Hybrid Long-Term Care Insurance Combines Long-Term Care Benefits and Life Insurance in One Policy
Financial advisor Cary Stamp discusses the value of Hybrid Long Term Care Insurance, a powerful combination of Long Term Care Benefits with Life Insurance that preserves your capital.
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I’m Cary Stamp and this is a Principled Wealth Moment. Today I’m going to talk about a subject that most people really don’t like to address. I’m going to talk about how you pay for long term care expenses for yourself or maybe for a loved one.
So, I want to give you an example of where the marketplace is right now for long term care insurance. Most people choose one of three methods. They buy either a traditional long term care insurance policy and they pay a premium every single year. They decide that they don’t want insurance for long term care, they pay no premiums and they cross their fingers and hope that they don’t need it. There’s a third option and for a lot of people this might make the most sense and that’s using what’s known as hybrid long term care insurance policy. It’s an insurance policy that’s issued by an insurance company, but you pay one premium.
I’m going to give you an example. These numbers are merely example numbers. Say for the sake of argument, you contribute to this policy $100,000 one time. This policy is going to give you three different benefits. The first benefit is going to be what we call a cash value and many of these policies will offer the full $100,000 back to you as a refund without any penalty at any time during the course of your ownership of the policy. There are other policies that do have some types of penalties, so be careful what you’re looking at when you’re buying these types of policies. The second thing that the policy will give you is a death benefit so that if you were to pass away, the minimum that you should probably get is $100,000, which means that unlike a lot of long term care insurance policies where you pay premiums for years and years and years, and if you just die and don’t use it, you get nothing, this one, you at least get your money back. But here’s the kicker and here’s why people do this. Here’s the deal. If you’re a 50 year old female, you could probably get today for your $100,000, somewhere around $300,000 maybe even a little bit more in long term care insurance at age 50. But it gets even better, because most of these policies have what’s called an inflation rider, so by the time that you get to age 80 somewhere down the road here, the value of this long term care insurance benefit is probably somewhere between $700,000 to $800,000 or possibly even more, all from your original $100,000 investment.
Show me another way where you can take $100,000 and pretty much with a high degree of certainty, create that much money for long term care insurance when you’re retired. This Hybrid Long Term Care Insurance is a great strategy, but you have to have some money available to do it, it has to be conservative money, and it has to be a long term type of a strategy. I’m Cary Stamp, and this has been a Principled Wealth Moment.
All guarantees and benefits of the insurance policy are subject to the claims-paying ability of the issuing insurance company. They are not backed by the broker dealer and/or insurance agency selling the policy, or any affiliates of those entities other than the issuing company affiliates, and none makes any representations or guarantees regarding the claims-paying ability of the issuer.