Hybrid Life and Long Term Care Insurance with Lifetime Premiums – Long Term Care University
Long Term Care University – Question of the Month – 05/15/25
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 our lifetimes? 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 Your Lifetime 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 want initial monthly benefits of $5,000 ($10,000 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. Bill and Sue are comparing Hybrid policies that offer the largest LTC benefits and inflation protection and prefer cash indemnity. Nationwide CareMatters II and Nationwide CareMatters Together offer a Pay to Age 100. OneAmerica State Life Asset Care offers a Page to Age 95. See 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. Nationwide Care Matters IIprovides $10,469 monthly and $812,606 total benefits for Bill and $10,469 monthly and $812,606 total benefits for Sue. Nationwide CareMatters Together provides $10,469 monthly benefits for Bill and Sue and $1,117,115 (shared). OneAmerica State Life Asset Care with 3% compound inflation protection provides $10,469 monthly benefits for Bill and Sue and unlimited, lifetime total benefits – the highest total benefits (unlimited).
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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 lifetime premiums that are guaranteed 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.
