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10 Advantages of Hybrid Life Insurance with Long-Term Care

You probably know about hybrid cars. But do you know about about hybrid life insurance?

This coverage combines long-term care and life insurance into one policy. Like hybrid cars, these hybrid policies are increasingly popular. That’s because they have some unique benefits.

How It Works

Most people bought long-term care insurance as a standalone policy in years past. Today, it’s becoming more common to buy the coverage as a policy that also includes life insurance.

The long-term care portion of the policy pays for care if you develop a health condition and need care. Meanwhile, the life insurance portion gives your loved ones financial support if you were to pass away.

You receive the long-term care benefit if you develop a health condition. And your loved ones get the full death benefit if you never use the long-term care benefit.

10 Advantages of a Hybrid Life Insurance Policy

  1. More complete coverage. A hybrid life insurance with long-term care policy lets you—and your loved ones—benefit from two very important coverages.
  2. Easier to get.  The medical underwriting for a hybrid life insurance policy is often more relaxed than for a standalone long-term care insurance policy. In fact, some hybrid policies only have you answer a few health questions.
  3. Flexible payment options. There are two ways to pay for a hybrid life insurance: with a lump sum or with annual payments.
  4. Tax savings. Life insurance payouts to your loved ones aren’t taxed. And premiums paid for long-term term care insurance can sometimes be deducted from your state and federal taxes.
  5. Less time and effort. It’s often easier to research, buy and manage one policy than two separate policies.
  6. Fewer premium hikes. Many people worry about cost. That’s because standalone long-term care policy premiums could increase dramatically. Hybrid policies typically offer more pricing stability.
  7. Possibility of a death benefit. Typically you forfeit the premium dollars you’ve paid for a traditional policy if you never need long-term care. With a hybrid policy, your loved ones receive the full death benefit if you never need long-term care. Some policies even guarantee a small death benefit no matter what.
  8. Option to lock in your premium. Some hybrid life insurance policies let you lock in your premium payments.
  9. Option of a money-back guarantee. Some hybrid policies return the premium paid if you decide you don’t want the policy after a set time.
  10. Ultimate peace of mind. Hybrid life insurance coverage erases worries about potential long-term care costs and helps ensure your family’s financial future. Who doesn’t need that?

Getting Coverage

A licensed insurance professional can help you determine if a hybrid or a standalone policy is the right fit and find one that works with your life and budget⁠.


There’s a great deal of publicity now about large rate increases on long-term care insurance policies.  Rates are now far higher than they were before the year 2000.  Why has this happened?

The long-term care insurance industry is less than fifty years old, and first grossly underpriced its products for four major reasons.  First, it assumed the high interest rates of the eighties and nineties which would give it high investment returns on the premiums it collected, but interest rates have become very low.  Second it assumed high lapse rates, but lapse rates have been under 1 %, so more policyholders become old and claim benefits on their policies.

Third, claims have been higher and of longer duration than originally thought.  And finally, for these three reasons, regulatory agencies have forced insurance companies to increase their reserves for claims and have insisted the reserves be invested conservatively.

The insurance companies have to seek approval from State departments of insurance for rate increases.  They must justify the need for additional funds to pay claims, not to administer the policies or make a profit.  This as been easy to do for the older underpriced policies, and some of the rate increases have been very substantial.

No one likes these rate increases, and in many cases, they were entirely unexpected when the policies were bought.  Many policyholders still want the protection that long-term care insurance provides.  They don’t want to lapse their policies after paying premium for many years. They have accepted these increases and have kept their policies intact or have reduced benefits to cushion the blow of the rate increases.

With these rate increases, the premiums today are far different than what they were some twenty years ago.  They more accurately reflect current interest rates, lapse rates, claims intensity and reserve requirements.  In addition, insurance commissioners have set rate stabilization guidelines for the industry to follow.

The result is that the rates of today are less likely to have substantial increases, if any.  In addition, there are many products available now where the rates are guaranteed not to increase.  It’s a far more stable suite of products, with a far greater degree of certainty for the buyer.

By Louis H. Brownstone

California Long Term Care Insurance Task Force

The California Long Term Care Insurance Task Force has been established with the support of Governor Newsom to implement a publicly funded long term care program.  This task force has a committee of fifteen members, consisting mostly of California Department of Insurance employees and representatives of caregiving organizations.

