As explained in a New York Times article, “Hybrid Long-Term Care Policies Provide Cash and Leave Some Behind”, rising costs of long term care are providing greater incentive to consider long term care insurance. A recent nationwide survey by Genworth found that nursing home costs average $90,000 a year for a private room. These high costs can quickly deplete a lifetime of accumulated assets. However, due to the cost of long term care insurance, consumers are finding hybrid long term care policies are more appealing.
Hybrid long term care insurance policies are becoming popular because they include greater flexibility in addition to protection from costs of long term care. After paying a lump sum premium, the owner of such a policy can tap into the insurance for long term care (if needed) and then pass on what is left to their heirs. Unlike traditional long term care insurance, the money is invested and grows with interest. Many hybrid plans have surrender periods that limit access to the money for a certain number of years. This type of policy is a triple threat investment; fixed-income investment, long term care insurance and life insurance.
These policies have grown significantly in popularity with sales doubling since 2008, reaching about $2.4 billion in 2015. Comparably, only $300 million stand-alone long term care policies are sold annually.
You can be denied coverage (another incentive to apply early in life). Insurance companies will review your medical history for chronic diseases – this is an obstacle for those with chronic conditions who probably need coverage the most.
Before deciding on a policy be sure to consider all of your options. Meet with an experienced advisor to determine what is best for you.