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What If My Spouse Doesn’t Use Long-Term Care Insurance?

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July 1, 2022 •  Emily Hicks Law, PLLC
Long-term care insurance helps pay for healthcare costs that aren’t covered by Medicare or conventional health policies.

If you have traditional long-term care insurance, there’s no benefit from the coverage if you pass without ever needing long-term care. However, some kinds of long-term care insurance allow a surviving spouse or partner to use unused benefits. Others provide for partial or full return of the premium, if the original policyholder dies without using the benefits. Note that these options cost more than traditional life insurance.

Yahoo Finance explains in its recent article entitled “What Happens if You Don't Use Long-Term Care Insurance as a Senior?” that long-term care insurance helps pay for healthcare costs that aren’t covered by Medicare or conventional health policies. It’s supposed to help the disabled and those with chronic health conditions pay for the costs of assistance with activities, such as dressing, bathing, and eating. This coverage can also cover nursing care. However, it’s not designed to pay for medical care of the type covered by health insurance—doctor visits, lab tests and hospital stays. Long-term care insurance can cover expenses arising from in-home care, as well as bills for living in nursing homes and assisted living facilities.

About half of long-term care insurance policyholders die before ever using their benefits, studies say. For the majority who purchase coverage that doesn’t begin paying until 90 days after the covered individual begins needing long-term care, only 35% ever use their benefits. One way to get some value from unused long-term care insurance policy benefits is to purchase a policy with shared spousal benefits. It’s a traditional long-term care insurance that covers a couple and allows a surviving spouse to take advantage of any unused benefits remaining after the other spouse dies.

If the deceased spouse used all the policy’s benefits before dying, the surviving spouse wouldn’t get any benefits. However, if either spouse uses all the benefits available to them, he or she can then begin using unused benefits from the other spouse’s coverage. One benefit of spousal benefit policies is that the likelihood of the policy’s benefits being used is much higher when two people are covered.

Another type of long-term care policy provides a return of premium for unused long-term care insurance coverage. These policies combine long-term care coverage with life insurance that has a death benefit and will pay back some of the premiums on an unused policy when the policyholder dies.

These hybrid policies vary significantly in the number of premiums they’ll return. Some will return all of the premiums plus an additional death benefit. Some will return only the amount of the premiums minus any claims that have been made under the policy. Another group has a graded return that decreases as the policyholder gets older.

Reference: Yahoo Finance (June 1, 2022) “What Happens if You Don't Use Long-Term Care Insurance as a Senior?”

Suggested Key Terms: Elder Law Attorney, Medicare, Medicaid, Paying for a Nursing Home, Long-Term Care Planning, Long-Term Care Insurance

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