Traditional vs. Hybrid Long-Term Care Insurance Policies

 Traditional vs. Hybrid Policies

There are two basic types of individual long-term care policies currently available for purchase:  Traditional and Hybrid.

True to their names, Traditional policies are similar to long-term care policies that have been available for decades and Hybrid policies combine to meet more than one insurance need in one policy.

I currently offer both types of policies to my clients.  In order to decide which type of policy would work best in your situation, you must have an understanding of your specific needs, as well as how each type of policy might meet your needs.

Together, we can put together a policy that will meet your long term care needs in the most effective and affordable way.

Below is information about Traditional and Hybrid policies, including a basic description of each, the pros and cons of each, and how each type of policy addresses long-term care insurance needs.

Traditional Long-Term Care Policies

-With Traditional Policies, you purchase a policy to cover a certain amount of long-term care expenses and pay the recurring premium for as long as your policy remains in force.

-If you ever receive long-term care services, the policy will pay for those benefits up to the amount stated in the policy.

-Like your car insurance, if you die or cancel your policy before it pays any benefits, you will not receive any benefits from the policy.

-You can design your policy to fit your needs by choosing the amount of your monthly/daily benefit, the length of your elimination period, the length of your benefit period, and by deciding whether or not you want to include an inflation benefit.

 -The policies are Guaranteed Renewable.  Guaranteed Renewable is a specific term in the insurance industry.  It means that your policy cannot be cancelled by the insurance company as long as you pay your premiums on time.

-Guaranteed Renewable also means the insurance company can increase the premium amount charged for you policy.  Based on my clients’ experiences, premium increases have been one of the most undesirable experiences of having a Traditional Policy.

-If your policy qualifies under your state’s Partnership Program, your policy might allow you to protect a portion of your assets that you would typically need to spend down prior to qualifying for Medicaid coverage.

Hybrid Long-Term Care Insurance Policies

-Hybrid Policies combine long-term care benefits in the same policy with another type of insurance benefit, such as life insurance or annuity.

-If you ever receive long-term care services, the policy will pay for those benefits up to the amount stated in the policy.  It will do the same for life insurance or annuity.

-If you die before needing long-term care, the policy will pay the life insurance amount or the annuity amount, depending on which type Hybrid Policy you have.

-Like Traditional Policies, you can design the long-term care portion of the Hybrid Policy by choosing the amount of your monthly/daily benefit, the length of your elimination period, the length of your benefit period, and by deciding whether or not you want to include an inflation benefit.

-With a Hybrid Policy that includes long-term care benefit and life insurance benefits, you can choose your life insurance benefit amount as well.

-Hybrid Policies provide policies that cannot be cancelled by the insurance company as long as you pay your premiums on time.

-Hybrid Policies provide policies that have level premiums, which means the insurance company cannot ever increase your premium amount.

-Hybrid Policies allow for one time single premium payments to fund the policies or recurring monthly or annual premiums.  It’s your choice.

-With Hybrid Policies, you can receive your premium back if you do not use the benefits for long-term care.