Hybrid Long-Term Care Insurance
Also called asset-based or linked-benefit long-term care. It is a life insurance policy whose death benefit can be spent on care instead — so if you never need care, the money is not wasted. That single feature is why most new long-term care business is now written this way.
Read this first
Long-term care insurance is medically underwritten. Acceptance is not guaranteed and health history matters, which is why waiting until care is close usually removes the option entirely.
Benefits on a tax-qualified contract are triggered by a licensed health care practitioner certifying that you cannot perform at least two activities of daily living for a period expected to last at least 90 days, or that you need substantial supervision because of severe cognitive impairment.
Medicare does not pay for custodial long-term care — help with bathing, dressing, eating and moving about. It pays only limited skilled care under narrow conditions. Check this for yourself at Medicare.gov or with your State Health Insurance Assistance Program before relying on anything an agent tells you.
A hybrid policy is life insurance with a long-term care rider. Care benefits are paid by accelerating the death benefit, so every dollar used for care reduces what your beneficiaries receive.
Whether the care rider is filed under Internal Revenue Code section 7702B or section 101(g) changes what the contract is and how it pays. Ask which one, in writing, before you compare two policies on price.
The problem it solves
The honest objection to traditional long-term care insurance is that you might pay for thirty years and get nothing. Combined with the fact that premiums are not guaranteed, that objection stops a great many people from buying any protection at all — which leaves them with the worst option of the three.
A hybrid policy answers it directly. You fund a life insurance policy, usually with a single premium or over a set number of years. If you need care, the death benefit is accelerated to pay for it, and most designs add a second pool that keeps paying after the death benefit is exhausted. If you never need care, your beneficiaries receive the death benefit.
Three things happen, in this order
You fund the policy, often in one payment or over a set term
Unlike a traditional policy there is usually no open-ended premium, which removes the risk that a future increase forces you to lapse.
Care benefits accelerate the death benefit
Every dollar drawn for care reduces what your beneficiaries receive. Many designs add an extension-of-benefits pool that continues after the death benefit is used up, and many keep a small residual death benefit so heirs receive something even after a long claim.
If care never happens, the death benefit is paid
And most designs include a return-of-premium or surrender guarantee, so you are not locked in with nothing to show. Ask what that guarantee is and when it becomes available.
Who this suits, and who it does not
The second list matters more than the first. An agent who only writes the first one is selling, not advising.
Worth considering if…
- The use-it-or-lose-it structure of a traditional policy is what has stopped you buying anything, and you would rather accept less care benefit per dollar than risk paying for nothing.
- You have a lump sum — savings, a matured CD, an old annuity or an old life policy — that is not doing a defined job and could be repurposed.
- You want a premium that cannot be raised, and you value that certainty more than the larger benefit pool a traditional policy would buy.
Probably not for you if…
- You want the most care coverage per dollar. Traditional insurance buys a larger pool for the same money. You are paying for the death benefit and the return-of-premium guarantee, and they are not free.
- You do not have a lump sum and would have to strain to fund it. These are usually funded from assets rather than income.
- Nobody has told you which tax section the care rider is filed under. A section 101(g) chronic illness rider and a section 7702B long-term care rider look similar in a brochure and behave very differently at claim. Read our riders page before comparing two policies on price.
Who we are appointed with
We are independent and appointed with the companies below for this product. Which of them we would approach for you depends on your age, your state, your health history and how the policy is to be funded — underwriting and design differ sharply between companies, which is the practical reason for working with someone who can approach more than one. Premiums depend on all of those, so they are quoted for you directly rather than published here.
- Brighthouse Financial
- Global Atlantic (Forethought Life)
- Lincoln Financial Group
- Mutual of Omaha
- National Guardian Life
- Nationwide
- OneAmerica
- Securian Financial (Minnesota Life)
Being appointed with a company does not mean that company offers every product on this page, and we do not represent every insurer. Which company suits you depends on the product, your age, your state and your health history. We publish no benefit, rate or feature for any company here until we can cite it to that company's own current material.
Questions people actually ask
How is this different from traditional long-term care insurance?
Three ways that matter. The premium is usually fixed and often paid in a lump sum, so it cannot be raised the way a traditional premium can. If you never need care there is a death benefit rather than nothing. And in exchange for both, the same money buys a smaller pool of care benefit than a traditional policy would. You are trading benefit size for certainty and for not losing your money.
What happens to the death benefit if I use it for care?
It reduces, usually dollar for dollar. That is what acceleration means — the care money is your death benefit, paid early. Many designs then add an extension-of-benefits pool that keeps paying care benefits after the death benefit is exhausted, and many keep a small residual death benefit so your beneficiaries receive something regardless. Ask specifically whether a policy has both.
Can I get my money back if I change my mind?
Usually some or all of it, under a return-of-premium or surrender guarantee that is a standard feature of this design. The percentage and the timing vary: some are available immediately, some phase in over several years, and some are reduced if benefits have been paid. Ask for the surrender value schedule in writing rather than accepting a general assurance.
Is a hybrid policy medically underwritten?
Yes, though usually less stringently than a traditional long-term care policy, and some designs use simplified underwriting. It is not guaranteed issue, and health history still matters. If you have been declined for traditional coverage it is worth asking whether a hybrid would be accepted, because the answer is sometimes yes.
Ask for a quote on Hybrid (Asset-Based) Long-Term Care Insurance
Tell us how to reach you and which state you are in. A licensed agent calls back, usually the same business day, and will tell you plainly if a fully underwritten policy would serve you better.
The other three
Same family, different jobs. Match the product to how long the need lasts.
Traditional Long-Term Care Insurance
A standalone policy paying a monthly maximum toward care, after an elimination period, up to a pool of benefit. You pay a premium for life, and if you never need care you get nothing back.
Worth a look if you are insurable, in your fifties or early sixties, and want the most benefit per dollar.
Annuity-Based Long-Term Care
An annuity whose value can be drawn on for qualified long-term care, often with easier underwriting than a standalone policy. Frequently confused with an annuity income doubler, which is a different thing entirely.
Worth a look if you have been declined elsewhere, or have an annuity doing no defined job.
Long-Term Care and Chronic Illness Riders
Riders that let a life insurance policy pay for care. Two of them look alike on a brochure and behave very differently at claim, and only one of them is long-term care insurance.
Worth reading before you compare two life policies where one advertises a care feature.