Q: If my parent has long-term care insurance, but dies without needing care, are the premiums refunded to the family?

A: No, there is no refund of premium to the family if benefits are not needed. You can buy a return of premium rider (very expensive) but its something to consider if a family is buying long-term care insurance (LTC) for their parents.

If you are thinking of purchasing LTC, there is a new type of hybrid product that combines life insurance with LTC. Many people think if you buy a LTC policy and don't use it (which may be a blessing) that you've wasted your money on the premiums. So the life insurance industry has begun to offer products that have a combined whole life insurance policy with LTC. You purchase a policy with a single or lump-sum premium. If you pass away, your heirs receive the death benefit as with a normal life insurance policy.

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However, if you need LTC during your lifetime, you can draw down on the death benefit to pay for those needs. Whatever remains after you pass away still goes to your beneficiaries. The other advantage is the LTC benefit is income tax free since life insurance payouts are not taxed.