About Hybrid Long-term Care Policies

Ask the Experts by Dan H. Tripp, CLU

Q: I keep hearing about a "hybrid" form of long-term care insurance.  What is this and should I consider it?

A: Basically, a hybrid long-term care policy is life insurance with a long-term care rider. The rider allows the policy owner to use the death benefit to pay for any expenses related to long-term care.

Developed in the early 2000's as an alternative to traditional policies, hybrids offered guarantee premiums. Many traditional policies, due to faulty actuarial assumptions, began raising premiums. And, hybrids also helped answer the common objection of "what if I don't need it?"

Hybrid policies work very simply. They use permanent life insurance (sorry, it doesn't work with term insurance), typically a Universal Life policy, with a rider allowing the accelerated use of the death benefit if at least 2 of 6 activities of daily living (ADLs) - eating, bathing, dressing, toileting, transference and continence - are required.

The benefit paid out is typically a percentage - 1 or 2% - of the death benefit each month until the benefit is exhausted or the policy owner dies.

Any remaining death benefit is paid tax-free to designated beneficiaries. This is a major difference from a traditional plan, which has no death benefit feature. 

Another major difference: the benefit is paid to the insured, not the care facility.

If you've provided care for a loved one, you know the financial, as well as the physical and mental stress involved. Long-term care insurance, in any form, could reduce future stress on your children.

Dan H. Tripp is an independent agent with over 27 years' experience helping individuals, families and small business navigate the complexities of life, disability and long-term care insurance. He holds a CLU designation from The American College, and is a member in good standing with NAIFA and the Society of Financial Service Professionals. He can be reached at 313-478-4337 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Tripp is a member of The Family Center's Association of Professionals.

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