May 25, 2019

Hybrid Long Term Care Insurance (LTC)

by JessAB

Long term care insurance (LTC) is part of the overall financial/estate planning.  I am that kind of person who likes to think ahead and prepare for the future.  It serves me well with this mentality.

A hybrid LTC means that when the policy owner doesn’t need LTC, he/she can still receive death benefit although the death benefit is much less usually a little more than the premium paid as compared to the LTC benefits that the policy owner would receive when needed. 

Something to think about:

1.  How many years of LTC are needed like two years acceleration with 2 or 4 years extension of LTC benefits, which give a total of 4 or 6 years of benefits.

2.  Whether to choose inflation protections like 3% or 5% compound rate.  Of course the higher the compound rate, the higher the premium.

3.  Elimination or waiting period: The 90 days waiting period means that the policy owner needs to be on long term care services (chronically ill) for 90 days in order to receive LTC benefits.

4.  Cash indemnity vs reimbursement benefits:  A cash indemnity benefit pays the full monthly LTC benefit without the policy owner having to submit specific monthly receipts while a reimbursement benefit (实报实销) requires evidence and approval of actual expenses before the receipt of the monthly benefit payment.

5.  LTC benefits received are typically considered as taxable free.

July 13, 2019

Estate planning: Long term care insurance 

As part of estate planning, finally cut two checks to LTC, each for $50000 premium.

This $50000 single premium policy covers two years acceleration and 4 years extension LTC benefits with 3% compound inflation protection for one person.

This policy has a face amount of ~$70000 that my beneficiary will receive if I die prior to needing LTC.

If I start to use LTC benefit at age 80, I can expect to receive ~$75000 per year and continue for a total of 6 years with 3% compounding.

The other good thing about this policy is that it is a cash indemnity benefit meaning that I can receive full monthly LTC benefit without having to submit specific monthly receipts.

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