LTC Hybrid Products Provide Attractive New Options

Some consider the cost of long-term care insurance to be high, and many people are reluctant to pay premiums for something they may never use. Yet the need has never been greater, and insurance companies are responding with creative new hybrid products–combining long-term care insurance with either a life insurance policy or an annuity.

What makes the hybrid product attractive?

If you don’t use the long-term care insurance, you can still benefit from the life insurance or the annuity.

• Depending on the carrier, the details of these products vary, but a hybrid life insurance policy enables a buyer to purchase a life insurance policy and use a portion of that policy for long-term care benefits, if it becomes necessary.
• Keep the rest as a death benefit that will be paid to the purchaser’s beneficiary.
• If long-term care benefits are used, the death benefit may be reduced.

A law passed in 2010 mandated that the premiums were excluded from the owner’s taxable income. This law clarified that the benefits, paid to an individual needing long-term care, would be income-tax free. A long-term care rider attached to an annuity or life insurance contract will not affect the tax-free nature of these contracts.

More detailed information: Download this 2016 Tax Summary: Tax Qualified Long-Term Care Insurance chart. Please check this and feel free to share! 

2016 Tax Sumary LTCI

Another benefit: relaxed underwriting

These new hybrid policies are especially attractive for people who may have previously been denied coverage for standalone long-term care insurance. The underwriting for these hybrid contracts differs from stand-alone contracts and is more relaxed.

In all cases, terms of these hybrid contracts can be complicated and the benefits can vary greatly. It takes careful analysis to determine if these hybrid products make sense for you.

Ask me about these new hybrid long-term care options for 2016. Carly Ebenstein@CJB Insurance Services: 510.342.2670