Traditional Long-Term Care Insurance v. Hybrid Long-Term Care InsuranceMany people entering their senior years expect to remain healthy and able to live in their homes for many years to come.   However, in reality, some people will experience age-related health challenges which will create the need for additional services such as nursing home, assisted living, or in-home attendant care.  To prepare for this possibility, it is a good idea to invest in long-term care insurance.  Another option is to purchase hybrid long-term care insurance which provides long-term care coverage in conjunction with a life insurance policy.  Here are some facts to consider about both choices:

Traditional Long-Term Care Insurance

A traditional long-term care insurance policy is designed to provide coverage for care which Medicare and other insurance plans will not address.  These policies usually cover the expenses associated with nursing home, assisted living, hospice, and personal attendant care.   In order to obtain coverage, you typically provide information about your health and lifestyle to an insurance company and, if approved, pay an annual premium.  These premiums tend to be expensive but can be well worth their costs if the policyholder finds themselves in need of this kind of care.  However, if the policyholder is fortunate and does not end up needing this coverage, they may have spent several thousand dollars for their policy which will not be returned to them.

Hybrid Long-Term Care Insurance Policies

An alternative to traditional long-term care insurance is a hybrid long-term care insurance policy.   A hybrid policy still offers long-term care insurance coverage but does so in combination with a policy holder’s life insurance benefit.   Hybrid long-term care is connected to a permanent life insurance policy which means that the life insurance will be for the entire span of the holder’s life rather than a term policy which is only applicable for a set number of years.   The holder would pay their insurance premiums and could take funds from their paid premiums if long-term care is needed.  If the policy holder’s insurance funds are inadequate to cover care, the insurance company pays the balance.  Unlike traditional long-term care, if the policyholder never used their premiums for long-term care, the money they paid into the policy would pass to their heirs.

Which Option is Right for You?

Both options offer critical long-term care coverage.  While traditional long-term care coverage does not provide reimbursement of unused premiums, this may not be a concern for someone seeking coverage.  Further, permanent life insurance such as a whole life policy tends to be much more expensive than a term life policy.  As such, a hybrid policy may be cost-prohibitive.  However, if you can afford a hybrid policy and it is important to you that premium payments are paid back to your family, this may be an attractive choice.  Deciding on the right type of coverage will depend on what each policy has to offer, their costs, and your individual circumstances.

Long-term care planning is vital, but it is only one part of preparing for the future of your care and estate.  By consulting with an experienced Elder Law attorney, you will be able to fully consider these and other options which may be right for you.  We are experienced with and knowledgeable about the healthcare and estate planning options offered to Michigan residents and can help.  Please contact us online or by phone if we may be of assistance.

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