“What if you never need long term care?” is the biggest objection people have to purchasing Long Term Care Insurance (LTC).
People don’t want to buy it because they view LTC as a “use it or lose it” proposition according to most financial advisors. The premiums are completely lost if they never file a claim. The money is kept by insurance company.
The insurance industry has responded with the creation of Hybrid Long Term Care Policies. These are the fastest growing product in the marketplace. Sales of these policies grew 500% in the six years ending in 2016. In comparison, traditional LTC policies sales fell 19% in 2015 according to Financial Advisor Magazine, Feb 1, 2016.
In exchange for a single one-time upfront premium, you receive 3 guarantees:
- Long term care benefits if you need care
- Tax-free death proceeds if you pass away
- 100% Money Back Guarantee if you change your mind
These Hybrid products are ideal for utilizing cash that would otherwise be sitting in low interest bearing accounts, such as CD’s and money markets. The premium is completely refundable at any time should an emergency of some kind come up, but in the meantime you have LTC protection. In addition if you die, additional money is paid to their beneficiaries tax free.
Unlike life insurance policies with LTC riders, Hybrid LTC policies provide more LTC coverage for the same premium dollar. However, the death benefit is comparatively less. Also, the Hybrid policies appear to have better contractual definitions, making it easier to qualify at claim time. Benefit increases for inflation as well as spousal discounts may also be available on Hybrid policies.