As your clients plan for the future, securing financial protection against unexpected extended care needs becomes crucial. Long-term care services, such as in-home care, assisted living, or nursing homes, can be costly and overwhelming for families to manage without proper planning. Traditional long-term care insurance (LTCI) has long been a solution, but many insurance advisors are now turning to hybrid long-term care insurance for its added flexibility and unique benefits.
What Is Hybrid Long-Term Care Insurance?
Hybrid LTCI is a policy that combines the benefits of a life insurance policy (or an annuity) with long-term care coverage. Essentially, it provides a dual-purpose solution: if long-term care is needed, the policy pays for those expenses; if not, the policyholder’s heirs receive a death benefit. This structure ensures that your client’s premiums won’t go to waste, unlike traditional LTCI, where premiums may be lost if long-term care is never required.
Read More: How to Effectively Close a Long-Term Care Insurance Sale
Top 3 Hybrid LTCI Benefits to Your Clients
1. Guaranteed Value
One of the biggest client objections to traditional LTCI is the “use it or lose it” factor. Many people are hesitant to pay premiums for years without knowing if they will ever use the benefits. Hybrid LTCI eliminates this concern by ensuring the client’s investment always has value. If long-term care services are needed, the policy covers those costs. If services are not needed and the policy benefits are not used, the death benefit provides value to the client’s beneficiaries. This guaranteed value makes hybrid policies easier to sell, as clients appreciate the dual-purpose nature of the product.
2. Stable Premiums and Predictability
While traditional LTCI often comes with the risk of rising premiums, which can frustrate clients and lead to dropped policies, hybrid LTCI typically offers:
- Level premiums that never increase, even on multi-pay or recurring premium policies
- Single-pay or multi-pay options to fit different budgets
This predictability provides peace of mind and makes the product more attractive, especially for clients concerned about financial stability in retirement. Agents can confidently present hybrid LTCI as a secure, long-term solution without the fear of surprising premium hikes.
3. Tax Benefits
Hybrid LTCI allows for the transfer of gains from an existing life insurance or annuity policy in the form of 1035 exchange. Your client can convert a contract they already own into a hybrid LTCI policy and obtain long-term care benefits they didn’t have under their original policy. This transfer saves the client from being taxed on the gains in the original contract.
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From an insurance advisor’s perspective, hybrid long-term care insurance addresses client concerns while providing a flexible, high-value solution. Its guaranteed payout, stable premiums, and tax benefits make it a win-win product for both agents and clients, ensuring financial security and peace of mind for the future. The Krause Agency offers multiple hybrid LTCI options for your clients. Contact our team to learn more!