Our Thoughts

Long-Term Care Insurance . . . Standalone or Hybrid?

According to federal-government projections, about a quarter of Americans turning 65 between 2015 and 2019 will need up to two years of long-term care. Twelve percent will need two to five years, and 14% will need more than five years. At $15 an hour, around-the-clock aides run $131,400 a year, while private rooms in nursing homes top $100,000 in many places. In “Long-Term Care Without Handcuffs,” an article that recently appeared in the print edition of The Wall Street Journal, Leslie Scism cites this statistic and compares the traditional/standalone policies to the newer/hybrids that are re-shaping the long-term-care insurance industry.

Hybrids may cost more than traditional/standalone products because they typically include a death benefit, a “return of premium” feature, and/or a guarantee that premium rates won’t increase. According to industry-funded research firm Limra, 260,000 hybrid policies were sold in 2017, far outpacing the 66,000 standalone policies sold. Although affluent Americans may be able to afford costly care later in their lives, they are buying the contracts to protect large estates.

Once a client of FJY determines with his/her advisor that there is a need (or wish) for long-term-care insurance, we team with Ken Fahmy of Fahmy & Associates in Falls Church to figure out whether the standalone or the hybrid policy is the best fit for the client.

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Marjorie Fox