Asset-Based Long Term Care Insurance

Asset-Based Long Term Care Insurance functions in much the same way as Traditional Long Term Care Insurance.  The biggest difference is that the insured pays a lump sum for their insurance, rather than paying premiums.

There is a common misconception about asset-based long term care insurance; some would say that it really doesn’t exist.  The misconception is that Asset-Based Long Term Care Insurance and so-called “Hybrid” policies are two different things.  In reality these types of policies are the same, and the terms are often used interchangeably.  Thus you may find it difficult to find an Asset-Based policy, when really, the Hybrid policies you may have come across are actually the same thing.

Many new policies have come into existence recently under names like Hybrid or Linked benefits.  As a consumer you should know that these policies are all basically the same thing:  A Guaranteed Universal Life Policy with a Nursing Home Rider.

Problems With Traditional Long Term Care Insurance

The biggest flaws with Traditional Long Term Care Insurance coverage are that it has no cash value, it does not give any benefit unless you make a claim, and your premium may increase based on factors that have nothing to do with you personally.  Owners of Long Term Care Insurance were previously placed in “classes” (i.e. by age, by health problem, etc.).  If the overall rate for your class went up, then your rate would go up as well, regardless of your health.  The insurance industry noticed that consumers’ needs were not always being met by their LTCI, which led them to develop hybrid policies that addressed the concerns of their policy holders.

The Development of Hybrid Long Term Care Insurance Policies

Hybrid, or Asset-Based Long Term Care Insurance Policies, were developed to make up for the flaws inherent in traditional long term care insurance.  One of the first developments was the “return of premium” rider.  This rider makes it possible for the policy holder to recover a portion of the premiums paid if the policy was not used over a set period of time.  Over time, more riders were added to perform specific functions, and eventually became full-on hybrid policies.

What is Hybrid or Asset-Based Long Term Care Insurance?

A Hybrid (Asset-Based) Long Term Care Insurance Policy is essentially a life insurance policy with a Nursing Home Care Rider.  With these policies, a consumer can deposit premiums and create an immediate pool of money to be used for Long Term Care while simultaneously creating a death benefit which can be collected by the policy holder’s family in the event they pass on before Long Term Care is needed.  This is just one example of a hybrid policy; there are others which incorporate annuities or various other benefit riders.  It is best to discuss these topics with a professional to find out what kind of coverage you will need.

First Senior Financial Group Can Help

First Senior Financial Group’s educators can help you select the Long Term Care Insurance that’s right for you.  If you don’t qualify for LTCI, our team can help you explore other options to ensure that you’re being cared for properly in your golden years.

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