If you’re enrolled in the Federal Long-Term Care Insurance Program (FLTCIP), you already know that premiums increased starting on January 1, 2024. In addition to previous premium hikes in 2009 and 2016, the current increase has left enrollees having to decide to pay more for less coverage.
Even in the private sector, premiums for Long-Term Care (LTC) insurance continues to rise as the tsunami of Baby Boomers entering their later years drive up the cost of non-medical, long-term care in a nursing home.
The Downside Of Traditional LTC Insurance: Use-It-Or-Lose-It
The ever-rising cost of premiums for traditional LTC insurance is the main reason why only 7% of adults over age 50 purchase LTC insurance. Even though there’s a near 70% chance of needing some type of LTC services when you turn age 65, most seniors don’t want to pay for expensive insurance they believe they may not need. This is a major downside with FLTCIP and other traditional LTC coverage – if you don’t use it, you lose all the money you paid for premiums through the years. Fortunately, there are other options.
What You Need To Know About Hybrid Life Insurance
Hybrid life insurance is permanent life insurance coverage that can be used to pay for long-term care plus a death benefit for your beneficiaries when you pass away. There are a few different types of hybrid insurance that can provide LTC coverage.
“If it turns out that you don’t need the LTC coverage, a linked-benefit policy will pay a death benefit to your beneficiary.”
Linked Benefit Insurance: Unlike a traditional, stand alone LTC policy, a linked benefit policy is a true hybrid policy that connects life insurance coverage with long-term care insurance. Typically, linked benefit policies provide 5X the coverage of your total premiums for long-term care services. If it turns out that you don’t need the LTC coverage, a linked-benefit policy will pay a death benefit to your beneficiary.
Life Insurance With A Long-Term Care Rider: You can usually add different types of riders to any life insurance policy. Adding a LTC rider to a permanent life insurance policy usually doesn’t provide as much coverage as a hybrid policy or traditional LTC insurance.
Annuities With Long-Term Care Riders: An annuity is an insurance product that provides a stream of guaranteed retirement income life. When you add a LTC rider, it can be used tax-free to pay for long-term care in a facility. If you don’t use the LTC coverage before you pass away, your beneficiaries can collect the accumulated value of the annuity as a death benefit.
To learn more about these and other insurance products, meet with an FRC® trained advisor.
Sources:
https://prospect.org/familycare/the-collapse-of-long-term-care-insurance/
