What is Hybrid LTCI?

As we go through life, it is most common for us to think about what our retirement life will look like. What will we do with all that time on our hands? What will we be able to afford when we are no longer working and provided a steady income from our 9-5? How much do we need to set aside for our retirement? The questions about retirement can go on and on, but a big question we need to ask ourselves and prepare for is, “what if I need long term care?”. About 70% of people aged 65 and older need some form of long term care, and only 40% of total Americans own a long term care policy. Think of how many people are currently in long term care facilities or receiving some form of long term care and don’t have a policy in force to help them cover the aforementioned costs. Could you or your family handle this additional expense for 3+ years, because that is the average length of time that people need long term care services. If your answer is no, maybe, or I’m not sure, then you are in the right place to figure out how to cover those possible future expenses.

Hybrid long term care insurance (LTCI) is a Whole Life Insurance policy coupled with a Long Term Care benefit and is a cost effective way to cover long term care expenses and protect your assets and investments. Most of us don’t have the funds to pay for a hybrid policy lying around in our savings account, but there are many ways to fund this type of policy. Spending a small portion of your investments now can protect your assets from losing hundreds of thousands of dollars in the future. At age 45-55 you will continue working another 10-20 years before you decide to retire. That’s plenty of time to recoup a small portion of your retirement savings and set yourself up for the best possible retirement future! 

We work with all of the top rated long term care insurance providers and can provide a few different styles of hybrid LTCI quotes. This style of policy is newer to the market but has cutting edge features that are only improving as they gain more popularity. The best part about hybrid LTCI policies is that they get rid of the “use it or lose it” mentality that standard LTCI policies use. With that, they have much more to offer when compared to standard LTCI policies such as a death benefit, cash value and more! Let’s take the companies that offer cash indemnity for example, you can avoid the headache that comes with reimbursement plans and have your monthly benefits paid directly to you in the form of a check to be spent as you see fit. Yes you read that right! No receipts, no covering costs up front and waiting for the reimbursement and best of all, no exclusions for what they will cover in terms of your care costs. What we mean by that is that once your physician has verified that you need long term care, you make your claim and get a check. It’s as easy as that! You can choose to have your check made out to you, a caregiver, or family member and then divide the funds as you see fit. If you only use a portion of your monthly benefit to pay for care costs then you can stash away the remainder in a savings account for future care needs. 

There are many benefit rider options that you can add to these policies but we put an emphasis on the inflation protection rider. As you will see on our Long Term Care Costs page, the cost of care continues to rise as the need for care rises and with people living longer, this is something you can count on for the foreseeable future. A 3% compounding inflation protection rider is a safe option to combat the rising costs of long term care services. When you talk with one of our brokers, ask about inflation protection options that are offered in your state from the different companies as it is not consistent between all states.

There are many questions that come to mind as we begin our journey researching long term care; and most of those questions involve how to finance the costs of long term care. As you may or may not know, long term care costs can range from as low as $2,500 a month up to $10,000 a month as an average scope, depending on the type and level of care being provided. These costs can be unmanageable for some and in turn can cause some families to rely on funding from their loved ones putting them in financial decline. Even then, if someone can afford these costs out of pocket, how much of your assets would you have to deplete in order to fund your long term care costs and where does that leave your loved ones after you pass? At PrepSmart, we will not only explain all the options available to fund long term care costs but also the difference in costs between those options and the differences in the benefits provided.