When researching and considering Hybrid Long-Term Care Insurance, the first thing many people would like to know is, “How Much Does Hybrid Long-Term Care Insurance Cost?”
The benefits of a hybrid policy typically sound great. Unlike Traditional Long-Term Care insurance, Hybrid Long-Term Care Insurance offers you:
- Long-Term Care Benefits in case you have a long-term care event
- A Death Benefit in the event you do not need long-term care services
- A Return of Premium if you ever decide to change your mind
- Guaranteed Premiums that never increase
Hybrid policies definitely offer great value and benefits to the policy owner. However, with such guarantees and protections built into the policy. it will come at a cost.
Sample Hybrid Long-Term Care Insurance Rates
Well below is a table for the cost of a Hybrid Long-Term Care Insurance policy from one of our most popular carriers. The table shows married men and women ages 50-70.
The cost is based on a policy design of $4,000 in initial monthly benefits with a 6 year Benefit Period and 3% Compound Inflation Protection.
The reason I’m using $4000 in monthly benefits is due to a recent “Genworth Cost of Care Survey.” The survey found that the median cost of home healthcare in the USA is about $4,000/month.
Let’s see how much it costs using a single premium:
Using a single premium, we see that a Hybrid Long-Term Care Insurance policy ranges in price depending on a number of factors including gender and age. That said, there are other factors that are used to determine the cost.
Therefore, when talking about the cost of Hybrid Long-Term Care Insurance, we must consider what affects the cost of a hybrid policy. In doing so, we can find ways to help save on the cost based on our needs.
Therefore let’s look at some ways to save on a Hybrid Long-Term Care Insurance policy using the factors that affects its cost.
Ways To Save – Buying A Policy Now As Oppose To Later
One simple life choice that can help lower your premium deposit is to buy a policy as early as possible. The earlier you buy a policy the less it will cost you!
You see, hybrid policies are underwritten for mortality and morbidity. Therefore, the younger you are and further away you are from the average age for long-term care, the less costly your policy will be.
Using our table above, you saw that the younger a person was the less it cost to fund a hybrid policy. Based on our sample rates, a 55 year old male has a 35% lower premium deposit than a 70 year old male looking to get the same policy.
Therefore, one way to save on premium is to fund a policy as early in life as possible. Don’t wait if you don’t have to! Get Hybrid Long-Term Care Insurance while you are younger, check it off your to-do list and move on to something else.
I often get two questions from individuals considering Hybrid Long-Term Care Insurance. They say “Michael, what is the typical age people buy this stuff and is now a good time for me to get it?”
For me, the typical age group of many my clients range from ages 50-65. Most of my clients are somewhere in the middle. That’s not by chance however. I find that many folks begin to think about retirement around that age.
Therefore, I usually answer by saying that if you are in a position to consider long-term care insurance planning, you should be getting it A.S.A.P.
All things being considered, the only time you should not be considering long-term care insurance planning is when you are too young to buy it.
Let’s look at another simple life choice that can help lower premiums.
Retiring In A Low-Cost of Living State
One major factor that determines how much folks pay is where they live. Planning to retire in a state with a lower cost of living can result in lower premium deposits.
The reason for this is because a lower cost of living typically correlates to a lower cost of home healthcare in that state. Therefore, with a lower cost of home healthcare, your hybrid policy requires a lower initial monthly benefit. This then results in a lower premium deposit.
The median cost of home healthcare in the U.S. is approximately $4,000 a month. That means half the country pays less than $4,000 a month for care while the other half pays more.
In New York for example, the median cost of home healthcare is $4,750 a month. However, in a state like Georgia, the median cost of home healthcare is $3,800 a month. That’s almost a $1,000 difference.
Now let’s say a 55 year old married man living in New York decided to get a hybrid policy using our sample carrier. Based on the states median cost of home healthcare, a hybrid policy may require a premium deposit of $89,524.
However, if he decided to retire in Georgia which has a lower median cost of care, that same hybrid may require a lower premium deposit of $71,619. That is almost a $20,000 difference in premium deposit!
