May 2021 Issue: Hybrid Policies Offer a way out of the Long-Term Care Conundrum-Hybrid Policies Offer a way out of the Long-Term Care Conundrum by Alexandra Baig

Hybrid Policies Offer a way out of the Long-Term Care Conundrum by Alexandra Baig

Pdf Summary

Hybrid policies provide a solution to the conundrum of long-term care insurance. Stand-alone long-term care insurance can be expensive, especially if you require significant care over an extended period. Premiums can also increase unexpectedly. Hybrid policies, on the other hand, combine features of both life and long-term care insurance.<br /><br />There are two basic variations of hybrid policies. One provides long-term care coverage with a death benefit if the coverage is not used. The other is primarily designed as permanent life insurance but includes a rider that allows the policyholder to access the death benefit to pay for long-term care expenses.<br /><br />These hybrid policies offer advantages over stand-alone long-term care insurance. For example, if someone qualifies for long-term care at age 78 and lives to age 100, they could benefit from over $2 million in long-term care coverage. <br /><br />Two examples are provided to illustrate how hybrid policies can work. In one case, a single client purchases a whole-life insurance policy with long-term care benefits to protect her savings and legacy without wasting money. In another case, a couple uses withdrawals from an IRA to fund premiums for a second-to-die life insurance policy that provides long-term care coverage to both of them.<br /><br />Asset-based long-term care policies, such as hybrid policies, are considered the most cost-effective way to cover severe or extended long-term care events. These policies allow individuals to set aside funds for long-term care without losing the funds if they are not needed.<br /><br />Overall, hybrid policies provide a way to address the risks and costs associated with long-term care while offering additional benefits and flexibility compared to stand-alone long-term care insurance.

Keywords

Hybrid policies

Long-term care insurance

Stand-alone insurance

Premiums

Death benefit

Permanent life insurance

Rider

Advantages

Asset-based long-term care policies

Flexibility