The Task Force has now met four times and must report its recommendations by the end of 2022.  It is looking at several programs elsewhere, but the main plan it is discussing is the recently enacted Washington State Cares Act.

The Cares Act will be funded beginning in January through a mandatory payroll tax of .58 % on all W-2 earners in the State.  This will give workers a lifetime benefit of up to $ 36,500, adjusted annually for inflation by Washington’s Consumer Price Index.

The concept in Washington and potentially in California is to provide a small long term care benefit and to encourage citizens to buy wrap-around private long term care insurance.  This would protect citizens and save the state many millions of future Medi-Cal dollars.

In my view, this noble effort got many things right in its design.  It’s a mandatory program.  It is funded by a progressive tax, so that the poor pay very little and the rich do a great deal of the funding.  Its benefits are far-reaching.  It has a seventy-five year vision, and the program can be adjusted to ensure its financial solvency.

However, there have been problems in Washington.  Citizens pushed back, as no one likes to be taxed.  Not all citizens are included and must opt-in.  Those employees who live or retire out of state will have to pay the tax but will not receive benefits.  Washington allowed a brief opt-out period for those who purchased private long term care insurance.  This created panic buying to avoid paying the tax, and the insurance industry was swamped with applications and could not cope with the business activity.

If California uses the Washington Cares Act as its model, which I believe it will, it will attempt to overcome its shortcomings.  Even with improvements, the benefits will be small and will not come close to covering most long term care scenarios.  Hopefully the Task Force will adopt a large marketing plan to recommend private insurance plans as a wrap-around to its public plan.

By Louis H. Brownstone

This Expense Could Deplete Your Retirement Nest Egg. Are You Prepared?

Hint: It’s an expense that many face but don’t properly plan for.

It’s no secret that retirement can be an expensive period of life. With housing, healthcare, and keeping busy, you might find that you spend more money during your senior years than anticipated. And for that reason, it’s important to come into retirement with a healthy amount of savings.

But there’s another major senior living expense that could catch you completely off guard. And if you’re not careful, it can potentially deplete your retirement savings and leave you miserably cash-strapped.

Gear up for long-term care

American men who turn 65 over the next few years will require an average of 2.3 years of long-term care, reports For American women, that estimate rises to 3.2 years.

Meanwhile, American men who turn 65 in the next few years will spend an average of $142,000 on long-term care, while women will spend $176,000. But unfortunately, Medicare won’t cover long-term care. And unless you come into retirement with a very robust nest egg, you might easily run down your savings balance in an effort to keep up with that expense.

So what’s the solution? It could boil down to long-term care insurance.

Long-term care insurance can substantially defray costs like nursing home care, assisted living, and home health aides. And while that insurance itself might not be cheap, it can, in many situations, pay for itself and then some.

The ideal age to apply for long-term care insurance is during your mid-50s. At that age, you’re more likely to secure a reasonable premium rate based on your age and health. At the same time, you’re not signing up to pay those premiums for too many years.

The American Association for Long-Term Care Insurance reports that the average 55-year-old man will spend $1,700 a year on premiums, while the average woman of that age will spend $2,675 per year. Meanwhile, the average cost for an opposite-gender couple age 55 is $3,050.

That said, long-term care insurance rates can vary, and they hinge on factors such as location and health. If you’re a 55-year-old man who’s overweight and smokes, you’re apt to pay more than a man that age who’s fit with no known health issues or risks. Either way, it pays to shop around with different insurance providers before settling on coverage.

Another thing you should know is that if you have funds in a health savings account (HSA), you can use that money to cover the premiums for long-term care insurance. That could, in turn, ease that burden.

While the idea of paying for long-term care insurance might seem daunting, your premium costs might pale in comparison to what you spend on actual care. Say you and your spouse wind up, as a couple, spending $3,050 a year on long-term care premiums for 30 years. That’s $91,500 — a lot of money. But if you both wind up needing the level of care estimated above, your total comes to $318,000 — more than three times as much. When you compare those numbers, long-term care insurance does read like a no-brainer.

