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Comparing Traditional or Hybrid Long Term Insurance Policies

Two types of long term care insurance policies:


Traditional Policies
Hybrid Linked Benefit Policies



It is important to understand the differences of the two types of policies to determine which approach is best suitable for your needs.

Traditional Long Term Care Insurance

With a traditional stand-alone policy, you elect your benefits at the outset:


Monthly Benefit ($3,000-$15,000)
Benefit Period (2 years, 3 years, 4 years, 5 years, 6 years, 8 years, 10 years, Unlimited) (Individual or Shared)
Inflation Protection (3% Compound, 5% Simple, 5% Compound)
Waiting Period (30 Days, 60 days, 90 days)


Your policy can be custom-tailored to suit your needs.

Your premium is guaranteed renewable.  Premiums are typically paid on a monthly, quarterly, semi-annual or annual basis.

As long as you pay your premium, you will have coverage in-force.

Long term care insurance policies are similar to your auto insurance, homeowners insurance, and health insurance.  There is no cash value.

As with your auto or homeowners insurance, if you do not make a claim on your policy you will not receive any benefits (actually a good thing).

Because this traditional insurance utilizes a "pay-as-you-go" approach your premium is typically affordable and attainable.

Most importantly because traditional policies are able to be customized.  You are able to design the policies to account not only for your current needs but also to account for future inflation .

If inflation protection requirements are met, traditional policies will also offer you Medicaid asset disregard benefits through your State Long Term Care Partnership Program.

With this traditional insurance, your premium may be subject to a rate increase although there are a few highly rated companies that have never once requested a rate increase on any active policyholders-Mass Mutual, for example.  

Hybrid Long Term Care/Life Insurance Policies

Traditional "pay-as-you-go" policies are just one avenue for you to explore when you are considering your planning needs.

Additional planning options for you to consider are "linking" your long term care benefits to additional insurance benefits such as a paid up life insurance policy or an annuity, for example.

Unlike traditional policies that have a small premium "pay-as-you-go" approach, hybrid linked benefit insurance policies usually are funded with a one-time single premium up-front such as $50,000 or $100,000.

Many hybrid policies also provide you the ability to elect your long term care insurance benefits at the outset, i.e. monthly benefit, benefit period, and inflation protection.  The waiting period will be fixed by the insurance company, however, typically 90 days or less.  

The appeal of hybrid long term care life insurance policies  is that you are guaranteed to receive your premium back should you never need to receive long term care.

Also, premiums with hybrid LTC policies are fixed, and are guaranteed to never be increased.

Hybrid long term care policies will:


pay for your costs should you receive care
provide your estate a tax-free life insurance benefit should you not need care
offer you a 100% money-back guarantee should you change your mind


For example, you may have already set aside $500,000 in your savings should you need long term care. Let's presume you are a 60 year old female. As an alternative to self-funding your needs, you could choose to move $100,000 of the $500,000 in your savings into a linked-benefit policy. In doing so you could receive:

•$500,000 of long term care benefits ($7000 month for 6 years) should you need care
•$165,000 tax-free life insurance benefit to your beneficiaries should you not need care
•$100,000 returned to you should you change your mind

Hybrid insurance policies may be worthwhile for you to consider if you have liquid assets generally not needed for retirement income that can be easily re-positioned.

Hybrid policies do not offer State Long Term Care Partnership Protection.