The nature of long-term care and life insurance policies has changed rapidly in these uncertain hard times. Many customers are reluctant to put out large amounts of money for future benefits, especially when those benefits may never become necessary. The insurance industry has changed this trend by selling combination goods that blend long-term-care with standard life insurance.
Choosing the long term care could possibly be good
Generally mixed life insurance policies utilize universal life, in which a portion of the death benefit may be used early to help pay for long-term care should it become necessary. These mixed policies have been available for a while but have recently been gaining popularity. A mixed product, combining two products into one, sounds attractive to many customers. A policy holder may still get life insurance even if the long-term car is not necessary.
The number of traditional policies still accessible
Sales of the hybrid policies more than doubled in 2010, according to Gebworth Financial Inc. By contrast, the sales of traditional long-term-care insurance have plummeted by nearly 25 percent over the last five years.
“Most people who purchase hybrid insurance are not purchasing it because they want life insurance,” said John Ryan, a Colorado-based broker. “They’re purchasing it because they need long-term-care insurance, and the sales pitch that you can get your money back no matter what is pretty compelling,”
Those that have retired
About 69 percent of Americas turning 65 each day will need long-term care at some point, according to Washington-based lobbying group for retirement homes, LeadingAge, with those numbers doubling by 2040.
Getting your use out of your policy
There are very different details on hybrid insurance plans with many different versions available. Usually a person is given a cash-value life insurance policy with the option to use it for long-term care benefits instead. When using the long-term care benefits, death benefits are no longer accessible. That is the tradeoff.
Reasons to stay away from it
There are several things to consider with a two-for-one product. Usually they’re strict with rules on combined products. There is no room to move. Usually a mixed product does not cover home care. It does not change for inflation either. The different long-term care accessible to be covered is typically specialized. It is impossible to predict future care needs, and often that is exactly what the insurance companies expect you to do. While purchasing a mixed product is cheaper than purchasing two different policies, it is also typically more expensive than purchasing a dedicated long-term care policy.
Make sure you know what you are doing
With any investment, including this one, you need to always stay well informed and know what you are getting. Make sure you know the product well. It always helps to have advice from an impartial financial adviser.
Elder Law Answers