NEVER* Combine Long-Term Care Insurance with Life Insurance
3 Reasons Why Insurance Companies Want You To Buy
A Single-Premium “Hybrid” Policy
Most “hybrids” are sold as single-premium products. You don’t pay premiums once a month or once a year. You make one large premium payment.
Insurance companies love it when consumers buy these single-premium products for three reasons:
1) They earn money on your money for a very long time.
2) When you need care, they use your money first.
3) When you need care, you'll have to use even more of your own money.
Sometimes We Do Recommend Life+LTCi.
Wouldn’t it be better to just keep the $100,000 yourself and earn what you can earn on it? If you could earn 3% on a conservative mutual fund, you could earn enough each year to pay the annual premium of a well-designed long-term care policy that has inflation protection built into it.
If you never need care, your heirs will still get the $100,000.
If you need care, you can keep the $100,000 and your long-term care policy will pay for most of the cost of your care.
If you buy a long-term care insurance “partnership policy” you can protect your assets from Medicaid even if your long-term care policy runs out of benefits.
Here’s what happened with one of our clients:
Recently we helped a client of ours, age 69, obtain a long-term care policy that qualifies under the Long-Term Care Partnership Program in his state. He wants to protect $200,000 of his assets if he ever needs long-term care. He was able to purchase a long-term care insurance “partnership policy” for less than $190 per month. If his long-term care policy runs out of benefits, he can apply for Medicaid to pay for his care and his assets will be protected.
His life insurance agent suggested he buy a single-premium “hybrid” policy with a $200,000 death benefit. The death benefit could be used for long-term care, if needed. The single-premium “hybrid” would cost $84,000.
He was able to get $200,000 of long-term care asset protection for less than $190 per month.
Or, he could get $200,000 of benefits from the single-premium “hybrid” for $84,000.
This is one reason why we say you should NEVER* combine long-term care insurance with life insurance.