Traditional Long Term Care insurance (LTC) policies only pay when a qualified LTC event occurs. Such policies typically offer the most coverage for the least cost, but they do not quarantee premium rates. Most often there’s more flexibility when it comes to waiting periods, benefit periods, and whether benefits are tied to inflation. Premium payments are made for the life of the policy, and benefits are typically paid via reimbursement.
Traditional LTC policies are for those that don’t want or need life insurance, and are looking for the most coverage at the least cost. They understand that the policy is a use it or lose it proposition in regards to premiums paid. That said, some policies offer riders that return unused premiums for an additional cost.
Life Insurance with LTC Rider:
For those in need of life insurance today, but are concerned about the cost of care down the road, a life insurance policy with an LTC rider may be the ticket. LTC benefits are deducted from the life insurance face amount, with any remaining life insurance monies paid to the beneficiary. A stand-alone LTC policy will likely offer richer benefits, but if you prefer to have life insurance and LTC insurance within the same policy, such plans are a viable option.
Hybrid/Linked LTC Insurance:
For those whose number one concern is the cost of long term care, but want the ability to recover much of their cost if LTC benefits are little or never needed, a hybrid policy is worth looking into. These policies have two benefit pools. The first is basically a life insurance policy with an LTC rider, the death benefit equal to or better than all premiums paid. The second pool continues paying LTC benefits solely. These policies are for those that want premium protection if LTC benefits are little or never used, want guaranteed premiums and benefits, and primarily want LTC insurance.