What is Asset based Long Term Care Insurance?
Asset Based Long Term Care Insurance (LTCI) is quickly growing in popularity. It allows you to protect assets from Long Term Care costs. But also allows you to keep liquid access to your funds in the event of an emergency, or if you end up not needing the Insurance benefit.
Asset Based Long Term Care Insurance
The idea of this product is to use a small amount of low yielding funds, such as CD or Money Market funds, and protect the majority of your assets. You still keep liquid access to the money and you gain a LTC Benefit as well as a Death Benefit. These products cover all of the “what ifs”. If you need LTC then you are covered, if you need the money during retirement you can get back 100% of what you put in, & if you die your loved ones receive much more than what you put in.
Asset Based Long Term Care Insurance is also called “Hybrid” LTCI. It is a “hybrid” because it combines aspects of traditional LTCI, Fixed Annuities, & Life Insurance. Many Hybrid LTCI policies are actually life insurance based products, but there are annuity based products as well. They all essentially do the same thing more or less, with a few various differing aspects. This is where using a knowledgeable independent advisor works in your favor.
The purpose of Long Term Care is not just to pay for care, but to protect your assets. You use a small amount of money to protect a large amount of money from being depleted. It also helps to protect against the worst case scenario of needing to use Medicaid.
How does it compare to traditional LTCI?
Traditional Long Term Care insurance only gives you a return on premiums if you actually need Long Term Care. Most people will end up needing some form of LTC. But clients are still worried about “wasting” expensive premiums. This is why Asset Based Long Term Care has boomed in popularity.
There are Hybrid LTCI Policies that provide benefits that are close to identical to a traditional policy. It gives you a certain amount of benefits per month, for a set amount of years. This combination gives you a “bucket” of money to pay for any long term care needs. It covers both In-Home Care, Adult Day Care, & Facility Based Care. A doctor must certify that you are unable to perform 2 out of the 6 “ADLs” (activities of daily living) is the requirement for benefits to trigger. Activities of Daily Living include eating, bathing, dressing, toileting, walking, & continence.
A traditional policy does offer slightly more comprehensive benefits and a few “bells & whistles” that an Asset Based LTCI policy does not offer. But for many, the benefits outweigh any differences.
Who issues Asset Based Long Term Care Policies?
This is a growing area of the insurance industry. Currently there are around 10 -12 hybrid LTCI policies on the market. Like any other area of insurance, the “best” often fluctuates over time as companies tweak policies. There are around 3-4 carriers that really “stand out” at the moment. The best one for you depends on your situation, needs, and what features you value over others.
Lincoln Financial, Mass Mutual, & State Life all have excellent Hybrid LTCI Products.
How to obtain a Hybrid LTCI Policy?
The best way to purchase a Hybrid LTCI Policy is to use an experienced independent agent. They should shop the market to ensure you have the best policy for your specific needs and circumstances. If you would like my help in finding the right Asset Based Long Term Care Policy, feel free to contact me or fill out the form to the right and I will call or email within 24 hours.