No one wants to pay for something and possibly never use it. Hybrid long term care insurance gives consumers a way to insure themselves against long term care costs as well as leave their family a benefit if they don’t end up needing care.
Simply put, a hybrid policy is a combination of life insurance and long-term care insurance.
Hybrid long term care insurance is commonly referred to as a live, die, or quit policy. This is because it will provide benefits no matter what you do. We break down those benefits below.
Long Term Care: Life Insurance, Lifetime Coverage, and Guaranteed Premiums
Hybrid long term care insurance has the ability to turn on a stream of income exactly when you need it. If you don’t need care, your loved ones get a sum of money (usually a life insurance payment) when you pass.
Live: Hybrid long term care benefits while you are living
It is projected that 70% of the people turning 65 today will need some form of long term care services in their lifetime. Medicare does not pay for this care; you need specific long term care insurance or a plan for self-insurance.
The largest benefit hybrid long term care insurance is going to provide you is while you are living. If you use a hybrid for long term care expenses, you are going to get a great deal.
With most hybrid policies, the available long term care benefit is going to very much exceed the life insurance benefit.
There are many different hybrid long term care policies which all vary in benefits. You can choose how you pay for the policy, from a lump sum to payments spread out over a set number of years.
You can choose based on the waiting period, some policies even offer a 0 day waiting period so the policy would start paying the first day you needed care.
You can choose based on how long you want the benefit period to be.
Hybrid long term care premiums tend to remain stable since most of these policies are paid up front or over a short period of time.
Hybrid long term care policies are also easier to qualify for as the underwriting tends to be less strict.
Die: Hybrid long term care benefits after you die
If you die before using the full value of the hybrid policy on long term care costs, your policy turns into life insurance and your family will be left a death benefit.
The amount of the death benefit is going to depend on how much you have used before you pass. If you have not needed any long term care, your family could get a very substantial benefit.
Hybrids are able to insure you against living too long and needing long term care, or dying too soon and leaving your family without money to pay the bills.
Do know, if you really need or want to leave a death benefit for your heirs, the long term care pay-outs from a hybrid policy could completely wipe out your death benefit during your lifetime. You should look into a true life insurance policy as well in this situation.
Quit: Hybrid long term care benefits if you cancel the policy
Most hybrid long term care insurance policies are going to have a provision where if you decide you no longer want the policy, or you want to “quit”, you are able to get your initial premium back.
When signing up for a policy, make sure to review their quit provision with your agent.
There is no “use it or lose it” with hybrid long term care insurance. No matter what happens, you or your family will get a benefit.
Not all hybrids are created equal. Because of the creative nature of the product, every company’s offerings can vary dramatically. Make sure to work with a broker who sells multiple hybrid policies so you can make sure you get the one that will fit your life.
If this sounds like something that would work well in your financial plan, contact Cardinal and we can get you started with comparison rate quotes for different hybrid policies!
If you want some price examples of hybrid long term care insurance policies, you can see those here.
