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Hybrid or Traditional Long Term Care Policies

Hybrid or Traditional: Two types of long term care insurance policies

It is important to understand the differences of these two types of policies to determine which approach is best suitable for your needs.

Traditional Long Term Care Insurance

With a traditional stand-alone policy, you elect your benefits at the outset:

  1. Monthly Benefit ($3,000-$12,000)
  2. Benefit Period (2 years, 3 years, 4 years, 5 years, 6 years, Unlimited) (Individual or Shared)
  3. Inflation Protection (3%, 4%,  5% Compound)
  4. Waiting Period (30 days - 90 days)

Your policy can be custom-tailored to suit your needs.

Your premium is guaranteed renewable, meaning that the insurance company may not cancel your coverage as long as you pay your premium.  Your premium is NOT guaranteed, however.  Your insurance company may request a rate increase if needed.  Premiums are typically paid on a monthly or an annual basis.

While most companies require annual premiums for life, there are 1-2 traditional LTC companies that will allow you to pay up your premium over 10 years and there is 1 company that will offer you as a single premium payment option. 

As long as you pay your premiums, you will have coverage in-force.

Traditional long term care insurance policies are similar to your auto insurance, homeowners insurance, and health insurance.  There is no cash value.

As with your auto or homeowners insurance, if you do not make a claim on your policy you will not receive any benefits (actually a good thing).

Traditional long term care insurance premiums are often affordable and attainable through this “pay-as-you-go”. approach.

Traditional LTC policies are able to be completely customized.  You may elect from a multitude of benefit periods, elimination periods and inflation protection options.

If inflation protection requirements are met, traditional policies will also offer you Medicaid asset disregard benefits through your State Long Term Care Partnership Program.

Traditional "pay-as-you-go" policies are just one avenue for you to explore when you are considering your long term care planning needs.

You may also consider hybrid long term care insurance policies, which are extremely popular today.

See Also: Shift To Asset Based LTC Market Expected To Grow

Hybrid Long Term Care/Life Insurance Policies

Hybrid long term care insurance policies combine your long term care benefits to a cash value policy such as a paid-up life insurance policy or an annuity, for example.

Unlike traditional policies that generally have a "pay-as-you-go" approach, hybrid asset-based insurance policies often are funded with a one-time single premium up-front such as $50,000 or $100,000, although the policies are becoming increasingly more flexible today with their funding options.  With many policies today you can also make installment payments over 5 years, 10 years, 20 years or to Age 95 or 100.

Similar to the design of traditional LTC policies, most hybrid long term care policies will provide you the ability to elect your long term care insurance benefits at the outset, i.e. monthly benefit, benefit period, and inflation protection.  The elimination period will be typically be fixed by the insurance company, however, usually between 0 days to 90 days.  

The appeal of the hybrid policies is that you are guaranteed to receive your premium back should you never need to receive long term care.

You avoid the inherent "use it or lose it" nature of the traditional LTC policies.

Also, your premiums with hybrid LTC policies are fixed, and are guaranteed to never be increased.  This is important because you want to be able to control the cost of your plan.

Hybrid long term care insurance policies will:

  • pay for your costs should you receive care
  • provide your estate a tax-free life insurance benefit should you not need care
  • offer you a 100% money-back guarantee should you change your mind

For example, you may have already set aside $500,000 in your savings should you need long term care.  

Let's presume you are a 55 year old female. As an alternative to self-funding your needs, you could choose to move $100,000 of the $500,000 in your savings into an asset based hybrid policy. In doing so you could receive:

•$500,000 of long term care benefits ($7000 month for 6 years) should you need care
•$165,000 tax-free life insurance benefit to your beneficiaries should you not need care
•$100,000 returned to you should you change your mind

Or you could elect to design an inflation adjusted policy that might leverage your $100,000 premium deposit into $1,000,000 of long term care coverage by the time your care is needed.

Hybrid LTC insurance policies will be very worthwhile for you to consider if you have liquid assets generally not needed for retirement income that can be easily re-positioned into the insurance policy.

Also, many hybrid long term care policies today are now designed with separately identifiable LTC premium components to afford you tax deductions.

Hybrid policies do not offer State LTC Partnership protection for Medicaid asset disregard benefits, however.

Is Nationwide CareMatters II your best cash indemnity hybrid policy?

Receive Independent Unbiased Objective Long Term Care Insurance Advice

You have various options to consider today when deciding upon long term care insurance solutions. 

I will help you review and compare your rates, benefits and options with all of the traditional and hybrid asset-based solutions offered by major top-rated companies such as Mutual of Omaha, Lincoln Moneyguard, Pacific Life, OneAmerica/State Life, Nationwide, Securian/Minnesota Life, Brighthouse Smartcare, Mass Mutual, Transamerica, Thrivent, John Hancock USAA, National Guardian Life and more.

Please call me direct toll free at 800-891-5824 or complete my easy online quote request form.

I look forward to hearing from you.

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Jack Lenenberg

Top LTC producer in the USA