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 long term care insurance policy, you elect your benefits at the outset:
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 long term care insurance policy you will not receive any benefits (actually a good thing).
Because traditional long term care insurance utilizes a "pay-as-you-go" approach your premium is typically affordable and attainable.
Most importantly because traditional long term care insurance 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 long term care insurance policies will also offer you Medicaid asset disregard benefits through your State Long Term Care Partnership Program.
With traditional long term care insurance, your premium may be subject to a rate increase.
Traditional "pay-as-you-go" long term care insurance policies are just one avenue for you to explore when you are considering your long term care 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 long term care insurance policies that have a small premium "pay-as-you-go" approach, hybrid linked benefit long term care life insurance policies usually are funded with a one-time single premium up-front such as $50,000 or $100,000.
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 long term care life insurance policies are fixed, and are guaranteed to never be increased.
Hybrid linked-benefit long term care insurance policies will:
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 long term care needs, you could choose to move $100,000 of the $500,000 in your savings into a linked-benefit long term care 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 long term care life 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 long term care policies do not offer State Long Term Care Partnership Protection.
You have various options to consider when deciding upon long term care insurance. I will help you review and compare your rates, benefits and options with all of the traditional long term care insurance and linked benefit solutions offered by major top-rated companies such as Genworth, Mass Mutual, Mutual of Omaha, Lincoln Moneyguard, Pacific Life, Transamerica, Medamerica, State Life and more.
Please call me direct toll free at 800-891-5824 or complete my easy online quote request form.
I look forward to hearing from you.
Jack Lenenberg, J.D.