HYBRID LONG-TERM CARE INSURANCE PLANS
Hybrid Long Term Care Insurance Defined
For people concerned about their long-term care needs but not convinced traditional policies are the solution, there’s a newer insurance option gaining popularity. They’re also called “hybrid products” and typically combine long-term care benefits with a life insurance policy or an annuity.
How can We Purchase Hybrid Long-Term care Insurance?
Hybrid long-term care insurance can be purchased using the cash values of existing life insurance or annuity contracts without incurring a taxable event.
Life insurance’s death benefit may be a very high priority for your family right now. But over time, your need to replace income will likely diminish, and the need to pay for long-term care may become a higher priority. These policies allow you to serve both needs with one policy.
In short, you’d buy a life insurance policy or an annuity, but the contract would also include long-term care coverage as a secondary benefit. If a need arises, you can access the policy’s long-term care benefits to pay for long-term care services. If you never need long-term care, hybrid policies have a death benefit that transfers to your beneficiaries. You can also decide to use the accumulated funds to generate income. The choice is yours.
Advantages of Hybrid Long-Term Care Policies
- Can be issued to “uninsurable” individuals (annuities)
- They have death benefits if the insured never requires long-term care services
- Can be purchased using other appreciated life insurance and annuity contracts without incurring taxable events
Disadvantages of Hybrid Long-Term Care Policies
- Premiums are not tax deductible
- Lower initial benefit when compared to traditional long-term care
- More expensive per-dollar of benefit that traditional long-term care
- Not eligible for State “Partnership” Plans
