Q. Why hybrid insurance is better than individual permanent life insurance the long term care insurance?
A. A hybrid insurance product combines the features of permanent life insurance with long term care insurance, its benefits and premiums are guaranteed. The insurance company either:
- pays you if you need Long Term Care (LTC)
- pays your heirs if you do not need LTC
- pays you and your heirs if you need a modest amount of LTC
- pays you a refund if you cancel the policy.
Below we will use Nationwide YourLife CareMatters Combination Life and Long Term Care Insurance product as an example to illustrate its features:
Overview. Nationwide Life and Annuity Insurance Company is part of Nationwide Mutual Insurance Company, an A.M. Best A+ rated, 92-year-old company. The Nationwide YourLife CareMatters policy is a Combination Life and Long Term Care Insurance (also called hybrid or asset based) policy. With Traditional LTC policies, premiums can be increased and you may not receive any benefits if you do not need LTC. With Combination LTC policies the benefits and premiums are guaranteed. The insurance company either pays: 1) you if you need LTC, 2) your heirs if you do not need LTC, 3) you and your heirs if you need a modest amount of LTC or 4) pays you a refund if you cancel the policy.
Nationwide YourLife CareMatters is Unique Because it is a Cash Indemnity Policy. There are three benefit payment methods among LTC policies. Reimbursement policies, the most common type of policies, require you to submit documentation of all expenses for reimbursement up to your monthly LTC benefits. Traditional Indemnity policies pay up to your monthly LTC benefits if you show even $1 worth of LTC expenses, or documentation of informal care. Cash Indemnity policies pay your monthly LTC benefits regardless of your actual LTC expenses, without needing to submit monthly bills or receipts.
Nationwide YourLife CareMatters is Unique Because It Pays for Formal and Informal Care from Family and Friends. Most LTC polices prohibit informal care, particularly if the care is provided by a family member. The Nationwide YourLife CareMatters policy allows you to use formal care providers (home care agencies or facilities) and informal care providers, including family and friends. Since informal care can be much less costly, you can obtain significantly more care with a lower monthly benefit. This is very valuable for home care.
Nationwide YourLife CareMatters Policy Options. The policy options include: Benefit periods of 2-7 years; Inflation protection of none, 3% simple, and 5% compound; Elimination period of 90 days; Cash indemnity based benefit payment method of the full monthly benefit, regardless of actual LTC expenses; Residual life insurance benefit (even if you deplete of your LTC benefits) equal to 20% of the face amount of insurance and a Return of premium vesting schedule 85% year 1, 88% year 2, 92% year 3, 94% year 4, 97% year 5, 100% year 6.
How Nationwide YourLife CareMatters Compares with Other Combination Life and LTC Policies. Let’s look at a husband and wife, Bill and Sue, who are each 55 years old and reside in New Jersey. They each pay a $100,000 one-time premium and are expected to need LTC in 25 years at the age of 80. They are comparing Combination policies that offer the largest LTC benefits, with six years of LTC and inflation protection included in the premium. They prefer Indemnity policies (highlighted in blue below).
Action Steps and Conclusions. Nationwide YourLife CareMatters provides high monthly and total LTC benefits, with the flexibility of formal and informal care providers. Since premiums vary greatly based on age, health and marital status, request individualized quotes.