Margaret Huntley Last Updated On: June 27, 2023

Home / Blog / Life Insurance / Hybrid Insurance Policies: Combining Long-Term Care Coverage with Life Insurance

Why Do I Need Hybrid Life Insurance Policy?

Hybrid Life Insurance Policy

Around half of adults over the age of 65 will at some point require long-term care. Despite this great need, many adults in this age bracket do not have life long-term care insurance.

Perhaps these adults underestimate their risk of requiring long-term care in the future, or perhaps they underestimate the cost of long-term care facilities. The average assisted living facility costs around four grand a month. That price more than doubles for skilled nursing facilities. With prices like that, it’s easy to see how helpful insurance can be.

Some people mistakenly believe that their long-term care will be covered by Medicare or Medicaid. This may not be the case. Medicare does not cover long-term care unless there are very specific circumstances, and even then the coverage is for a limited amount of time. And while Medicaid does pay for long-term care, there is strict criteria to qualify for coverage.

That said, many adults do know the potential costs of long-term care homes and still refuse long-term-care insurance policies due to their high premiums and risky nature. With traditional long-term care coverage, if you do not wind up using the benefits, you will lose them.

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What Long-Term Care Actually Is?

As the name implies, those who need extensive medical care for a long period of time are considered to require long-term care. Long-term care can be offered at home through home modifications and/or hired at-home caregivers, or at a facility that offers around-the-clock care.

If a person cannot perform two or more of the following daily life activities on their own, they are in need of long-term care:
  • Eating
  • Bathing
  • Dressing
  • Using the Restroom
  • Transferring (moving from bed or chair)
  • Caring for Incontinence
Those with limited cognitive function also require long-term care. While there are some circumstances in which long-term care is given to young people, most often the care is required by older people whose health declines with age. This is why it is worth researching and securing your coverage ahead of time so that you do not struggle more than necessary when the time comes.

Hybrid Life Insurance Policies

It’s totally understandable why you would not wish to pay high premiums for coverage that you may never even use. That’s where hybrid policies are able to help. Hybrid policies combined life insurance and long-term care insurance for the consumer’s ease. If you do not end up using all of your long-term care insurance, the rest will be paid out through a death benefit. You are only able to combine long-term care insurance with permanent life insurance policies, not with term policies. The following are the main ways to create a hybrid policy:
  • Linked Benefit: These types of policies are directly linked to life insurance and long-term care insurance policies, meaning that you have two separate policies combined at a discounted rate.
  • Long-Term Care Rider: With this type of hybrid policy, you must purchase a long-term care rider at the same time that you purchase your life insurance. With a rider, you will receive some long-term care coverage and a death benefit regardless of whether you use all of your long-term care coverage or not.
  • Chronic or Critical Illness Rider: This type of rider allows you to accelerate your death benefit to help you pay for long-term care. The rider only applies if you have an illness that will last the rest of your life.

In a lot of ways, hybrid policies are a better financial decision since you will receive a benefit no matter what, and you can receive two types of coverage. However, combining life and long-term care insurance is more expensive than either of the policies on their own. So if your main concern is receiving coverage for long-term care, then going with a singular long-term care policy is a better option for you.

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Benefits of Hybrid Life Insurance Policies

Aside from the obvious benefit of killing two birds with one stone, hybrid life insurance policies are beneficial in other ways too:
  • Your premiums remain the same; they will not increase over time
  • You are allowed different payment options for premiums (lump sum or spread out)
  • Easier to qualify for than traditional life insurance or long-term care insurance
  • You are permitted to pay a family member to care for you
  • Some life insurance policies also allow for a cash value component
There are many reasons to consider a hybrid life insurance policy, so if you’re in the market for a plan, start by getting a quote today.

Margaret Huntley Margaret Huntley is a creative writing and philosophy student at Western University. She has been working as a freelance writer for over two years and has written about everything from insurance, to poker, to health and wellness for international businesses.

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