If you or your partner need long-term care as you age, having a hybrid long-term care life insurance coverage could be a big help. The cost of long-term care is staggering — even for assisted living — so having a plan in place to pay for it financially is a good idea.
What is hybird long-term care policy and when does it “kick in”?
A hybrid long-term care policy is a combination of traditional life insurance and long-term care insurance. It is basically a rider (add-on) purchased at the time the individual buys a life insurance plan. It gives the insured access to the death benefit amount of the insurance policy to pay for assisted care activities once two of the insured’s Activities of Daily Living (ADL) are impaired. ADL’s include eating, bathing, dressing, toileting, transferring and continence. It also includes cognitive impairment.
If you get a long-term care policy, you will pay a monthly premium that will build up over time. However the monthly premiums will stop once the claim has been established. This long-term care insurance money can be used to pay for care at the end of your life.
Keep in mind that there are two types of long-term care insurance. You can get a policy that will pay for all of your car no matter where you get it or another policy that will pay for only your nursing home costs. Most people get the latter because it is usually less expensive and is designed to cover the costs that the insured will probably face in his or her later years.
How long does the hybrid long-term care policy last?
After the trigger event (losing 2 of the 6 ADL’s) then the insured can start a claim to receive the benefit. The insured’s condition does not to be permanent to receive the benefits. The insurance company usually requires the client to recertify annually with his or her doctor to make sure the condition still remains. Individuals can go and off a claim. If the insured recovers and later his condition is triggered again the insured can then start a new claim. The monthly benefit reduces the death benefit dollar for dollar until the insured passes, recovers, or goes off the claim. Any remaining death benefit will go to the his or her beneficiaries. However, if the death benefit is depleted the policy will end.
Most long term care riders must be added before the issuance of a life insurance policy. However, we do provide a carrier that will allow limited coverage to be added to a current life insurance plan. Not all life insurance plans are built the same, nor are all life insurance agents. Is important to talk to someone that understands your goals and design a plan custom for you and your family. Contact us at 248-362-1313 or submit the form below.
