While we generally associate the word hybrid with cars, hybrid also evokes a strong image of fiscal and environmental responsibility. Interestingly, the hybrid concept has crossed over to the world of long term care insurance by responsibly combining Long Term Care and Life Insurance, providing an innovative financial twist for savvy consumers. The hybrids insulate consumers from premium increases and allow heirs of consumers who die without using their long-term-care coverage to get a partial refund of their premiums.
While the concept of refunds and rebates are enticing, let’s start by explaining the concept behind Long Term Care Insurance, more commonly known as LTC.
As medical advances have improved our chances for longevity, the probability of requiring assistance with activities of daily living, such as bathing and dressing and even skilled nursing care has increased as well. Statistically 70% of adults over the age of 65 will require some level of service at some time in their life. But when you may need services as well as for how long is an unknown. And the unknown is a huge risk. No matter how large your savings or how many family members are available to care for you, the financial costs and emotional toll of the unknown can be overwhelming and potentially unaffordable.
Most people assume long term care insurance is only for the 65+ population.
In reality, LTC is one way of helping you pay for chronic care due to illness, disability or injury at any age. Generally LTC insurance pays for services not covered by your healthcare insurance provider or Medicare such as a private duty aide or nurse, assisted living, adult day care, long term nursing home or memory care centers.
While LTC insurance sounds great in theory, you may wonder if it is a good investment.
What if you are one of the lucky ones who enjoys the “golden years” and lives to a ripe, old age without requiring assistance? That is the advantage of the hybrid. This innovative two-in-one package allows you the flexibility of using long term care insurance during your lifetime while paying out the unused potion to your beneficiaries as life insurance. An additional benefit is the premiums do not increase annually. Currently, LTC premiums have been increasing every year due to the increase in the number of consumers requiring services. The hybrid comes with a premium guarantee.
There are currently two hybrid choices: Life insurance policy with an LTC rider or the Linked benefit long term care policy.
The former is preferable if your primary concern is life insurance or leaving a legacy. If you are primarily concerned with long term care coverage, then the Linked benefit LTC policies may prove to be a better choice.
Of course, you can always opt for a third option, the traditional long term care insurance policy utilizing a “pay-as-you-go, use-it-or-lose-it approach.” Which is right for you will depend on factors including your net worth, your tolerance for investment risk, and whether you want two forms of coverage or just one.
Jeff D. Hackmeier LUTCF, CSA has been providing insurance solutions since 1978 and is also the endorsed agent for the Dade County Medical Society. To learn more about the hybrid insurance plan, please visit www.hackmeierinsurance.com or call (305) 893-4488.