We’re big believers in long-term care insurance (we both own policies), but the premiums can be quite expensive. One relatively recent innovation in the insurance realm is the option of converting a portion of the cash value on a life insurance policy into a long-term care policy.

One listener of our radio program recently asked us to outline the pros and cons of converting a portion of his universal life policy’s cash value to a long-term care policy. It’s a topic that’s rife with complexities, and we wanted to clarify what you need to know before utilizing this strategy.

An Overview of Universal Life and Long-Term Care Insurance

Before delving into the conversion, it’s important to first define these two types of insurance. Universal life insurance has a face value on the policy that will be paid out to your beneficiaries if you die. Unlike term insurance, universal life policies have a cash value within the policy. This cash value can be used to pay for premiums or for living expenses.

Universal life is sometimes thought of as being synonymous with whole life insurance. While both types of policies provide coverage throughout your entire life, there is a key difference between the two. Whereas whole life policies tend to have fixed premiums, universal life policies have flexible premiums. This means that you can pay premiums at almost any time and in almost any amount that you wish. Paying more into the policy can help bolster your cash value while underpaying could reduce coverage or even cause you to surrender the policy in extreme instances.

Long-term care insurance, as the name suggests, covers your medical expenses in the event you require long-term care. Expenses from a private nursing home, home health aides and hospice care are just some of the eligible expenses a policy can help you pay for. Furthermore, these are expenses that are not covered by Medicare, meaning unless you spend down your assets to an extremely low level to become eligible for Medicaid, you’ll have to pay for these costs out-of-pocket.

Should You Convert Your Universal Policy to a Long-Term Care Policy?

The question you’ll need to ask yourself when deciding whether to convert a portion of your cash value into a long-term care policy is whether life insurance or long-term care insurance is more important to you. In other words, do you want to have a larger death benefit, or do you want to have greater protection against potential long-term care costs?

If we had a crystal ball and could tell you for sure whether or not you’ll need long-term care, we’d be able to say with certainty whether the conversion is right for you. Unfortunately, the crystal ball isn’t a tool we have, which means you’ll have to balance the value of long-term care insurance with the cost of reducing the amount of life insurance you have.

Like many of the topics we write about, we can’t tell you definitively whether this is a strategy you should pursue; we would need to know your complete financial inventory and what your goals are in order to provide advice one way or the other.

What we can say is that insurance is an especially complex topic. If you conclude that the conversion makes sense for you or if you want a second opinion when evaluating this strategy, it’s a good idea to talk with an experienced insurance specialist who can help you find the policy—and the decision—that’s right for your family.

This article originally appeared on November 13, 2016 in the Brainerd Dispatch.