Long-term-care insurance has become increasingly popular as more and more individuals wish to plan for their extended lives. Another type of insurance that is growing in popularity seems to be Hybrid policies as they are also being used as an estate-planning-tool. In fact, recent studies found that Americans today are most interested in hybrid policies.
The reason for this shift is likely due to the shift in insurers target market. When LTC insurance was first introduced in the 90’s, the target market for insurers was the middle class American families. The goal was that these policies would hopefully save the average American from exhausting their life savings on care. The concept is undoubtedly a great option for some but the issue lies in what happens if you end up not needing coverage or only needing a small amount? Many insurers currently lack of premium returns in policies and perhaps this has led to the decline of interest in these types of policies.
Fast forward to now when insurers now recognize some of their greatest opportunities as the upper class American families. You should note that many of these people are able to afford traditional policies however, see greater value in purchasing policies to protect their estates
Hybrid policies offer long-term-care benefits in conjunction with potential death benefits in the case LTC isn’t needed. Meaning, most policies will pay out 10-20% of the original death benefits even if LTC proceeds are fully utilized. In conclusion, yes you are putting forward a lot of monthly income for these policies however, you are truly only paying a small portion in the case that LTC is needed and in the case it isn’t, you are able to stop your policy without losing much of the money put into it. A hybrid policy is great for those who recognize the need for LTC insurance and don’t want to risk the chance of rising premiums in the future. As with Hybrid policies, it is guaranteed that rates will never change or increase.
If you wish to invest in your long-term-care, its is highly recommended you look into hybrid policies, ensure your policy has the option of “opting out” and premium returns in the case LTC isn’t needed.