Bud Boland has spent his career providing financial and planning advice to wealthy clients.
Increasingly, he says, customers are sensitive to the demands of the longevity trend and want to invest in long-term healthcare insurance.
For high-net-worth clients and those with substantial incomes, hybrid LT care policies can be an effective planning vehicle. These customers are often counseled to simply self-insure – that is, to cut out the insurance company and use their own substantial assets to cover future medical expenses. Boland thinks this idea is suboptimal, as hybrid LT care policies provide healthcare protection and the advantages of life insurance in one package.
Hybrid policies are purchased either through a single lump-sum payment or by paying premiums over several years. If LT care is needed, payments are made in a manner similar to traditional policies. In the event that long-term healthcare is never needed, though, hybrid policies pay a death benefit to heirs once the covered party finally dies.
Boland indicates a particularly appealing feature of these policies. The death benefit for hybrid policies usually equals the purchase price. However, if LT care is needed, the amount available can well-exceed the death benefit. He gives the example of a policy that cost $110,000, provided a death benefit of $144,000, and offered a considerable $432,000 in long-term healthcare coverage.
The stumbling block is that initial payment. However, Boland notes that a $110,000 investment, earning 5% per annum, would take 28 years to reach the level offered by the hybrid policy. For those with the cash in hand, hybrid LT care policies can offer appealing benefits.
For more information, please read:
Does It Makes Sense to Buy Hybrid Long-Term Care Insurance? | Kiplinger