If you do advanced planning, a linked benefit product could be a valuable addition to your toolbox.

Shawn Britt, an advanced sales consultant for Nationwide Financial, Columbus, Ohio, says a combo solution can be used, for example, to fill a common gap in buy-sell planning: funding the buy-out of a partner. Assuming, for example, that each of two partners owns 50% of a business valued at $800,000, then each can purchase a $400,000 linked-benefit policy on the life of the other. In the event that one partner requires long-term care, the LTC benefit can be used to buyout the partner’s interest in installments.

Britt adds that a linked life-LTC policy can also prove valuable in estate planning to provide additional income to a trust and reduce estate taxes. She cites a hypothetical client who, to cover a $5 million estate tax liability, sets up an irrevocable life insurance trust that owns a $5 million life insurance policy, $1 million of which is available to cover long-term care expenses.

In Britt’s scenario, the trust loans $1 million to the client (trust grantor) to a cover a long-term claim, the loan collateralized by a vacation home owned by grantor. The remaining $4 million of the life policy is paid at the grantor’s death, the proceeds used in part to retire the debt owed by the estate to the trust ($1 million borrowed for the LTC claim, plus $352,000 in accrued interest on the loan). Upshot: the trust ends up with $5.352 million after the grantor’s death, rather than $5 million if a life-only policy were purchased.