How Do Traditional And Hybrid Long-Term Care Insurance Differ?

One of the options a person has for financially preparing for the possibility of needing long-term care at some future point is getting long-term care insurance. There are a variety of different types of long-term care insurance policies, so there are all kinds of important decisions for a person to make when they have decided to pursue getting such insurance. One is the decision of whether to get a traditional or hybrid policy.

Traditional and hybrid are the two main classes of long-term care insurance. The main way these two classes differ is in what happens when the policyholder dies.

In traditional long-term care insurance, benefits payouts are generally just limited to paying for qualifying long-term care expenses. So, once a person dies, the policy will typically not pay out any further benefits, regardless of how much in benefits the person received during their lifetime.

In a hybrid insurance policy, however, a death benefit provision typically is present in addition to the long-term care coverage provisions. In these policies, there is generally a certain amount that is set aside that can be used either to cover long-term care expenses or as a death benefit. So, if this specified amount isn't completely exhausted in relation to long-term care costs during the course of a person's life, the policy will generally pay out a death benefit to their beneficiaries upon their death.

These two policy classes can also differ in other ways, such as in the structure of premium payments.

Whether a traditional or hybrid policy would be best-suited for a given individual is heavily situation-dependent, as each class has its particular pluses and minuses.

Another thing that it is important to note is that decisions regarding long-term care insurance don't happen in a vacuum. What decisions a person makes regarding such insurance (such as whether or not to have such insurance and what type of policy to have) could have major implications when it comes to other aspects of their long-term care planning and their estate planning. Long-term care planning lawyers can help individuals who are thinking of getting long-term care insurance understand how what they decide regarding such insurance could impact their overall long-term care plan and estate plan. Such lawyers can also help them incorporate whatever they decide into their overall plan.

Source: USA Today, "3 types of insurance everyone should consider," Barry Glassman, March 13, 2016

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