Therefore, choosing to retire in a state with a lower cost of home healthcare typically works out better for the individual when doing long-term care insurance planning. This can help lower the policies funding requirements.
Now let’s look at another way you can reduce funding requirements for a hybrid policy.
Selecting A Shorter Benefit Period
Another premium reduction method is to use a shorter benefit period. The benefit period is the minimum amount of time your policy will last when collecting benefits.
Today, Hybrid Long-Term Care insurance policies offer a range of benefit periods. For example, some carriers offer benefit periods as short as 2 years while others offer benefit periods for a lifetime!
Therefore, adjusting the benefit period can help lower your funding deposit requirement. For example, using our sample carrier, a 60 year old female can lower her premium deposit by over 15% simply by reducing the benefit period from 6 years to 3 years.
She would still receive the same monthly LTC benefit and compound inflation protection. However, she would be receiving benefits for a minimum of 3 years instead of 6 years.
However, with people living longer than the past due to better medicine, shortening the benefit period may not always be the most favorable option to control premium requirements.
Another method to lowering your funding deposit is to combine policies.
Combining Traditional & Hybrid Policies
Another way to reduce the amount of assets you place in a Hybrid LTC Insurance policy is to get to Hybrid Long-Term Care coverage in addition to any Traditional LTC Insurance policy you may have.
You see, some folks have Traditional Long-Term Care Insurance policies they bought in the past, either on their own or through an employer. If you happen to be one of those folks, you already have some level of Long-Term Care Insurance.
Therefore, if you decide to get more coverage, this time using a hybrid, you may not need to get as much coverage as as a person who has no coverage at all. Having a Traditional Long-Term Care Insurance policy does not stop you from getting additional LTC coverage using a hybrid policy.
You can then have two policies, a Traditional and a Hybrid Long-Term Care policy, to help cover your expenses during a long-term care event. Of course, both policies will provide benefits exclusively from one another.
Making sure you don’t overspend on getting the additional Hybrid LTC policy especially works when you find a good agent and choose the right policy. These are my next and last two tips on how to reduce the amount of assets you place in a Hybrid Long-Term Care Insurance policy.
Choosing A Good Agent to Get The Right Policy
Last but not least, finding the right agent when making a big decision such as long-term care planning can go a long way. Sometimes people work with their financial advisor to choose a policy. However, as good as your financial advisor may be, they typically cannot compare to an agent that specializes in long-term care insurance planning.
A good agent has access to all products and knows what products work best in each given situation. In addition, an agent that specializes in this niche has more focus and understanding of the available Hybrid Long-Term Care insurance products.
The advisors recommendations may be limited due to not having full knowledge of all the available hybrid products. Also, more importantly, some advisors are captive agents and are only allowed to sell one company’s product. They may appear independent however they are a captive insurance agent.
One way to tell if your advisor is a captive agent, for example, is by asking who is there broker-dealer. If there broker-dealer is NYLIFE Securities LLC then they are a captive New York Life insurance agent. If there broker-dealer is MML Investor Services, then they are a captive MassMutual insurance agent.
While both companies offer hybrids, we know there are far better hybrids on the market than what New York Life and MassMutual offers.
Some advisors have special contractual relationships where they can only sell specific hybrid products although they may not be a captive insurance agent.
For example, Fidelity Investment advisors have a special contractual relationship where they can only sell both MassMutual’s & New York Life’s hybrid products. Although they can offer you two options, there hybrid options are still limited.
Therefore, when considering a Hybrid Long-Term Care Insurance policy, it is best to work with an agent like myself who specializes in this particular market. That way you can be presented with the best options available according to your needs.
Choosing the right agent like myself can lead to choosing the right policy for you and choosing the right policy can lower the required assets needed to fund your hybrid policy!
Request A Free Quote Today!
If you are interested in a hybrid product and you would like to see how much it would cost you, request a personalized quote. If you are also interested in placing a smaller amount of your assets in your policy we may be able to assist you.
Give us a call today (800) 498-3955 or request a quote from one of our carriers below!