Long-term care (LTC) insurance hybrids—which pair traditional LTC insurance with either a life policy or an annuity—have emerged as an increasingly popular and versatile financial solution.
To use hybrids to your clients’ full benefit, however, it’s important to understand how they work, who they’re appropriate for, and how to choose specific policies.
If you’ve spent your career offering nothing but annuities, you may be in for an adjustment with LTC-annuity hybrids, given their need for underwriting. Be aware that some carriers offer streamlined underwriting, but that doesn’t necessarily mean easier. Clients with health issues may actually benefit from full underwriting (Firms like LTCI Partners can usher your client through underwriting for you).
It’s important to realize that, since hybrids provide two distinct benefits, those benefits won’t be as rich as if you used the full sum to purchase just one of them. For example, $100,000 would buy a larger stand-alone, single-premium life policy than $100,000 used to build a combination of both LTC and life insurance benefits.
That’s no small concern—the claims process for life insurance is fairly straightforward, but obtaining benefits for LTC needs can be vastly more complex. To minimize the risk of future disappointment and turmoil for both you and your client, it may be wise to favor experienced carriers until some of the newer names build experience and a record of excellent service in this very specialized field.
Of course, in addition to big-picture considerations like financial strength and product experience, it’s also important to study specific features and benefits, which can vary greatly from issuer to issuer and even from contract to contract. In the LTC world, that means carefully studying features like: