Hybrid Long Term Care Insurance

Eric Van Haaften Permanent Life Insurance

New hybrid long-term care insurance policies offer more flexibility by combining long-term care insurance with universal or whole life insurance.

Most insurance consumers typically look at life insurance coverage separately from stand-alone long-term care insurance.

The most significant risk of buying an individual long-term care policy is that you will never up in a nursing home or need home health care.

Learn how to eliminate this concern with hybrid long-term care insurance that will provide a death benefit and help pay for nursing care.

What is Hybrid Long-term Care Insurance?

A hybrid long-term care policy is a universal or whole life policy with a long-term care rider.

Most whole life and universal life policies are more expensive than term because of cash value accumulation and guaranteed death benefit.

The LTC rider grants you access to part of the death benefit to subsidize your nursing care if you can no longer care for yourself.

What does long-term care insurance cover?

LTC insurance pays for custodial and personal care costs that arise because of aging, chronic illness, disability, or injury.

This valuable insurance can help with the expenses incurred by staying in a nursing home, assisted living facility, and in-home care.

Hybrid life insurance ensures that the nursing expenses do not drain your estate so your spouse or children can still receive an inheritance.

If you do not ever need nursing care or do not use all of the benefits in your policy, your beneficiary will get the balance in a death benefit.

To activate the long-term care rider, you need to meet the definition of disability, which implies that you can not individually complete two of the six activities of daily living.

The six activities of daily living are bathing, eating, dressing, continence, walking, and using the toilet.

If you meet the definition of disability, the insurance company will typically begin paying you benefits after your policies stated elimination period has expired.

The conventional way policies benefits are paid through either reimbursement or cash indemnity.

Reimbursement – These policies will only include your specific expenses for long-term care services that qualify under your contract. You are required to submit monthly receipts and invoices for reimbursement.
Cash Indemnity – These policies pay out your total monthly benefit without utilizing your money. Once your claim is accepted, you are not obligated to present monthly bills and receipts.

Cash indemnity plans offer more flexibility and fewer paperwork headaches because you can use your money as you see fit without getting the nursing home’s approval.

Who Buys Hybrid Life Insurance?

Most people that buy hybrid insurance tend to be moderately wealthy seniors needing nursing home or death benefit protection. Some insurance companies will even sell policies to somebody up to age 85.

Affluent seniors can transfer a small portion of their assets into hybrid insurance to leverage a death benefit or need nursing care later in life.

Hybrid long-term care policies should be a crucial part of estate planning for every family with assets to protect.

Hybrid life insurance is an asset that can alleviate the risk of exhausting your savings to pay for care and eventually leaving more assets to beneficiaries.

The cost of nursing home care can be over $100,000 per year and can quickly drain all of a couple’s savings pretty fast.

You can scale premiums to coordinate with your desired budget and the benefits required for your family.

Interest in blending long-term care with life insurance has started to catch on with America’s seniors.

In 2021, 25% of older Americans surveyed said they would consider a life insurance policy with a long-term care component if they needed permanent coverage, according to LIMRA.

If you plan to purchase a hybrid policy, buying at your current younger age is beneficial compared to waiting until you get older.

If these policies seem complicated or you need to compare the plans side-by-side, request an immediate quote on our long-term care hybrid insurance calculator.

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Types of Hybrid Life Insurance

Policies that offer nursing care benefits are permanent life insurance policies, not term life policies. There are two popular forms of these life insurance hybrid plans.

Linked benefit LTC

A linked benefit LTC is a policy that links a life insurance policy with long-term care accounts for a majority of all new sales.

Depending on the policy, you pay one single premium or several significant annual payments over several years (often less than ten years).

We encourage buyers to compare policies entirely paid off in 1, 5, or 10-year payments.

These limited pay life policies are almost always guaranteed, meaning your premiums and benefits will not change in the future.

The benefits can vary by company, but a standard linked benefit equals approximately five times the premiums paid into the contract.

According to Market Watch, these policies are typically best for people with excess cash reserves because the average cost of long-term care insurance for a single-premium policy is $75,000.

Long-term care rider (LTC)

This living benefit rider allows you to add nursing home coverage to a contract when purchasing the life insurance policy.

These LTC benefits are not as hearty as a linked-benefit policy and are purchased when life insurance is more important than long-term care coverage.

The linked benefit and LTC rider will pay out by reimbursing the actual cost of care or an indemnity design that pays a definite cash benefit regardless of the exact care price.

With either model, a bucket of money is available for your long-term care, equal to several times your initial premium payments.

If you ever start using your long-term care benefits, the face amount of your policy is decreased, which means less money for your life insurance beneficiary.

