Hybrid Life Insurance and Long-Term Care Products Eliminate Use-It-or-Lose-It Risk

Should you buy long-term care insurance? It’s a loaded question and the answer often requires tough conversations with your family about the future. You may also find yourself running financial scenarios to figure out if long-term care expenses are a risk even worth insuring against. Many of us prefer not to take the time to contemplate our eventual decline and the costs associated with it, so we simply do nothing. We are here to tell you that is a bad idea.

You’ve probably heard the daunting figures associated with long-term care: $100,000 or more each year for a high-quality assisted living facility or nursing home. If you think you can save money by staying in your home, think again. Twenty-four-hour nursing care can run more than $500 per day. Even if you can afford to self-insure, having some form of long-term care coverage means eliminating huge financial question marks. It could also mean passing more money along to your heirs because you didn’t have to pay out-of-pocket for several years of private care.

We have a solution that solves the main concern many people have when it comes to purchasing long-term care insurance: that it won’t ever be used. The “use-it-or-lose-it” problem can be eliminated by purchasing hybrid long-term care products. These policies, which combine aspects of life insurance, annuities, and long-term care insurance, ensure that you never spend money on a benefit you do not use but provide protection when you need it.

Hybrid Long-Term Care Coverage

Hybrid long-term care insurance can be in the form of a life insurance policy in which the death benefit pays out early, if needed, to cover long-term care expenses. Such policies typically pay a percentage of the face amount each month for long term care benefits as a tax-free advance of the death benefit. Should you qualify for those benefits through an inability to perform basic activities (such as eating or going to the bathroom,) the policy would reimburse you up to your maximum monthly benefit, regardless of what type of care you opt for, like a live-in aide, assisted living facility, nursing home, or some other, less typical arrangement.  

Some might point out that the premium payments for these hybrid policies tend to be higher than if you were to purchase traditional life insurance. However, that may not be as important of a concern when the policyholder or his or her beneficiaries are guaranteed to enjoy a benefit that they may otherwise not be willing to purchase on a stand alone basis. The truth is that the additional premium is rather minor considering the enhanced level of benefits provided. In cases in which the money isn’t needed for long-term care expense reimbursement, the life insurance policy retains the full death benefit.

Many of today’s state-of-the-art fixed indexed annuities also offer home healthcare benefits or confinement benefits. These benefits double your income on a guaranteed basis for a period generally up to five years if you qualify for the benefit. While they will reduce your contract value by the amount withdrawn, your future income guarantees remain intact. After the period expires, your guaranteed income resumes at the normal level for life.

Is A Hybrid Long-Term Care Product Better for Everyone?

As with most financial products, a hybrid long-term care product serves a purpose that works well for some but not for all. Hybrid long-term care may hit the spot for certain people, such as those who are on the fence about whether to get long-term care coverage. Others, such as a healthy, high-earning couple in their 50s, may determine that a traditional policy is affordable and more cost effective. And, if you’re a person with a large extended family that will reliably look after you one day when you are much older, you may not have as pressing a need for this type of insurance.

At Howard Kaye, our goal is to help protect and grow your legacy so that you can keep as much of your money as possible while alive, and then pass as much along to your heirs as possible after you’re gone. Planning for events, such as long-term care, is crucial in that process. Speak to one of our experts today by calling 800-DIE-RICH to determine if a hybrid long-term care solution may work for you.  

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