Hybrid vs. Traditional LTCI - An Elder Law Attorney's View

[Dale M Krause]

Hybrid long-term care insurance is a policy that combines traditional long-term care insurance with life insurance or an annuity. You can pay a lump sum or regular premiums to the insurance company, and in return, you will receive long-term care benefits along with a death benefit or a return of premium if you don’t use the long-term care benefits. This type of insurance is gaining popularity as it offers flexibility and peace of mind to those concerned about the high cost of long-term care.

However, if you want the best possible insurance coverage for long-term care, a traditional plan is better than a hybrid one. Traditional long-term care insurance policies are explicitly designed to cover long-term care costs. These policies offer more comprehensive coverage for long-term expenses such as in-home care, assisted living facilities, and nursing homes. In contrast, hybrid long-term care insurance policies combine long-term care insurance with other types of insurance, such as life insurance or annuities. Although hybrid policies offer additional benefits, such as a death benefit or the ability to receive a return of premium, they may not provide the same level of coverage for long-term care expenses as a traditional policy. Therefore, a conventional plan is usually better if you want the best possible insurance coverage for long-term care.

 

[ltcadviser]

Dale, in a vacuum you might have a point. The fallacy in your argument is that current pricing of stand alone policies are still using (much higher) cost of insurance rates filed 5 years ago at the peak of low interest rates. Alternatively, hybrid LTC policies have refiled for significantly lower COI rates in past 18 months as treasury yields have risen. Not many applicants are buying stand alone LTCi now at current pricing.