Many of these contracts offer a minimum face amount or a percentage of the total death benefit if you use all nursing home care coverage.

Alternatives to Long Term Care Insurance

Annuities with LTC Benefits – Annuities can often payout at multiple premiums you’ve paid if you ever need nursing care.
1035 Exchange – If you are in good health and already have an insurance policy with cash values, you could transfer it to a hybrid long-term care policy using a 1035 exchange.
Cash Value – If you have an overfunded policy, you could use the cash value via loan or withdraw inside an existing policy to pay for long-term care.
Sell your policy – You could sell your policy to a life settlement company for an immediate taxable refund. Sellers usually net less than the face amount but more than the cash value.
Critical illness rider: If you have a term or permanent policy, you can use this rider to accelerate the death benefit to pay for care if you have a chronic illness lasting for the rest of your life.
Policy Loan: Older policyholders can borrow against their life insurance policy, knowing that the loan balance will be deducted from the death benefit when they eventually pass away.
Home Equity Loan or Reverse Mortgage – If you cannot qualify for coverage, home equity loans or reverse mortgages can help with nursing care.

Long Term Care Insurance Companies

We use a comprehensive process when shopping for hybrid long-term care insurance providers.

We try to measure the pros and cons of each hybrid insurance product to find the best carrier in America.

Financial ratings for life insurance companies are also relevant when selecting a life insurance provider for our clients.

We monitor life insurance companies’ financial strength and claims-paying ability using various rating agencies like A.M Best, S&P, Fitch, and Moody’s.

The best hybrid life insurance long-term care policies offer a combination of ratings, product design, underwriting fairness, and reasonable rates.

John Hancock Hybrid LTC

John Hancock offers a rider that can be added to your life insurance policy to provide long-term care benefits if needed.

The John Hancock Hybrid Long Term Care Insurance plan has combined universal life insurance that protects you if you need nursing care at home or in a facility.

The customizable LTC rider offers flexible nursing coverage and death benefit protection. The John Hancock plan emphasizes life insurance more than long-term care benefits.

John Hancock is a well-known, and highly rated insurance company rated A+ by A.M. Best.

lincoln national long term care insurance

Lincoln Hybrid Long Term Care Insurance

The Lincoln Moneyguard product is a universal life insurance policy with an LTC rider to reimburse you for qualified long-term care expenses.

This reimbursement policy will require you to submit receipts back to the insurance company.

Lincoln offers a monthly benefit for home health care, assisted living facilities, adult daycare, or nursing home care.

If nursing care is not needed, the plan will pay a tax-free life insurance benefit to the beneficiary.

Lincoln will only ask you to perform a phone health interview with no medical exam required.

Lincoln National Life Insurance Company has excellent financial strength ratings from all the major rating agencies.

Nationwide Cash Indemnity Long Term Care

Nationwide is part of Nationwide Mutual Insurance Company and is A+ rated by the rating agency A.M. Best.

Nationwide’s CareMatters II provides policyholders with cash indemnity benefits that do not require paperwork each month documenting expenses.

Nationwide’s hybrid long-term care insurance policy is 100% guaranteed, death benefits cannot go down, and premiums cannot go up.

Your guaranteed universal life insurance death benefit will either amount to or even exceed the premiums paid into your policy.

Pacific Life Premier Care

Pacific Life offers a range of policies to choose from, making them one of the more flexible life insurance companies available.

This Pacific Life policy offers several benefits known as linked benefits under the Premier Care umbrella names.

These include long-term care benefits if care is needed, death benefits if care is not required, and a total premium money-back guarantee if you choose to cancel your policy.

The application process for Pacific consists of a telephone interview and a physician’s statement from your doctor.

Pacific Life has excellent financial ratings, having received a rating of A+ from A.M. Best, A1 from Moody’s, and AA- from S&P.

Applying for Hybrid Life Insurance

Getting a hybrid insurance policy can be easier than buying a traditional long-term care policy.

Older people with a few medical issues can qualify with companies that offer coverage with only the need to answer health questions over the phone.

The company’s underwriting is less stringent, and insurers tend to be more relaxed about the medical conditions they will cover.

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Buyer Tip

If your health is an issue, you might buy an annuity with a long-term care benefit because you will only have to answer a series of questions.

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Most competitively priced hybrid insurance is medically underwritten, so it is necessary to check whether you can qualify for coverage.

Younger people in good health will pay less for coverage when purchasing a policy that entails an exam and submission of doctor records.

Your medical profile and exam are submitted to several highly rated companies to determine which carrier would be willing to offer you the most competitive rate class.

Affordable Life USA can help you find the best hybrid life insurance long-term care policies from various companies in minutes.