Index Universal Life Insurance With Long-Term Care

Key Takeaway

The costs of long-term care can throw a wrench in your family’s financial planning as you reach the end of your life. You can help protect your family from large medical bills by adding a rider to your existing indexed universal life insurance policy that focuses on long-term care, or you can purchase an insurance product that already includes long-term care insurance.

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5/7/2024



We think having life insurance is one of the most important ways you can help make sure your family is taken care of in the event of your passing, but many don’t consider life insurance until they are older. Your family may be responsible for costly bills, such as medical bills and funeral expenses, after you pass. This can cause strain on your family. The death benefit from a life insurance policy can help defray the expense of some of these costs. 

But what is universal life insurance, indexed or otherwise, and what are your options for long-term care planning regarding insurance? We will dive into all of that and more in this post.

What Is Index Universal Life Insurance?


Index universal life insurance is a type of permanent life insurance product, meaning you will have coverage for your entire life as long as you pay your monthly premiums on time and in-full. This means coverage isn’t in force for only a set number of years, unlike with term life insurance products.

A key feature of universal life insurance products is that the premiums can be flexible, and you may be able to adjust them as life’s events unfold over the years. You may also be able to adjust the death benefit and saving component of your policy.

Indexed universal life insurance typically has a cash component, called a cash value account, and this account can accumulate value inside of the policy. You may be able to borrow against the money in that account and put it towards your monthly premium in a pinch, or use it for any other financial hardships or unexpected costs subject to policy terms and conditions.

Where does the term ‘index’ come in? In these products, there is a cash value account portion to your policy. The cash value account can be tied in part to an index, and growth in that account is based on the index’s performance. (An index is a group or basket of securities, derivatives, or other financial instruments that represents and measures the performance of a specific market, asset class, market sector, or investment strategy.)*

Long-Term Care Considerations


You can supplement your indexed universal life insurance policy with a long-term care insurance policy or rider. A rider is essentially an add-on component to an existing policy, and may also be called a policy amendment or policy endorsement depending on the insurance carrier.

The older you get, your chances of needing specialized care can increase which can be costly. While you can generally dip into your existing life insurance cash value account to help ease the financial burden, this ultimately decreases the benefit amount paid out to your beneficiaries when you eventually pass. Also, there is a possibility that the amount in your cash value account cannot cover all of your expenses causing the policy to lapse.

Long-term care protection can usually be purchased the same way as other insurance products through your insurer. Explore with a licensed insurance agent to determine whether long-term care options, such as a rider, are a good choice for you.

Closing Thoughts


If you’re searching for a permanent life insurance product‒such as whole life insurance for nurses, or an index universal life product‒and want coverage that will help protect your family in case the worst occurs, adding a long-term care product or rider may help. Indexed universal life insurance can help protect you and your beneficiaries, and coupled with a long-term care product, you may be able to help cover all of your bases.


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*www.spglobal.com

The information above is for educational use only and does not represent insurance, tax or legal advice. It is not a recommendation or solicitation to buy insurance. Please talk to your licensed insurance agent for more information about life insurance and your needs. Please consult with the appropriate professional for tax or legal advice. Guarantees are backed by the claims-paying ability of the issuing insurance company.


Article Author: Meredith Bell
Author Bio: Meredith joined Everly in 2022 and has 20+ years of experience in the life insurance industry. She has held various roles in advertising, marketing, communications, sales and distribution support, and product development. Outside of the office, Meredith lives with her daughter Kennedy and their dog Mavis. Meredith enjoys cooking, camping, gardening, hiking, and bourbon (though not always at the same time). She is a live music enthusiast and an avid reader. Her favorite quote is by Thomas Jefferson: "I cannot live without books." Meredith agrees, but would add cheese, movies, and dogs to that list.

Policies are issued by Everly Life Insurance Company (“Everly Life”), Topeka, KS. Everly Life is not licensed in the state of New York and does not solicit or transact business in New York.

A.M. Best's 15 ratings are a measure of claims-paying ability and range from A++ (Superior) to F (in Liquidation). Ratings are current as of January 25, 2024 and subject to change at any time. While ratings can be objective indicators of an insurance company's financial strength and can provide a relative measure to help select among insurance companies, they are not guarantees of the future financial strength and/or claims-paying ability of a company and do not apply to any underlying variable portfolios. The insurance agency from which a policy is purchased, and any affiliates of those entities, make no representations regarding the quality of the analysis conducted by the rating agencies. The rating agencies are not affiliated with the above-mentioned entities, nor are these entities involved in any rating agency's analysis of the insurance companies.

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