Should I Consider a Combined Life and Long-Term Care Plan?

The combination of life and long-term care insurance policies is sometimes referred to as a “hybrid policy.” These are created by purchasing a cash value life insurance policy and a rider that allows the cash value of the policy to be used for long-term care (LTC) expenses. Conceptually, and from a sales perspective, these hybrid plans seem to make sense. Looking more closely, however, there are serious flaws. First and foremost: the life insurance plan that these additional coverages are coupled with are cash value type policies such as whole or universal life. Dave is adamantly against these types of plans, and coupling them with an LTC benefit does not increase their appeal. In most cases, these added benefits are inferior to plans you can purchase independently and are simply not worth the risk. Many of the LTC benefits in a hybrid plan are limited to either the amount of benefit paid, the types of services covered, or the length of benefit period.

Both types of protection are important enough to warrant their own policies. Dave recommends that you buy a term life insurance policy right away if you have debt that your estate cannot pay and/or if your death would put your family’s financial well-being at risk. As you attack debt and grow savings, you are actually reducing – and, eventually, eliminating – your need for life insurance. Your need for long-term care insurance, on the other hand, is increasing during this time. Incurring an expense for life insurance when it’s no longer needed so you can keep your long-term care protection makes no sense! In short – you need life insurance and long-term care insurance at different points in your life, and getting them combined is an expense you just don’t need.

Get more information on long-term care insurance or get a free, instant term life insurance quote.