What is a Hybrid Long Term Care Policy?
Frequently, I am asked what is a hybrid long term care policy. Often times that question comes
up when I am asked “What if I never use long term care.” I will answer that in this blog.
A hybrid policy is a combination of a universal life insurance policy and a long term care policy.
Most often a single premium is paid. Based on the age of the insured, the sex and health of the
insured, and the amount of the premium paid, the death benefit of the life insurance contract is
calculated. The same premium amount is used to calculate the long term care benefit.
The insured can use either the life insurance or the long term care or both for the same premium.
Obviously, the death benefit pays only when the insured dies. Let’s look at the long term care side. When the insured needs assistance with at least two activities of daily living, she/he is eligible to receive long term care benefits. If all of the long term care benefits are used, the life insurance benefit also has been used. Only one premium amount was paid and was used by the long term care side. In some policies there may be a reduced death benefit.
When a portion of the long term care account is used, a portion of the life insurance remains.
That calculation of the remaining death benefit is done when the insurance stops using the long term care benefit.
If ever the insured decides that they no longer want life insurance nor long term care insurance, they can request that the premium be returned, less any benefits that had been paid. One of companies will charge a surrendered fee if the policy is surrendered within the first 14 years, Hybrid policies meet the needs of many people who want the assurance that they will collect on their premium either for long term care or at death.