I'm 40-years-old and I bought a long-term care policy, here's why

michaelaloi |
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There's not much we can do about getting older. Try as we may, the birthdays keep coming. For me, turning 40 wasn't so bad. I suppose you have enough birthdays over time and you begin to think it's not a big deal, just another year. Then again, the longer you live, the more you begin to realize how lucky you are to be living. That was sort of the epiphany I had at 40, it was time to think about the next half of my life. 

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Turning 40 got me to think about the risks of living too long, such as the need for long-term care.

The real risk is living too long

Having a wife and three kids I know the value of life insurance, but then I began to think, what if I don't die prematurely, but live a lot longer? What got me really thinking about this was a recent study that showed retirees are more prepared for death than life. With life expectancy being pushed out further and further and medicine and healthcare improving all the time, maybe we should prepare more for a longer life. I may live to 100! (It's those green smoothies.) Statistically speaking that is still a low probability, but there's still a chance. And the probability of living longer keeps getting better over time, so in the next 40 years, I'm willing to wager the 90s are the new 80s, and the 100s are the new 90s. In other words, just as common as it is for us to know someone living to 90 now, it will be that common to know someone in their 100s in the next 40 years. God help us, that is long time to live. 

Now I get the best of both worlds, a life insurance death benefit for my young family if I die early or if I live too long the ability to access the death benefit while I'm alive for future long-term care needs1

Hybrid policies combine life and long-term care insurance

This is why I bought a long-term care insurance policy on my 40th birthday, because I know living to 100 is a long time to count on using only my retirement assets to support my old self. But I didn't buy any long-term care policy, certainly not the kind where you pay every year for the rest of your life. That wasn't appealing since that could be a long time to pay. Instead, I bought a whole life insurance policy with a long-term care rider. Now I get the best of both worlds, life insurance death benefit for my young family if I die early or if I live long enough the ability to access the death benefit while I'm alive for future long-term care needs1. What's also great, is the policy is guaranteed to be paid up in 20 years. This way I'll be 60 and on the cusp of retirement knowing that if I am lucky to make it to 100, at least I'll have some help paying the long-term care bills. That's peace of mind. 

 

1 Accessing cash values, through loans and partial surrenders or by accelerating benefits for long term care benefit payments, will reduce the death benefit payable, the cash surrender value and the long term care coverage available.