Hybrid long-term care insurance and key-person life insurance with long-term care insurance riders have almost completely replaced traditional long-term care insurance options. The main reason for this is that traditional long-term care insurance policies do not come with guarantees. Most importantly, they will not guarantee that premiums will not increase. It means that even after several years of paying premiums, a policyholder could receive a notice requesting additional annual premiums or an option to decrease their benefits at the current premium rate.

This happens so often that we will only offer to sell these products on rare occasions. To add to this, traditional long-term care insurance policies are what we call “use it or lose it” policies. If a policy holder does not need long-term care during their lifetime, the policy essentially has no value once they pass away. 

Hybrid long-term care insurance policies, on the other hand, offer guaranteed premiums, guaranteed coverage to age 121, offer a death benefit should the policyholder pass away even if they have used some or all their long-term care benefit pool, options for getting their premiums back while they are alive, plus all the other features that come with traditional long-term care insurance policies like care coordination.

We write a large amount of these policies each year and can provide a detailed plan comparison with some basic client information.

Another way to purchase from long-term care insurance companies is through a rider on a permanent life insurance policy. These policies typically provide a larger life insurance death benefit than hybrid long-term care insurance products and can be a great way to cover two needs at once.

These policies can be customized in several ways, including the number of years the policy premiums are owed, how long the contract is guaranteed for along with the ability to dial in the death benefit and monthly long-term care payout. If you have been sent an illustration by an agent, it is best to thoroughly review each item or have experts like us explain each detail to you. These policies are not inexpensive, so you want to make sure you are getting a conservative explanation of how they perform and what their underlying guarantees.

Traditional long-term care insurance has a niche market these days. For most, we do not recommend them, because the premiums are not guaranteed. The premiums in these policies have and will increase over time. The benefit is only available if you are on a long-term care claim and there is no return of premium or death benefit options with most currently available products.

There is a fair argument to keep grandfathered plans in place, as they were very inexpensive at the time of purchase and have a lot of group benefit services. Plans offered today are expensive and offer a much lower amount of long-term care benefits.

There is one niche in this market. The pricing for single men in their early 60s is reasonable. We should consider this as an option amongst others when quoting. Not to be morbid, but insurance carrier actuaries know this population is more likely to pass away quickly versus other population classes reducing the need for long-term care and long-term care insurance claims.