Hybrid life insurance is a permanent life insurance policy that has a long-term care rider.  These types of policies provide a partial or full death benefit to your beneficiaries and the death benefit is usually tax-free. These policies can help pay for health care costs that would otherwise reduce your other financial assets.

Hybrid life insurance is unlike the traditional, “use-it-or-lose-it,” long term care policy. These traditional policies also tend to have had many prices hikes in premiums over the years which have made them undesirable for many looking for long term care coverage.

Benefits of Hybrid Life Insurance Policies

Qualified Long Term Care Services — It is important to know which services you can utilize with your policy,  but many of the Hybrid policies allows the insured to use the following services:

  • Adult daycare
  • Assisted living
  • Bed Reservation
  • Home health care
  • Hospice
  • Household services
  • Informal care
  • Nursing home care
  • Respite care

Cash Indemnity vs Cash Reimbursement — Policyholders need to understand if they have a policy that has indemnity.  Policies with cash indemnity will pay the maximum daily or monthly benefit once the policy holder is on the claim, regardless of care costs. For example, if you have a monthly benefit of $7,000 but you only incurred $5,000 worth of care expenses, the insurance company would still pay the full $7,000. No bills or receipts need to be submitted to the insurance company to collect monthly benefits. The insurance company places no restrictions on how the money is used. This provides flexibility for the insured.

If the insurance is a reimbursement policy, then the insured must use qualified long-term care expenses, but not exceed the daily or monthly benefit. Bills and receipts must be submitted to the insurance company and actual costs are reimbursed. Most likely, the insurance company will work directly with facility or home care agency.

Benefit Triggers — Most policies will be activated if the insured cannot perform at least two of the six activities of daily living, which include: bathing, maintaining continence, dressing yourself, eating/feeding, toileting and transferring.

Tax-Free Reimbursements — These policies offer tax-free payments to the insured for qualified long-term care expenses.

Inflation Protection — Many polices will have monthly long-term care benefits increase on a set percentage annually – even after the client goes on the claim. Inflation options could be an annual increase of 3% or 5%, simple or compound interest on an annual basis.

Elimination period — Most of these policies will contain a 90-day elimination period from the date the insured is certified as chronically ill by a licensed health care professional.  After the 90-day elimination period, then the benefit will take place for the insured.

Premium Flexibility — Many insurance companies will allow you to pay lump sum or over a period of time. This allows the insured multiple payment options depending on the situation.

Return of Premium — Depending on the policy selected, there is a potential return of premium if you change your mind at a later date. 

Schedule a Meeting to Learn More About Hybrid Life Insurance

If you are looking for long-term care coverage and life insurance, contact Safe Harbor to learn more about a hybrid life insurance policy. We offer a complimentary consultation to review you existing coverage and can provide an insurance strategy that will provide the care you’ll need in your golden years. Call our office at (614) 760-0670 to schedule your initial consultation.