Hybrid Life and Long-Term Care Insurance

Pros and cons of hybrid life insurance

Hybrid life insurance’s dual coverage can offer several advantages, but there are some drawbacks to consider as well. Here are some pros and cons of hybrid life insurance:²

Pro: Can pay for long-term expenses and provide a death benefit

Hybrid life insurance can help you pay for long-term care expenses, such as facility or caregiver costs, while protecting your loved ones with a death benefit. This can help you hedge against future scenarios without managing separate policies and tracking several premium payments.

Pro: Flexibility with premium payments and benefits

Hybrid life insurance policies often let you choose between monthly premiums or one single payment. Making a single payment can help you achieve coverage without worrying about future monthly payments if you have the money available. Meanwhile, monthly premiums may be more budget-friendly, letting you pay for your coverage over time. This flexibility helps a larger range of prospective policyholders take advantage of hybrid life insurance.

Pro: Consistent premiums

Premium costs do not change once you get your hybrid life insurance policy, making your coverage costs predictable. As a result, you can fit coverage into your budget more easily.

Con: Premiums may not be budget- friendly.

Bundling life insurance and long-term care insurance into one policy results in less budget-friendly premiums to account for more coverage. This can make these policies harder to afford for some, whether they pay a lump sum or monthly payments. That said, since there are a few ways to structure a hybrid policy, you may be able to reduce the long-term care coverage available to fit your desired budget.

Con: Longer elimination periods

An elimination period is how long you must wait before receiving your long-term care benefits after filing a claim. The most common elimination period is 90-days but can be anywhere between 30 and 365 days, which means you’ll have to wait until the elimination period is over before you’ll receive any benefits for a claim.² This means you’ll need to pay for coverage and replace income yourself for a few months.

However, policy elimination periods can typically range from 30-days to two-years, with longer periods, possibly resulting in cost-effective premiums. Therefore, you may be able to customize your elimination period to meet your needs.

Con: Long-term care payouts can reduce the death benefit

Tapping into the long-term care benefits can reduce the death benefit, resulting in fewer funds available for beneficiaries when you pass away. Therefore, you must weigh your potential long-term care needs against your life insurance coverage needs. This may require additional financial planning to ensure you balance coverage for loved ones with long-term care assistance.

How much does hybrid long-term care insurance cost?

A healthy 62-year-old couple could expect to pay about $13,335 annually for a hybrid long-term care insurance policy offering $240,000 in long-term care coverage and $160,000 in death benefit coverage per person, for example.³ The cost of hybrid long-term care insurance can vary due to several factors, such as:

• Age: Premiums tend to vary with age.


• Health history: Your personal and family health history could impact premiums. For example, a history of a health condition could impact premiums.


• Gender: Men pay more than women for life insurance, on average.


• Elimination period: Selecting a shorter elimination period may result in higher premiums since the insurer bears more risk.


• Job: Riskier jobs, such as law enforcement, construction, or aviation, may affect premiums.


• Lifestyle: Certain hobbies, like skydiving and car racing, are riskier for insurers and may also affect premiums.


• Smoking status: Smokers pay higher premiums than nonsmokers for life insurance.

Is hybrid life insurance right for me?

Here are some instances where a hybrid life insurance policy could make sense:

• Retirement planning: Healthcare and long-term care become more crucial in retirement when on a fixed income and when health issues could appear. Hybrid life insurance helps you cover long-term care costs and helps protect your loved ones, potentially making it a valuable retirement asset.


• Older couples planning for the future: As you age, you may have a better picture of potential long-term care needs. A hybrid life insurance policy could be helpful.


• Single parents: Single parents must make sure their children are provided for if they pass away, but also may not have the ability to cover long-term care costs. A hybrid life insurance policy can help cover both cases, protecting themselves and their child.


• Individuals who want to streamline their coverage: Anyone who needs both life insurance and long-term care could simplify their financial management with a hybrid life insurance policy. Combining two policies eliminates the need to juggle premiums and terms.

If hybrid life insurance isn’t right for you, here are some alternatives:

• Traditional permanent life insurance: This policy offers lifelong coverage and a cash value growth component that grows with each payment and may earn tax-deferred interest. You may be able to tap into the cash value via no-credit-check, low-interest loans, or withdrawals. This could help cover long-term care costs.


• Standalone long-term care insurance: If you don’t need life insurance, you could purchase a standalone long-term care policy to only help cover long-term care costs. For instance, if your loved ones have enough assets to help replace your income but may not be able to cover long-term care costs, a standalone policy could make sense.


• Term life insurance with a long-term care rider: If cost is a concern, getting term life insurance with a long-term care rider could help. Term life insurance may not cost as much as permanent life insurance, helping you get long-term and life insurance coverage for your budget. However, term life insurance can expire.


• Annuities with long-term care benefits: Annuities pay a fixed income stream in retirement. Adding a long-term care rider allows the option for long-term care coverage. These may work well if you don’t need death benefit coverage but instead are seeking a source of income in retirement and want long-term care coverage for a fixed premium.

Learn more about life insurance

Hybrid life insurance rolls life insurance and long-term care coverage into one policy, helping you protect your loved ones from financial issues before and after you pass away. However, keep in mind these policies' premiums can vary, come with elimination periods, and may reduce the payout of the death benefit if you tap into long-term care benefits. To learn more about life insurance and explore your options, speak with an Aflac agent today.