Hybrid Life Insurance Policies for Long-Term Care

When planning your future, it’s important to consider long-term care as an essential part of your financial future. One of the biggest hurdles to people getting the care that they need once they’ve been disabled or are suffering from a chronic illness is that there aren’t enough funds to cover the care required. That’s why it’s vital to protect yourself and the financial future of your loved ones by considering long-term care insurance and care options.

Traditional long-term care insurance policies have decreased in popularity as of recently, mainly due to companies pulling out of the marketplace. However, a different method of obtaining long-term care has emerged as more popular. The hybrid life insurance and long-term care insurance policy has increased in popularity significantly over the past few years. In 2017, this type of policy increased by 5% to 260,000 policies nationwide, compared to only 70,000 long-term care policies sold that year. While these numbers show the increase in popularity of these types of hybrid policies, what exactly is a hybrid policy?

Hybrid Life and Long-Term Care Insurance Policies

There are two main types of hybrid-based life insurance. The first is linked-benefit products, which are more like traditional long-term care policies and can be marketed that way. The second is an accelerated-death rider, which cannot be marketed as long-term care insurance but the benefits can be used long-term.

The accelerated-death rider may be included with a policy, but it may require an extra charge, so it’s important to ask your insurance provider. The policy can never pay out more than the life-insurance death-benefit face amount, and the amount of money that is paid out before death depends on factors such as age, gender, class of policy, interest rate, and death-benefit amount. Benefits received are usually income tax-free, but may not exceed HIPAA daily limits.

These accelerated benefits for chronic illness will be paid by an indemnity payment, or a cash payment either daily or monthly. Cash payments make these policies attractive to those who would rather have the cash to pay for care over a straight reimbursement.

Chronic Illness Rider

To be considered chronically ill and therefore eligible for the benefits of this rider, you must be diagnosed by a licensed health practitioner as unable to perform two or more daily tasks, be severely cognitively impaired, or equally disabled. The daily tasks that are considered for a chronic illness diagnosis are eating, toileting, transferring, bathing, dressing, continence.

Long-term care is critical, and so is planning for the future by having the finances to afford care. In-home caregiving may be the most comfortable way for you or your loved one to live if you need daily assistance, rather than being forced into a nursing home, but providing the resources to obtain this type of care starts early.

At 24/7 Nursing Care, we bill most long-term care insurances on our clients’ behalf as part of our administrative services. Contact us to learn more about our payment options. (855) 687 – 7344

References:

Hopkins, J. (2018, October 10). Hybrid Life Insurance Policies Increasingly Popular As Long-Term Care Funding Strategy. Retrieved from https://www.forbes.com/sites/jamiehopkins/2018/10/10/hybrid-life-insurance-policies-increasingly-popular-as-long-term-care-funding-strategy/#476804081efa