Hybrid Life/ Long-Term Care Insurance

Hybrid Long-Term Care Insurance Policies have become a popular form of insuring long-term care expenses. One reason is that Hybrid Long-Term Care insurance policies, are not “use it or lose it;” there will always be a Death Benefit unless long-term care benefits equal to the Death Benefit have been paid out. Another attractive feature of a hybrid policies is that premiums are often guaranteed to never increase, though the Death Benefit may be reduced after a certain age.

Hybrid policies are often referred to as Asset-Based long-term care insurance. There is a life insurance policy behind the Long-Term Care insurance. Hybrid LTC policies are linked benefit insurance policies. The way this works is that you have a life insurance benefit for when you pass, but if you have long-term care expenses, you can accelerate your life insurance benefit to pay for long-term care needs.

Two Types of Hybrid Long-Term Care Insurance Policies
  1. The first type of Hybrid Long-Term Care Insurance policy operates like a traditional long-term care insurance policy. You qualify for benefits if you need assistance with two activities of daily living: bathing, dressing, eating, maintaining continence, toileting and transferring. You can also qualify for benefits if you have a cognitive impairment like Alzheimer’s or Dementia.
  2. The second type of Hybrid Long-Term Care Insurance policy is more flexible. To qualify for LTC benefits, all you need is for a doctor to confirm that you need assistance and have a chronic condition.

Both types of Hybrid policies are permanent life insurance policies. You can pay single premium, ten-pay or life pay. One reason these policies are popular is because, in certain situations, you can guarantee that the premiums will never increase.

Generally, the monthly long-term care insurance benefit is anywhere from 2% to 4% of the life insurance benefit. The amount of long-term care insurance benefit you use is subtracted from the life insurance benefit and that is what your heirs or estate receives.

Some Hybrid Long-Term Care Insurance policies offer full return of premium after premiums have been paid for five years.

Some Hybrid policies also have an Extension of Benefits option. An Extension of Benefits option allows you to increase your benefit payments for an additional 2 or 4 years, extending your total benefits up to a maximum of 7 years.

Long-Term Care insurance benefits can be paid on either a cash indemnity model or on a reimbursement model, depending on the Hybrid policy.