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Policy Matters

Fourth Quarter 2020


The majority of individuals purchasing long-term care insurance protection this year are opting for hybrid or linked-benefit policies according to the American Association for Long-Term Care Insurance.

“A hybrid long-term care policy combines the benefits of life insurance or an annuity with long-term care benefits,” explains Jesse Slome, AALTCI’s director. “If it turns out that long-term care is not needed, the life portion pays a death benefit to the designated beneficiary when the insured passes away.”

Here’s why consumers find the hybrid LTC option of value. “If long-term care is never needed, the policy’s life insurance benefit is generally similar to the amount paid for the coverage,” Slome notes. ”On the other hand, if long-term care is needed, the amount of money available can be significantly greater, offering meaningful benefits for the policyholder who requires care at home or in a skilled care facility.”

According to the Association, an increasing number of insurance companies are offering hybrid long-term care options. Costs to purchase virtually equal levels of coverage can vary widely as can policy provisions. “While the life insurance component is uniform, the long-term care provisions can be significantly different today,” shares Slome. “It makes comparing worthwhile.”

Potentially significant differences include how the insurer will eventually pay claims. “The differences can vary most in terms of how home care benefits are paid,” Slome points out. “Some policies utilize a reimbursement formula with specific contractual limitations regarding who can provide care. Alternatively, a cash benefit method provides payments without such limitations including the ability to pay family members who are providing care.”

“Cash payments provide the greatest flexibility and possibilities when care is needed,” explains George Mellendorf, President of LTC Solutions, a national distributor of individual and multi-life long-term care insurance headquartered in Cape Coral, FL. “One of the innovative plans today even provides a retroactive lump-sum cash payment for home care back to day-one after the 90-day elimination or deductible period is met.”

Other differences include options that can increase the future value of available benefits. “An inflation growth option can be a valuable consideration to address the risk of rising care costs,” adds Slome. “Most insurers offer a fixed rate formula but one ties their increase to U.S. medical care costs that a number of long-term care insurance specialists find is more relevant for their clientele.”

Finally, a number of hybrid long-term care policies offer potentially valuable tax advantages. “A portion of the premium may be included when calculating your medical or health deductions,” Mellendorf shares. “The potential deductibility generally becomes valuable after retirement when every tax deduction has important value.”

Source: AALTCI, Wednesday, November 25th, 2020

To learn more about both traditional and hybrid long term care insurance, contact our subject matter expert Jill MacNeil and/or visit our Advisor Tools for these informative documents and more:


Term Life Insurance | Low-Load Universal Life (Individual & Survivorship) | No Lapse Guaranteed Univeral Life (Individual & Survivorship) | Long Term Care Insurance | Disability Insurance | Critical Care Insurance | Low-Load Variable Annuity | Immediate and Fixed Annuities | Low-Load Variable Universal Life | Hybrid Life/LTCi | Hybrid Annuity/LTCi

(We recommend low-load permanent life insurance and annuities when possible)

(Not all policy types available in all states)

For a list of current providers, visit the Advisor Tools section of our website and click on "Insurance Companies We Work With".

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