Of course, such insurance might not cover all of your costs on an annual basis. But it could cover the bulk of them. And if you’re worried that an extended period of long-term care might result in financial ruin, then having insurance is a great way to buy yourself some peace of mind.

by Maurie Backman The Motley Fool has a disclosure policy.



The newly enacted Washington State Long Term Care Trust Act is a mandatory program which imposes a .58% payroll tax for all adult W-2 employees in Washington State beginning on January 1, 2022.  It will pay for long-term care services for a short period but lacks the following benefits when compared to private long-term care insurance:

  • No portability outside Washington
  • No inflation protection greater or less than the Consumer Price Index
  • No premium discounts for partners and spouses
  • No cash benefits
  • No shared care benefits
  • No Partnership protection

There is only one way to permanently opt-out of the Long Term Care Trust Act and its new payroll tax:  you must have other long-term care insurance in force before November 1st.

The Trust Act program could be less attractive to many when compared to the Washington Partnership for Long Term Care, a public/private plan.  This plan is also endorsed by the State and contains many features and benefits not included in the Trust Act.  You may want to compare the two programs, especially if your income and asset levels are above average.

For many, this Act will motivate you to create a long-term care plan now.  Learn about your options so that you can make an intelligent decision.  Contact us through this website or call 1-800-303-1527

Life Events That Trigger the Long Term Care Planning Decision

We wanted to know why people purchased long-term care
insurance when they did. What was going on in their lives
at the time? Was there an event that triggered a buying
decision? We discovered two important reasons people
bought their policies when they did – they were either
getting ready to retire or they knew someone who had
experienced a long-term care situation.
Retirement – We found that either planning for retirement
or entering retirement was a primary motivator for most
people. Those nearing retirement seemed to know it was
time to start planning for the future.
“I was retiring and I felt it was time to do it.” per policyholder
First-hand Experience – We also discovered that many
people were influenced by a loved one who needed longterm care services. This first-hand experience with a longterm care situation made many people say, “I don’t want
that to happen to me.”
“I’m going through it with my mother right
now – trying to pay her bills and make sure her
money lasts as long as possible. It just gives me
peace of mind to know my kids won’t have to
take care of me.” per policyholder


The Covid-19 virus entered the United States as early as December and created consternation by mid-March.  We did a poorer job by far in responding to this deadly virus than any developed country.  We are still lacking robust testing and contact tracing, and many Americans refuse to wear masks. By the time you read this, 500,000 Americans will have died due to Covid-19.

We faced a second wave of Covid-19 during the winter.  Even if a vaccine is proven to be effective, it could be many months before most Americans can be vaccinated, even if they want to be.  We will defeat this virus, but it may take a while longer.

The effects of the virus on us have been huge and have caused panic and uncertainty.  We have had to shelter in place.  In addition, we mentally have frozen in place.  In our efforts in trying to cope with the present threat of this virus, we tend not to think of our future.  Most of our financial planning, including long-term care planning, has been effectively placed on hold.

Now that a few months have passed we have learned a great deal, and we still don’t know a great deal.  But maybe enough of the fog has cleared that we can predict the future with at least some modest degree of accuracy.  This article will attempt to foresee the future of long-term care solutions as reflected in the eyes of government, insurance carriers and prospects.  We will only know years from now how accurate these predictions are.


Enormous deficit spending and lower tax receipts will create major challenges for local, state and federal governments.  They will have to cut back and eliminate many programs that its citizens want them to provide.  It is likely that we will be in a very low interest rate environment for many years.  Government debt will become dangerously high.  The Federal Reserve Board has reduced interest rates to almost zero in order to stimulate borrowing, and Congress has responded.  The Federal Reserve Board has many levers to control the rate of inflation, and it will utilize all of them to keep interest rates low and to stimulate the economy.

As President, Biden will be compelled to raise income taxes for the very rich in order to reduce deficit spending.  Even so, he will initially be limited in proposing spending for social causes, just because the money isn’t there.  His actions may be further limited if the Republicans still control the Senate.

He campaigned on health care as a major issue and will advocate a government health care option, not Medicare for all.  It’s questionable whether such an option would include long-term care benefits, due to the high cost of coverage.  My sense is that if long-term care benefits become a part of a government health care plan, it will either be a minimal benefit and/or it will be a rider and not be a part of the base policy.

