Life & Long-term Care Insurance

Life & Long-Term Care Insurance

Have you thought about how you would handle these situations?

• Keeping up with mortgage payments and household bills during an extended absence from work due to illness or surgery.
• Covering funeral costs and other end-of-life expenses so your family is not burdened.
• Replacing household income if your spouse passes away unexpectedly.
• Building a reliable foundation for your retirement years.

Cornerstone Insurance can walk you through the life insurance options that fit your family's needs and your budget. There are many policy types tailored to different life stages and financial circumstances. How much coverage do you actually need? If you have no dependents and can comfortably cover your final expenses, you may not need a policy at all. But for most families in the Piedmont region, life insurance is a cornerstone of financial planning.

Disability Insurance - Replaces a portion of your income when an accident or illness keeps you from working. For families along the I-85 corridor who depend on steady paychecks, this coverage can be the difference between staying afloat and falling behind.

Long-Term Care - As we age or face serious health challenges, everyday tasks like bathing, dressing, and eating can become difficult. Long-term care coverage helps pay for the assistance you need, whether at home or in a facility.

Final Expense (sometimes called burial insurance) - One of the most considerate things you can do for your loved ones is make sure they are not left scrambling to pay for your funeral and related costs. It is a practical, affordable way to show you care.

Annuity - At its simplest, an annuity is a contract where you make payments now in exchange for a guaranteed income stream later. Typically you set this up with a life insurance company, though trusts and charitable organizations can serve the same role.

Life Insurance: What types are available?

Life insurance breaks down into two broad families: term and whole life (also called permanent). Whole life includes several variations such as traditional whole life, universal life, variable life, and variable universal life. Historically, Americans have purchased roughly equal numbers of term and whole life policies each year.

Group life insurance products differ from individual policies. The information below applies specifically to coverage purchased by individuals.

Term Insurance

Several varieties of term coverage are worth considering:

• Renewable Term Insurance
• Convertible Term Insurance
• Level Term Insurance
• Decreasing Term Insurance
• Increasing Term Insurance

Term life is the most straightforward type of coverage. It pays a death benefit only if the policyholder dies during the specified term, which can range from one year to thirty years. Most term policies do not include any additional benefits beyond the death payout.

The two fundamental term structures are level and decreasing.

With level term, the death benefit remains constant for the entire policy duration.

Decreasing term reduces the benefit amount gradually, usually dropping once per year over the life of the policy. The vast majority of term buyers choose level term.

Whole Life / Permanent Insurance

Permanent coverage comes in six primary forms:

• Whole Life
• Joint Whole Life
• Survivorship Life
• Universal Life
• Variable Life
• Variable Universal

Unlike term policies, whole life or permanent insurance pays out whenever death occurs, even if the insured lives past 100. The three main categories within permanent life insurance are traditional whole life, universal life, and variable universal life. Each type has its own set of variations.

Traditional whole life keeps both the premium and the death benefit level for the life of the policy. The actual cost of insuring someone goes up as they get older, especially once they pass 80. Rather than raising your premium every year, the insurance company charges a steady amount. In the early years, this means you are paying more than the company needs for current claims. That extra money gets invested, and the returns help offset the rising cost of coverage as you age.

Under federal law, once these accumulated overpayments reach a certain threshold, they must be accessible to you as a cash value if you decide to cancel or change your plan. Keep in mind that the cash value is an alternative to the death benefit, not an additional payout on top of it.

During the 1970s and 1980s, the insurance industry developed universal life and variable universal life as alternatives to the traditional whole life model.

What is Long-Term Care Insurance?

Whether from aging, chronic illness, or a serious injury, some people eventually need help with fundamental daily tasks: eating, bathing, dressing, using the bathroom, maintaining continence, and moving from a bed or chair. These are known as Activities of Daily Living, or ADLs. Generally, if a person cannot perform two or more ADLs independently, or if they have a cognitive impairment, they are considered to need long-term care.

The name "long-term care" can be misleading. Some people need this type of help for only a few weeks or months.

A common misconception is that long-term care only happens in nursing homes. In reality, it can be provided through adult day programs, assisted living communities, or right in your own home.

ADL assistance, referred to as "custodial care," is sometimes delivered alongside "skilled care." Skilled care involves medical and nursing services like medication management, blood pressure monitoring, and rehabilitation. This distinction matters because Medicare and most private health plans cover skilled care but generally do not pay for custodial care.

Is long-term care insurance right for you?

Imagine needing long-term care services and having to foot the bill yourself. Do you have enough savings to cover four or more years of nursing home fees, assisted living costs, or home health aides?

If you are over 65, do not count on Medicare or your employer health plan to pick up the tab. Medicare does not cover custodial care, and private insurance rarely pays for long-term care services.

If your assets are very limited when the time comes, Medicaid may cover your expenses. It is a government program designed for people with few financial resources. In that situation, purchasing a long-term care policy might not make financial sense since Medicaid would pay regardless. The exception applies if you live in a state with a Partnership for Long-Term Care program, which offers additional asset protection for policyholders.

On the other end of the spectrum, if you have substantial wealth, you might prefer to pay for care out of pocket. Financial advisors often suggest that people with a net worth around $1.5 million (excluding their home) can reasonably self-fund long-term care expenses.

For everyone in between, long-term care insurance delivers real peace of mind alongside financial protection. Surveys consistently show that people who own long-term care policies feel significantly more confident about their ability to handle future care costs than those without coverage.

Even if you are well under 65, do not put off thinking about this topic. Insurers reject a growing percentage of applicants as they age. Studies show that roughly 11 percent of applicants in their 50s, 19 percent in their 60s, and 43 percent in their 70s are turned down.

Actuarial estimates suggest that 15 to 25 percent of Americans over 65 cannot qualify for long-term care coverage at all.

Research from the Henry J. Kaiser Foundation shows that more than five million Americans between 18 and 64 require some form of long-term care assistance.

Federal health statistics report that roughly 160,000 nursing home residents are under 65, accounting for nearly 10 percent of the total. Among those receiving home health care, about 400,000 are under 65, which represents approximately 30 percent of that population.

The takeaway is simple. Unless you qualify for Medicaid or have the assets to self-fund, long-term care insurance deserves serious consideration.

Life and long-term care coverage form the backbone of a sound personal insurance plan. Talk to Cornerstone Insurance about finding the right fit for your family's situation.