Hybrid Life and Long-Term Care Insurance

Q: 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.

Life insurance and long-term care insurance can each play vital roles in your financial planning. While life insurance helps protect your loved ones if you pass away by paying them a death benefit, long-term care insurance helps you pay for things like caregivers or long-term care facilities. Some insurers offer hybrid life insurance, which combines both into one policy. Below, we’ll explain how hybrid life insurance works and share some of its benefits and drawbacks to help you see if you should consider this type of policy.

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Table of Contents

What is hybrid life insurance?

Hybrid life insurance, sometimes called hybrid long-term care insurance, combines permanent life insurance with long-term care insurance. It pays a death benefit to beneficiaries if you pass away during the policy term and has benefits available while you're living, to help cover long-term care costs, such as a caregiver or long-term care facility.¹

Types of hybrid life insurance policies

Hybrid life insurance can come in several forms:²

Linked benefit life insurance

Linked benefit life insurance is one type of hybrid life insurance that combines life insurance and long-term care benefits within a single policy structure. Depending on the policy, premiums may be paid as a single lump sum or through a scheduled premium payment plan. If long-term care benefits are not used, a death benefit may remain available for beneficiaries, subject to the terms and conditions of the policy.

Life insurance with a long-term care rider

Life insurance riders allow you to add optional features or benefits to a life insurance policy. A long-term care rider provides access to benefits that may help cover eligible long-term care expenses. Adding a long-term care rider may increase the cost of coverage. Riders tend to provide less long-term care coverage than linked benefit life insurance policies and may be more cost-conscious.

Life insurance with a chronic illness or critical illness rider

Chronic illness and critical illness riders may provide a cash benefit if you are diagnosed with a qualifying condition, subject to policy terms. These benefits can help with expenses associated with treatment, care, and other financial needs that may arise while managing a covered condition, including during periods when you may be away from work.

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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: May help cover long-term care expenses and provide a death benefit

Hybrid life insurance combines life insurance coverage with benefits that may help cover eligible long-term care expenses. This can help you hedge against future scenarios without managing separate policies and tracking several premium payments.

Pro: Flexibility with premium payments and benefits

Depending on the policy, hybrid life insurance may offer different premium payment options, such as a single premium payment or premiums paid over time. This flexibility can allow individuals to choose a payment structure that aligns with their financial situation and coverage needs. Available payment options and policy features vary by insurer and product.

Pro: Consistent premiums

Depending on the policy, premium costs may 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: Higher Premium Costs

Hybrid life insurance policies combine life insurance coverage with long-term care benefits, which may result in higher premiums than some policies that provide only one type of coverage. Depending on the plan, it may be possible to adjust certain coverage features or benefit levels, which could affect the cost of the policy.

Con: Waiting Period Before Long-Term Care Benefits Begin

Many long-term care benefits are subject to an elimination period, which is the amount of time that must pass after a qualifying claim before benefits become payable. Elimination periods vary by policy and may affect when benefits are available. A 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 During this waiting period, policyholders may need to cover ongoing expenses from other available resources while receiving care or spending time away from work.

However, policy elimination periods can typically range from 30-days to two-years, with longer periods, possibly resulting in cost-effective premiums. Available elimination period options vary by insurer and policy, and may allow you to select a coverage design that aligns with your needs and financial situation.

Con: Long-Term Care Benefit Use May Affect the Death Benefit

Depending on the policy design, using long-term care benefits may reduce the amount of the death benefit available to beneficiaries. As a result, individuals may want to consider both their potential long-term care needs and their goals for providing a death benefit when evaluating coverage options. This may require additional financial planning to help ensure you balance coverage for loved ones with long-term care assistance.

How much does hybrid long-term care insurance cost?

Premiums for hybrid life insurance can vary significantly based on the policy design and individual circumstances. Some policies can be funded through annual premiums that may total several thousand dollars per year, while others allow for a single premium payment. Actual premiums will vary by insurer, age, health status, coverage amounts, and policy design. Factors that may affect the cost of coverage include:³

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: Depending on the plan and applicable regulations, gender may be considered in determining premiums.

Elimination period: Policies with shorter elimination periods may have different premium costs than policies with longer elimination periods.

Smoking/Tobacco Use: Tobacco users may face higher premium rates than non-users.

Is hybrid life insurance right for me?

Here are some instance where a hybrid life insurance policy way be worth considering:

Retirement planning: Healthcare and long-term care tend to become part of a broader strategy when on a fixed income and when health issues could appear. Hybrid life insurance can help you cover long-term care costs and can help protect your loved ones, making it worth considering.

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 seeking an integrated coverage option: Depending on the plan design, hybrid life insurance may combine life insurance and long-term care benefits within a single policy structure, which some individuals may find easier to manage than separate coverage arrangements.

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

Traditional permanent life insurance: Permanent life insurance provides life insurance coverage and may accumulate cash value over time, depending on the policy. You may be able to access available cash value through loans or withdrawals, subject to policy terms and conditions. Loans and withdrawals may reduce the policy's cash value and death benefit. 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.

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