Elderly Woman with Nurse

Which Type of Long-Term Care Insurance Is Right for You?

The long-term care (LTC) insurance marketplace is changing quickly, and you have more options to choose from than ever before. Read on for the pros and cons of the three main types of coverage.

  Pros Cons
Traditional
  • Avoid or offset out-of-pocket LTC costs
  • Lowest upfront costs/annual premiums
  • Flexible benefit levels and periods
  • Medical underwriting means you are more likely to get coverage
  • State partnership plans are available (LTC coverage amount excluded from your assets for Medicaid eligibility purposes)
  • Benefits and rates are not guaranteed; the carrier can raise your premium amounts
  • No death benefit for your beneficiaries
  • “Use it or lose it”; premiums are lost if you do not use your LTC benefits
  • Return of premium options are very limited
Hybrid
  • Avoid or offset out-of-pocket LTC costs
  • Pass/fail underwriting means quick policy issue and no blood work
  • Death benefit and return of premium options
  • Guaranteed benefit and premium amounts
  • Single premium or limited pay (e.g., ten annual premiums), or life pay options
  • Single premium and limited pay policies can be more expensive up front
  • It may be harder to qualify for coverage if you have health concerns or a family history of health issues
  • Your policy’s death benefit is reduced by the amount of LTC benefit you use
Life With Rider
  • Avoid or offset out-of-pocket LTC costs
  • LTC benefits with significant death benefit
  • Potential to grow your LTC benefit amount
  • Single underwriting process for both types of coverage
  • Your policy’s death benefit is reduced by the amount of LTC benefit you use
  • If your policy lapses, you lose your LTC protection


Traditional Long-Term Care Insurance – You custom-select your benefits to suit your needs. As long as you pay your premiums, you will have coverage (up to your selected limits). However, similar to auto insurance, if you do not make a claim, you do not receive any benefits.

Hybrid Life/Long-Term Care Insurance – If you are concerned about “losing” your premium dollars if you never require long-term care, a hybrid policy is a permanent life insurance policy with a rider that provides for long-term care.* If long-term care is not needed, a death benefit is paid to your beneficiaries or you can surrender the policy for a majority or full “return of premium” option, in which you would receive the majority or your entire original premiums back (subject to possible tax implication and carrier availability).**

Life Insurance With a Long-Term Care or Chronic Illness Rider – This is simply a life insurance policy that accelerates the death benefit for use in medically diagnosed chronic illness or long-term care situations.

* Riders that provide long-term care benefits may not cover all the costs associated with long-term care – costs that may be incurred during the period of coverage. You should review carefully all limitations in any policy you are considering and in the riders. Optional riders will incur additional cost.

** Return of premium must occur prior to the commencement of claims, assumes no loans or withdrawals, and is subject to each particular insurance company’s restrictions. A portion of the amount returned to you may have tax implications, which you should discuss with your tax advisor.

Costs, restrictions, and other conditions may apply, and not all features and riders are available in all states. Guarantees are based on the claims-paying ability of the issuing company.

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