Paying for care
Hybrid long-term care policy
A hybrid long-term care policy combines life insurance or an annuity with long-term care benefits. If the owner needs care, the policy pays for it. If the owner never does, heirs usually receive a death benefit. Many hybrids are bought with a single payment or a set number of payments.
Why it matters for your family
The Administration for Community Living and the NAIC, the group of state insurance regulators, describe the trade-off. Single-payment hybrids avoid the risk of future premium increases, but they need a larger upfront payment. Benefits paid for care reduce the death benefit. Ask whether the policy offers inflation protection and what care it covers at home. A common mistake is to compare only the premium. Compare the benefit pool, the waiting period, and the rules for filing a claim. A licensed insurance agent and a tax professional can explain the policy.
Source: acl.gov
Read more: 5 Myths about Long-Term Care
Related terms
- Long-term care insuranceLong-term care insurance is a private policy that pays for help with daily living when a person can no longer manage alone.
- Life insurance with long-term care riderA life insurance policy with a long-term care rider lets the owner use part of the death benefit while alive to pay for qualified care.
- Elimination periodAn elimination period is the waiting time in a long-term care insurance policy before benefits begin.
- Accelerated death benefitAn accelerated death benefit is a payment of part of a life insurance death benefit to the insured while still alive.
- Annuity for Medicaid planningAn annuity for Medicaid planning is a contract in which a person pays a lump sum to an insurer in return for a stream of income.
- Private payPrivate pay means a family pays for care directly from its own money.
