it is important to note that MassMutual no longer offers individual long-term care insurance. Another policy includes Lincoln Financial Group’s Lincoln MoneyGuard Solutions. This features a one-time, lump sum premium, typically around $100,000 or more. It provides long-term care benefits if you need them, or it pays a death benefit to your beneficiary. If you decide you don’t want the policy after all, you can get back the money you paid in premiums. These policies are marketed toward people who can self-insure for long-term care but would rather transfer some of the risk to an insurer. Here’s more on how to hedge your bets with a combination long-term care and life insurance policy. Talk to a financial planner to weigh the risks you face, develop a strategy to address them and match the right insurance policies to your situation. × Get Free Life Insurance Quotes Today! 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