Using an IUL for Long-Term Care

Did you know you can leverage a Indexed Universal Life Insurance ( IUL) for long-term care (LTC) needs such as assisted living or nursing care? An IUL is a great way to provide a stable option for long-term care. There are few ways this can be accomplished.

Long-Term Care Rider

Some insurance companies offer a rider to use an IUL for long-term care. Because these riders allow you to accelerate a portion of the death benefit, they can cover expenses such as long-term care if you become chronically ill. This can help you access funds to pay for nursing care, home health, or other qualifying expenses. However, long-term care riders are becoming less common so it is important to consider other ways an IUL can help as well.

Cash Value Accumulation

IUL policies accumulate cash value over time, and policyholders can access this cash value through policy loans or withdrawals, which also allows you to leverage this cash in your IUL for long-term care. While withdrawals may reduce the death benefit and cash value, they can provide a tax-advantaged source of funds to cover long-term care expenses.

Living Benefits

In some cases, IUL policies allow for the acceleration of the death benefit if the policyholder is diagnosed with a chronic, critical or terminal illness. These are called living benefits. This can also provide a source of funds to cover long-term care expenses. While other IUL options require you to borrow against your cash value, this option provides a tax-free draw against the policy’s death benefit.

It’s crucial to work closely with an insurance professional who has expertise in IUL and long-term care planning to set up a policy that will work for your long-term care needs. Keep in mind that the effectiveness of these strategies can depend on the specific terms and conditions of the insurance policy, and policies can vary between insurance providers. Additionally, tax laws and regulations may change, impacting the tax treatment of these strategies.

If you’re interested in learning more about a policy, please call 512-922-1273, use our contact form, or schedule a time to speak.