New Types of Long-Term Car Insurance: Hybrids & Short- Term Care

December 14, 2020

Recently, carriers are making new products available in the Long-term Care space. Among them is
another hybrid. A hybrid solution is different from the traditional long-term care insurance model of
"one- size fits all” approach to long-term care planning.
The hybrid product consists of a life insurance chassis or an annuity chassis encompassing long-term
care options. This vehicle allows heirs of the policy owners who pass away to receive a partial refund of
premiums if the policy owner did not use the LTC portion of coverage.
Short-term Care is a plan that allows for shorter benefit terms, typically, 12 months or less with smaller
daily allowances to offset the cost of care. The daily benefits could be $50.00 per day versus $100.00 per
day, for example.
Stand-alone “Pay as You Go” products are tax-qualified which means benefits are not taxable and
premiums may be deductible depending on the tax classification of the consumer. These plans are
integrated and cover services in all long-term care venues, home care, adult day care, assisted living,
nursing home and hospice. Several of top-rated carriers offer these highly customizable products. There
are many benefits, including a wide range of riders that fit the needs of individual clients, couples, small
business owners, professional organizations and large employers.
This product design also offers partnership policies that provide additional safeguards from Medicaid
resource reduction requirements. The age range for these products are between 18 to 79 and are more
appropriate than asset-based products for those under age 65.
The concept of financing this type of care is similar to a Workers Compensation model of pay as you go.
In the workers compensation model, payments for workers compensation are made based on the
number of employees per payroll. It is not dissimilar to auto insurance; you pay amount on a monthly
basis to cover a predetermined amount of coverage.