In a Forbes article titled: “Hybrid Long Term Care Insurance Policies”, author Wade Pfau discusses how concerns about traditional policies long term care insurance are being addressed by utilizing an asset-based approach to fund long term care. As we have discussed in past blogs, this new approach typically combines funding long term care coverage with life insurance or an annuity.
A long term care policy bundled with a whole life insurance policy provides a death benefit which can be accelerated for long term care expenses. An optional continuation of benefit rider can provide for the long term care benefits to continue even after the death benefit has been paid. Similarly, an annuity bundled with long term care benefits combines a deferred annuity with long term care protection. A continuation of benefits option is also typically available.
Consider a basic example of how a hybrid policy may be structured. A one-time $70,000 premium is placed into a life insurance contract that provides a $125,000 death benefit. This death benefit can be spent on qualified long-term care expenses. The unused cash value of the contract can remain liquid (after surrender charges) while growing at a modest rate.
These hybrid long term care insurance policies are providing consumers with significantly better options for protecting their estates from long term care expenses than traditional policies. Contact an experienced elder law attorney to consider what option is best for your situation.