Long Term Care Insurance: It’s No “Quacking” Matter

We’ve all seen the commercials with the talking duck, right? The company sells “insurance for medical injuries or disabilities.” It is an additional policy you can buy, just in case. Long term care insurance policies go one step further. Very succinctly, they provide similar types of insurance but for folks who have long term medical illnesses or disabilities.

Now, enter the age of Hybrid Insurance friends. Say what? Let me explain. Until recently, aging Americans (that’s us) had three choices if we became incapacitated due to injury, age or illness. Unfortunately, long term care is not covered by most health insurances, disability income insurances, or even Medicare (hence the duck and other companies who serve this market).

According to The Wall Street Journal, a policy with “long-term-care coverage with a potential life-insurance benefit are called ‘hybrids,’ and they are reshaping the long-term-care niche of the U.S. insurance industry.” In 2017, about 66,00 traditional insurance policies were sold, but more than 260,000 Hybrid Insurance policies were purchased. So yes, this is now a “thing” and you should know about it.

I know you are thinking, “Is this all really necessary?” Well, consider the stats: According to federal government projections as reported by The Wall Street Journal: “about a quarter of Americans turning 65 between 2015 and 2019 will need up to two years of long-term care. Twelve percent will need two to five years, and 14% will need more than five years. At $15 an hour, around-the-clock aides run $131,400 a year, while private rooms in nursing homes top $100,000 in many places.” Folks this is a general estimate — some states it will run higher and don’t forget inflation. SO, yes, it would be VERY wise to build this into your estate plan because many American families are seeing their retirement wiped away by these unplanned, tragic expenses.

What is so great about Hybrid Insurance. vs. regular LTC insurance? “Besides the death benefit … hybrids also include a ‘return of premium’ feature. This allows buyers to recoup much of their money if they want out of the transaction, albeit without interest,” explains The Wall Street Journal. Regardless of what type of long term care insurance you decide upon, Americans are living longer and the cost of living will continue to rise, so investing in this as part of your Estate Planning portfolio makes a lot of sense for most families with members of any age. Please feel free to reach out with questions!