Hybrid pay plans use either a life insurance policy or an annuity contract as the base platform from which the long term care benefit is calculated. The amount of the long term care benefit is based upon the amount of the initial deposit, the age, gender and smoking status of the insured.

What are the advantages of a hybrid plan contract?

The client can surrender the contract at any time and would be guaranteed to receive back 80% of the original premium deposit.

Clients are essentially buying two pools of money:
1) Base LTC Benefit/Death Benefit pool
2) Extension of Benefits pool

The base contract has a two year benefit period for long term care. If never used, the entire pool is paid out as Death Benefit.

The client can choose to add a coverage extension rider that extends the coverage for either two or four more years.

When a client goes on claim, they start deducting from the first pool, which is also their death benefit. Should the client use this full benefit, there is still a guaranteed residual DB (usually 10%) that will pay out to the beneficiary. At this time, the second pool of money will activate and LTC coverage will continue.

In NY, only the Extension of Benefits Rider can include an Inflation Protection provision, up to 5%.

Outside of NY, the Inflation Protection provision can cover both the first two years of coverage (base benefit) and the Extension of Benefits Rider.

Depending on carrier, monthly LTC benefits will be a reimbursement or indemnity product.

What scheduled premium payment options are available?

The scheduled premium payment options are dependent on the state of issue of the policy and the age of the insured. Some examples of what might be available are Single Premium, 5-Pay, 10-Pay, Pay to 65, Pay to 95, and Pay to 100.

Who are potential clients?

-Clients who are between the ages of 40 and 70.

-People who have “sleeping assets” such as CD’s and bonds that are maturing and can use these funds to purchase a single pay plan.

-Higher income earners who have surplus cash and like the idea of buying now at a lower cost and not paying premiums in retirement.

-Insured with qualified plans that want to protect the value of the asset and not place the burden of providing their care on their families.