Alternative Strategies to Funding Long Term Care Costs
A wonderful alternative strategy to funding Long Term Care costs, which have risen dramatically in the past few years, is to consider Hybrid or Linked Benefits policies. These plans allow access to the death benefit funds, while the insured is alive, and have gained much attention in the past few years. Hybrid and Linked Benefits plans provide a great solution to the “use or lose it” aspect of “Traditional” Long Term Care policies—plus the insured or heirs are guaranteed to receive their money one way or another. These policies also provide financial flexibility as they may allow access to the death benefit funds while the insured is alive.
Hybrid or Linked Benefit Long Term Care Policies are Life Insurance or Annuity Contracts with a Rider for Long Term Care Insurance. Regulated by Section 7702(b) of the IRS Code, these benefits were created so insureds would have a choice of using some or all of the funds for Long Term Care costs, or allocating funds for Life Insurance (or Annuity) distribution. Hybrids offer clients with available funds a cost-effective way to preserve assets by fully or partially self-insuring LTCI and Life Insurance. The amount of Life Insurance vs Long Term Care coverage is determined when the policy is purchased. In addition, rates are considered “non-cancelable,” which means premiums are guaranteed not to increase.
As with traditional Long-Term Care, one must “health-qualify” for coverage. It does not pay to wait to purchase a policy—today’s good health buys your future insurance coverage. As with traditional policies, the younger you are the more likely you will pay lower premiums, or not be turned down for coverage. Hybrid applicants must qualify for both the Life and the Long-Term Care Insurance coverages.
Reasons to Consider Hybrid/Linked Benefit LTCI policies:
- An income tax-free benefit from Life Insurance or an income tax-free benefit for Long Term Care expenses, which include: home care, adult day care, board and care, and/or skilled nursing care
- A cash value accumulation which earns a guaranteed rate of return
- Choice to maximize Long Term Care or Life Insurance coverage—to fit retirement goals
- No premium increases – rates are non-cancellable (fixed for life)
- Guaranteed funds for Life Insurance or for Long Term Care costs – flexible payouts
- One may rollover assets to fully or partially self-insure from other Life Insurance policies, Annuities, or other Qualified Savings vehicles—via a 1035 exchange
- A win-win – If all or some of the LTCI rider is not used, the balance will be used as Life Insurance
- Premiums may be paid with a single pay or with flexible premiums
OUR AGENCY WILL DEVELOP A HYBRID PLAN SPECIFICALLY DESIGNED FOR YOUR FINANCES, FAMILY, AND RETIREMENT NEEDS. WE WORK WITH YOU TO CREATE THE PROTECTION YOU NEED THE MOST
