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Term Life Insurance Policy Versus Long Term Care Policy

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A term life insurance policy and a long term care insurance policy have very similar sounding names. However, they are two completely different products that serve distinct functions. Both a term life insurance policy and a long term care policy are important elements of your financial planning.

What is a Term Life Insurance Policy?

A term life insurance policy is designed to spare your family financial hardship in the event of your untimely death. You purchase life insurance coverage for a specific period of time, or a “term.” The term should be a long enough period of time to ensure your family is protected until they are “self insured” or financially independent enough to live without your care or support.

If you die during the term of coverage, your family will be paid the death benefit. The death benefit should generally be equal to several times your income (experts suggest between ten and twenty times) plus the cost of your outstanding mortgage balance. When your family receives the death benefit, they can use it to live on once they no longer have your income or the care you provide. This allows them to maintain their standard of living, even if something should happen to you.

What is a Long Term Care Policy?

A long-term care policy, on the other hand, is a type of insurance that will pay for your nursing home fees if you become unable to care for yourself. Long term care insurance pays the monthly cost of a nursing home, or in-home care if you require assistance doing day-to-day functions.

A long term care policy is normally good throughout your entire life, as long as you pay premiums on it. It pays no benefit to your family in the event of your death

What Do a Term Life Insurance Policy and a Long Term Care Policy Have in Common?

A term life insurance policy and a long term care policy should both be purchased when you are young. In both cases, the statistical likelihood of the insurer having to pay out is much smaller if you are a younger person, since younger people are both less likely to die and less likely to require nursing home care.

By buying both a long term care policy and a term life insurance policy when you are younger, you can ensure that your family is completely protected. If you pass away before retirement, your family will receive the death benefit associated with a term life insurance policy. If you live into your retirement years and become unable to care for yourself, your nest egg will not be depleted by expensive nursing home care.

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