LTC / Life InsuranceThese plans provide two forms of protection in one policy. Depending on the carrier, both recurring-premium and single-premium plans are available. Because the plan incorporates life insurance, these policies pay a death benefit to the insured’s beneficiaries. They differ from life-insurance-only policies in one of two ways. In one approach, the insured may use as much of the death benefit as needed to pay for qualifying long term care costs. Another option is an “optional rider” design, in which the base policy is permanent life insurance and the long term care benefit protection is provided through an optional rider. These policies often require a recurring premium payment.
Single or Limited Pay LTC / Life Linked Benefits or HybridsThis type of plan provides:
- The same triggers as traditional Long Term Care Insurance.
- Death benefit to beneficiary if some or no LTC benefits are used.
- One premium or limited payment premiums with no rate increases.
- There are plans in some states with annual premiums.
- An ideal option for repositioning dormant assets or “safe money.”
- 1035 exchange.
- Small guaranteed residual death benefit.
- No tax incentives – no credits or deductions for premiums.
- No cash or shared pools, only reimbursement plans.
- Note: New York State does NOT allow inflation protection on the first two years of the accelerated death benefit. Inflation protection is calculated after 24 months. There is state-specific treatment for these plans.
- Might not provide as robust an LTC benefit as stand-alone plans, given purchasing of both Life and LTC protection.