First, what is a hybrid long term care policy? A hybrid policy can be a combination of life insurance (or an annuity) and long term care coverage all in one policy.
Some of the main bullet points when combining Life and Long Term Care coverage (Hybrid type policy):
- One reason that Hybrid's may appeal to many folks is that their premiums are locked in and won’t increase. With a Hybrid type policy, you can rest assured that you will have level premiums throughout your entire policy, with no increases.
- Hybrid policies pays for Long Term Care if you need it, a death if you don’t need it, or both if you only need a limited amount of care. However with traditional Long Term Care insurance, many people feel like it is a “use it” or “lose it” situation. If you paid premiums for decades, and you never had to use the long term care benefits, then finally you passed away your loved ones would not have anything to show for for all that money you invested in that traditional Long Term Care policy over the years. However with a Hybrid Life Insurance / Long Term Care insurance policy any Long Term Care coverage not used remains in a death benefit pool, so you don’t "lose it!" For example, if you have a $250,000 death benefit and only use $50,000 for Long Term Care, the remaining $200,000 goes to your beneficiaries as a tax free death benefit when the insured passes away.
- Benefit period can be lifetime! (Rather than just a set small number of years in a traditional long term care insurance policy.)
- Some Hybrid policies allow you the option to cover “both” spouses in the same policy.
- Hybrid policies are ineligible for Long Term Care Partnership Program (Medicaid Asset Protection).
- Generally Hybrid Insurance premiums are higher than traditional Long Term Care Insurance. However the reason is because you have a death benefit and you can also have more flexibility, such as some Hybrid policies let you cancel and get all your premium money back later on down the road if you no longer want to keep the policy!
- Hybrid policy generally don’t allow for an inflation option in the original policy, but can have that inflation option in lifetime rider. (Which is not the same.)
Some of the main bullet points for Traditional Long Term Care Insurance:
- Pays for Long Term Care if you need it (and qualify for it.)
- Premiums are subject to increase with approval from your state’s insurance commissioner.
- Shorter Benefit periods, usually limited to maximum of 5 years.
- Traditional Long Term Care insurance policies are eligible for the Long Term Care Partnership Program (Medicaid Asset Protection).
- Generally traditional Long Term Care Insurance initial premiums are lower than Hybrid policies for the same amount of coverage.
- If you don’t use the Long Term Care insurance, you lose the premiums you paid in over the years. (Similar to a home owner’s policy, if you never had a claim.) There is no death benefit to your survivors such as there is with a Hybrid type policy.
To read one of my related blog posts, click on web link below.
Long Term Care Insurance - Hybrid Advantages
Contact me at (941) 404-5334 to discuss your long term care options and/or get you started on the right track of getting yourself insured.