Hybrid Coverage – Life Insurance Plus Long-Term Care Insurance

Consider this: about 70% of Americans will require long-term care, long-term care facilities cost between $80,000-$150,000 annually, and the average stay is approximately 3 years. Those figures all add up to one thing; it’s time to consider a hybrid insurance policy.

Hybrid policies are a combination of long-term care insurance and life insurance where the policy covers long-term care expenses that regular health insurance or Medicare won’t cover by supplementing with the life insurance death benefit. If care is never needed, then the death benefit will be paid in full to the beneficiaries at the time of death. Because of this dual usage of the death benefit, the policyholder is guaranteed to always get their money back whether they need care or not.

Combination products have a variety of benefits:

  • Depending on the policy, premiums can be paid over the policyholder’s lifetime or for a more limited time-period, say 10 years, or even as a single payment.
  • A monthly cash benefit is the most flexible type of claims payment and allows the policyholder to use the funds without restriction.
  • The policy’s death benefit will be reduced — which means less money for your beneficiary — according to how much of the long-term care benefit you use. However, some policies guarantee a small percentage of the full death benefit, such as 10%, even if you use all the money allocated for your long-term care needs.
  • The policy can be a good investment if you otherwise would have spent the money or kept it in a low-yield account.
  • You won’t have premium hikes when you pay with a lump sum, and a policy with a limited number of payments might even guarantee the premiums will stay the same.
  • There’s a money-back guarantee with some combination policies. The insurance company will return a percentage of your premium if you decide you don’t want the policy after a certain period of time.

If hybrid coverage sounds like what you are looking for with your insurance plan, it’s time to talk. We understand these products and can compare them to stand-alone long-term care and life insurance options, so give us a call.

https://www.nerdwallet.com/blog/insurance/combine-life-insurance-long-term-care

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