Health care is such a complex subject that it will be fiercely debated and it could take years before a new government plan could become law.  Such a law would have to overcome the objections of insurance carriers, medical providers, hospitals and the device makers.  The public would have to overwhelmingly support such a plan for it to gain traction and succeed.  The Affordable Care Act took years to enact, and I foresee similar conditions now.

One major wild card here.  The Republican Party will eventually have to reinvent itself in the face of increasingly unfavorable demographics.  In this process, it could reject the extreme right philosophy that it has adopted under President Trump and move towards the political center.  That could dramatically alter the future and make social changes more likely.


Despite the increasing need, sales of traditional long-term care insurance policies have been declining for years, some 85 % down from the early 2000’s, and this product is now recognized by insurance carriers as an unprofitable loser.  This is still true in spite of the fact the premiums are up to three times what they were decades ago.  With one or two exceptions, the insurance carriers have lost all economies of scale, and at today’s sales levels, they can’t make much money if any regardless of what they charge.

In addition, with the very low interest rate environment forthcoming, their interest rate assumptions, already low, will still be higher than projected future income from safe investments.  They will either have to make riskier investments or seek further rate increases, even on current products.  There may also be more pressure on their reserves.

We still don’t know the long-term effects from Covid-19 on people’s health, especially the health of the older population.  What are the implications for one’s kidneys, livers, lungs and heart?  Will insurance carriers have to factor in unknown potential claims resulting from the long-term effects of this disease?

These factors have led to the insurance carriers being for more comfortable selling hybrid life/long-term care and annuity/long-term care products.  There has also been a large growth of life insurance policies with accelerated benefit riders, usually for chronic illness.  The distinction of benefits between these chronic illness riders and traditional long-term care insurance has become very small.  Now some 40 % of life insurance sales include riders which cover long-term care costs.

The risks in life insurance and annuities are far better known than the risks associated with traditional long-term care products.  These riders have become the main vehicle to protect people against the largest threat to their retirement.


The initial reaction of Americans to Covid-19 was to become, scared and threatened, and feel unsafe.  We retreated to our homes and ceased many of our normal activities.  We also had to learn to perform many routine functions differently and this required a significant mental adjustment.  Now was not a time to think about the future but to worry about the present and make sure that our changed lifestyle would provide for us the best chance of surviving the pandemic.

It’s obvious that the pandemic has resulted in horrible publicity for nursing homes, where many patients have become sick and died.  It’s even more difficult now to envision anyone interested in nursing home insurance, or even long-term care insurance with its history of caregiving in nursing homes and assisted living facilities.  Almost everyone will want to be cared for at home instead.  It’s actually a small mental difference from “sheltering in place” to “nursing care in place.”  Life insurance products which cover long-term care costs provide less of this nursing home stigma and will be more readily accepted.

This nursing home stigma may require a change in long-term care product marketing to become something like “home caregiving insurance,” rather than long-term care insurance, even if it includes benefits for care in nursing homes and assisted living facilities.  There will have to be a large increase in both the number of caregivers and in their compensation due to the rejection of nursing homes and the rising demand of folks to stay at home.

Now that a few months have passed, and the methods to fight this virus have become better understood, we have become less fearful and are beginning to resume some of our normal activities.  We can even envision a time when we will be able to adjust to whatever the new normal is and go on with our lives.  This may take a few months longer, but it will happen eventually.

This could cause a long-range change in our thinking from the immediate crisis to a longer view of our needs.  At that time, we will consider protection to be the basic need that it has always been.  Protection can take many forms, but we will mostly want to protect our families against loss of income due to death and expense due to bad health.

Therefore, I envision a slow but steady growth of hybrid/life long-term care insurance and life insurance with long-term care riders or chronic illness riders.  This could take up to ten years to occur, but many will recognize the need for this protection and take action to protect their families.

Our current system of health care is unsustainable and we all know it.  There will continue to be a great deal of talk and no action until a consensus emerges.  I foresee a completely different system in place by 2030 with some sort of health care for all.  It’s going to be interesting to see what form it takes.  Stay tuned.

By Louis H. Brownstone