“Today’s hybrid products are seeing significant traction with multi-pay designs that could potentially be extended as long as 20 years,” says Nash at Lincoln Financial. “Also, it’s worth noting that while the up-front costs for a hybrid may typically be higher than a traditional product, hybrids may be less expensive over the long term, as traditional products are subject to rate increases and their payments recur throughout one’s life. Hybrid rates are often guaranteed.”
Consider, too, that hybrids may not actually cost more overall because they guarantee some sort of payout—whether for LTC or as a death benefit. Clients can be sure of receiving something in return, which is not necessarily true of traditional LTC insurance.
If cost is a consideration, Kimberly Foss of Empyrion Wealth Management in Roseville, Calif., lists a number of ways to save. Some plans offer couples discounts, for instance. Some states are part of the federally mandated Long-Term Care Partnership Program, which rewards the purchase of private LTC insurance by making it easier to qualify for Medicaid. Also, Health Savings Accounts can be used to fund LTC policies, she says.
Not One-Size-Fits-All
“Hybrid policies can be tailored to meet consumers’ needs,” adds Chuck Piacentini, vice president of insurance regulation and associate general counsel at the Washington, D.C.-based American Council of Life Insurers. “There are a number of product options that enable consumers to build a product with benefits and premiums that meet their needs and their budgets.”
Still, the appeal of a hybrid policy as a simple way to cover all your bases at once can be deceptive. Most “do not leverage your premium dollar for LTC as much as pure LTC policies do, which is the main reason for acquiring LTC coverage,” notes Len Hayduchok, CEO of Dedicated Financial Services in Hamilton, N.J. “For some clients, getting the hybrid is putting one foot in the LTC pool,” he explains.
If clients truly want LTC insurance, he says, they should make sure the coverage is comprehensive. Otherwise they may be fooling themselves. Hayduchok prefers policies that guarantee lifetime LTC benefits, without a limited benefits period. That’s why, though he’s not big on life insurance with LTC benefits in general, he singles out one from State Life Insurance Co., a division of OneAmerica.
Dennis Martin, president of OneAmerica’s Individual Life and Financial Services unit in Indianapolis, says his company offers “many choices in benefit periods for hybrid LTC, including up-to-lifetime benefits. Clients can choose the benefit period they feel is appropriate based on their goals and their overall financial picture.”
Watch Benefit Limitations
But Aaron Schindler, a certified financial planner and geriatric care manager at Care Concierge NY in New York City, says it’s vital to be clear about payout dollars. “The benefit amount and period of an LTC life rider is usually dependent on the size of a life policy death benefit,” he notes. “Many LTC riders allow the period of coverage to grow [but] keep a lid on the amount of monthly benefit dollars.”