Hybrid Long-Term Care Might Be Right for You

Obviously, this product isn't for everyone. Consider it only if you meet the following criteria:

• You have significant liquid assets available. With a single premium payment ranging from $50,000 to $100,000, a hybrid policy is only for those with significant cash available that can be reallocated. Mark Chandik, a managing partner of Financial Diligence Partners in Irvine, Calif., finds that his high-net-worth clients like the idea of repositioning and leveraging liquid assets. "My clients are smart about making their money work for them" says Chandik. Of course, if you have a spouse that needs to be insured, you're talking about double this figure.
• You understand the risk to your portfolio. Once you have accepted that you may need care someday and that this care may be very expensive, the next step is to take a good look at what that will mean to your retirement portfolio. If you want to protect your assets, then consider insuring some of the risk.
• A stand-alone, long-term care policy is not an option. If you are not interested in paying premiums indefinitely on a policy you may never use, then the hybrid product -- with a death benefit built in -- may be an option. Or perhaps you aren't thrilled with the possibility of getting hit with an increase in premiums if the insurer has not set aside enough reserves. By paying a single premium up front, the issue of premium increases evaporates.
• You have been planning to self-insure. Mark Doherty, business leader of hybrid products at Lincoln Financial Group, suggests that "the funds used to pay the lump-sum premium should come from a larger pool of savings already put aside for long-term care needs." If you haven't already recognized the financial risk of the cost of long-term care, you are not ready for this product.
• The ability to get something back for your premiums and retaining control of your money is important to you. You will, at minimum, get the use of your full premium either through long-term care benefits, a death benefit or by requesting a return of premium.
• Simplicity is important. While the long-term care portion of the policy contains the same framework of coverage as a stand-alone policy, there are fewer bells and whistles to add -- or to complicate the deal. Inflation riders are available, but with the target policyholder age between 55 and 75, the initial purchase is often enough to cover future cost increases or self-insure remaining costs. (Another option is available with New York Life's Asset Preserver, which allows you to purchase add-on benefits of 5% annually until you no longer feel it necessary.)

I came across only a handful of carriers that offer these plans in some form or another, including New York Life Insurance and Annuity Corp, or NYLIAC (a subsidiary of New York Life Insurance Company), Lincoln Financial (LNC Quote), Genworth (GNW Quote) and Golden Rule Insurance, a subsidiary of UnitedHealth (UNH Quote).

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