Hybrid Life and Long Term Care Insurance with 10-Pay Premiums – Long Term Care University
Long Term Care University – Question of the Month – 04/15/25
By Aaron Skloff, AIF, CFA, MBA
Q: We read the Long Term Care University article ‘Traditional Versus Hybrid Life and Long Term Care Insurance’ and prefer the Hybrid Life and Long Term Care Insurance (LTC) policy. Can we pay for Hybrid Life and LTC policies over 10 years? Will the premium be guaranteed each year?
The Problem – Guaranteed Premiums for an Insurance Policy Paid Over Time
Can you imagine if your major medical health insurance, car insurance or homeowners insurance premiums were guaranteed from year to year? Not only are those premiums not guaranteed, but the insurance companies can increase deductibles or even drop your coverage. In the case of major medical health insurance, the insurance company can simply remove your doctors from their “preferred provider network” or “in plan providers”. This leaves you with a list of inferior doctors to choose from or forces you to pay additional out of pocket costs by going out of your network (if your plan even allows out of network providers). Many believe these same problems exist in Hybrid Life and LTC policies.
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The Solution – Hybrid Life and Long Term Care Insurance Premiums Paid Over 10 Years with Guaranteed Premiums Each Year
Many believe Hybrid Life and LTC Insurance companies can simply eliminate which care providers you choose, change your deductible, reduce or drop your coverage, or increase your premiums. Fortunately, Hybrid Life and LTC Insurance policies are based on a pool of money that allows you to choose your care providers without a list determined by the insurance company. The policies have guaranteed deductibles and guaranteed coverage amounts. You cannot be dropped if you pay your premium – even if you file multiple claims. The policies have guaranteed premiums.
Numbers Speak Louder than Words. Let’s look at a husband and wife, Bill and Sue, who are each 55 years old and reside in Maryland. They each pay a $10,000 premium per year for 10 years ($20,000 combined with Nationwide CareMatters Together and OneAmerica State Life Asset Care) and are expected to need LTC in 25 years at the age of 80. Insurance companies classify a premium paid-up (no further payments required) in 10 years as a “10-Pay”. Bill and Sue are comparing Hybrid policies that offer the largest LTC benefits and inflation protection (unless noted otherwise) and prefer cash indemnity. See reimbursement policies in blue and cash indemnity in green in the chart below.
How the Insurance Policies Compare to One Another. The following table reflects Sue and Bill’s monthly and total benefits at age 80. Brighthouse SmartCare provides $12,863 monthly and $998,452 total benefits for Bill, and $10,678 monthly and $828,859 total benefits for Sue. John Hancock LifeCare provides $3,103 monthly and $223,418 total benefits for Bill, and $2,569 monthly and $184,951 total benefits for Sue. Lincoln MoneyGuard Fixed Advantage provides $13,255 monthly and $1,028,832 total benefits for Bill, and $11,400 monthly and $884,872 total benefits for Sue – the highest total benefits without full cash indemnity and without unlimited benefits, and a 0 day elimination period. Nationwide Care Matters II provides $12,401 monthly and $962,539 total benefits for Bill, and $10,638 monthly and $825,737 total benefits for Sue. Nationwide CareMatters Together provides $8,199 monthly benefits for Bill and Sue and $874,933 (shared). OneAmerica State Life Asset Care without inflation protection provides $8,796 monthly benefits for Bill and Sue and unlimited, lifetime total benefits – the highest total benefits without inflation protection (unlimited). OneAmerica State Life Asset Care with 3% compound inflation protection provides $8,891 monthly benefits for Bill and Sue and unlimited, lifetime total benefits – the highest total benefits with inflation protection (unlimited). Securian Minnesota Life SecureCare III provides $13,192 monthly and $1,002,559 total benefits for Bill, and $11,330 monthly and $861,078 total benefits for Sue – the highest total benefits with full cash indemnity and without unlimited benefits.
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Conclusions. Premium payments options vary by insurance companies. While a single pay Hybrid Life and LTC Insurance policy may provide the most generous benefits, the same policy may provide less generous benefits if the premiums are paid over time – such as 10 years with guaranteed premiums each year. Since premiums vary greatly based on age, health and marital status, request individualized quotes.
Aaron Skloff, Accredited Investment Fiduciary (AIF), Chartered Financial Analyst (CFA) charter holder, Master of Business Administration (MBA), is the Chief Executive Officer of Skloff Financial Group, a Registered Investment Advisory firm. The firm specializes in financial planning and investment management services for high net worth individuals and benefits for small to middle sized companies. He can be contacted at www.skloff.com or 908-464-3060.
