Hybrid Life Insurance / Long Term Care Products - How Do They Work?
Life insurance is slowly becoming a popular way to solve for a long term care scenario. Clients like the idea of having some form of a death benefit combined with the ability to access the benefit for a long term care situation.
There are two methods to achieve this. The first is what the industry refers to as “hybrid” policies. In essence, these are universal or whole life insurance policies that function as base policies, and long term care riders are attached. These are unique in that most of these offer a single premium approach.
Another attractive feature is the “one and done” scenario. In these contracts you usually put in an initial lump sum investment, and it in turn, determines how much of a monthly long term care benefit you will have. Inside these policies, the life insurance can be organized to decrease over time, while the long term care need will have that portion of the contract increasing. These are great life policies for clients who have the liquidity and don’t want to pay continuing annual premiums.
One other feature in this approach is since these policies are life insurance based, they will never have an increase in premiums like traditional long term care products. One of the most attractive features to these contracts is the fact that the premium amount you put in is 100% refundable. Should you decide you want to walk away from the contract after 5 years, you have complete access to your initial investment.
This is a way to control your asset all the way through the process, solve for long term care, but potentially have a death benefit, should you pass away prematurely. The one down side to this approach is that you have to have the initial amount to invest into the contract. Clients can get turned off by traditional long term care products as they deem them as “use it or lose it” policies. These “hybrid” life insurance products could be the answer for clients who have this issue, while still getting them insured for their long term care needs.
There are many intricacies in navigating which policy is the right one for you. We are here and ready to help you through the process.
About the author: Mark Yurkovic has been in the life insurance business for over 12 years, and holds CLTC, LUTCF, and CES designations. He enjoys building remote control boats, and playing instruments including the piano, guitar, banjo, and mandolin. Mark would love to discuss life insurance options and work towards finding the best policy fit for your family. You can contact Mark at 1-800-651-1953 or MYurkovic@Pivot.com.