Have you been stuck in a situation where you’ve been with your whole life policy for a long time, and then suddenly, you came across a good deal for a long-term care rider? Let’s see how we should prioritize our coverage.
Nowadays, choosing the right insurance policy seems to be a dreadful experience. If we didn’t choose wisely, it might bite us in the end. With that in mind, how we should approach things, especially if we are in the middle of policy and someone presents a very competitive long-term care insurance?
According to experts, most insurance companies in the market today suspend their sale of long-term care insurance policies. Most of them also limit the benefits so they can be leaner towards the crowd. This means that the available options in the market are minimal, and we need to find the best course of action, especially if we are aiming for financial stability.
Almost all financial experts agree that the best possible option for us consumers is purchasing private insurance. This provides us with the most flexible resources when we need it most. With that in mind, the best course of action might be opting for a hybrid policy.
HYBRID POLICY: WHAT DOES IT MEAN?
Hybrid Policies are present in most new products in the life insurance market. It bridges the gap between long-term care rider and the aspect of our life insurance.
Most life insurance carriers only give us the option of including the LTC or long-term care rider during the application process. This means that we can’t put together our existing insurance policy and the LTC rider.
However, some carriers grant the policyholder of adding the said rider to their policy and converted it to whole life under a new set of rules and conditions.
With this as your window, it is best to ask your carrier if they can present you with this option. If all things fit into the right places, there is a higher chance that you will get a new policy along with the updated coverage that you wish to add.
If you hadn’t reached this agreement, the only course of action that you needed to take is to cancel the policy and start a new one. But be aware, this option is not always recommended by many insurance consultants. The main reason for this is the locked amount that you paid might be lesser compared to the ones currently on the market.
Let’s say that you had your whole life policy for more than eight years. That means that the cost of insurance is similar to the ones available in the market eight years ago. Plus, the price is relatively lower since the age we are in is also a factor when dealing with your monthly obligation.
What most consultants suggest is you ask if there is a possibility that your current life cash value can be transferred in a new policy that includes the rider you prefer. If everything goes in the right direction, you will be presented with a 1035 Exchange. It will help you settle the “paid-up addition,” which will also help lower your premium.
However, it all depends on the carrier’s and consultants’ awareness of the procedure that you are on. You need to coordinate with them before you cancel or even update your life insurance policy. You also need to consider that life insurance and long-term care rider is two different plans, so you need to check first if you are qualified right before you change anything.
Article is based on NJ.com
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