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Hybrid policies may be an option for long-term care

We live in an age where medical advancements and health awareness means that people in New York and nationwide are living longer than ever. While this is a good thing, it highlights the importance for people to give some thought and make plans as to how they will care for themselves in their old age.

At one time, long-term care insurance policies were a popular way for people to fund the nursing home care they anticipated needing in their old age. However, these days many life insurance companies are finding that these types of policies do not bring in as much of a profit as they'd like. In fact, two major life insurance companies have stopped selling long-term care insurance policies. Other life insurance companies do still offer long-term care insurance, but have increased premiums.

That being said, one option that some life insurance companies are offering are known as "hybrid policies." One example of a hybrid policy is a life insurance policy that has a rider providing for some long-term care insurance coverage. In general, these policies will make a specific lump-sum available for long-term care expenses. Premiums can be paid once a year, each month or each quarter.

These single-premium policies can be easier for individuals to sign up for, even if they have a pre-existing health condition. Another benefit of hybrid policies is that if the long-term care benefits are not used when the policyholder passes away, they can be passed on to the policy holder's heirs. Also, hybrid policies are less likely to see premiums increase. Finally, "extension" riders may be purchased through which the policy holder, after exhausting a base amount, can still receive a certain amount of benefits each month.

There are some disadvantages to hybrid policies, however. One is that traditional long-term care insurance policies tend to offer more flexibility than hybrid policies. In addition, some hybrid policies do not provide as much coverage as traditional long-term care policies.

That being said, hybrid policies may be worth considering as a means for paying for your care in your old age. These plans can be made part of a comprehensive estate plan, that includes not only life insurance coverage and long-term care coverage, but also health care directives, living wills and traditional wills or trusts. An elder law attorney can provide more information on what can be included in an estate plan.

Source: Chicago Tribune, "'Hybrid' insurance policies offer a way to cover long-term care," Elliot Raphaelson, Jan. 3, 2017

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