Long Term Care Insurance with a Return of Premium acts like a Hybrid Policy

Today’s blog post continues the series about buying long term care insurance as a strategy for planning ahead for long term care.  My post of May 22, 2014 discussed whether to buy long term care insurance at all.  My post of May 29, 2014 suggested looking for a stable, proven insurer.  My post of June 5, 2014 described how to identify a proven, stable Long Term Care insurance company.  My post of June 12, 2014 discussed the importance of protection against inflation. My post of June 19, 2014 suggested planning to use insurance to pay for four or five years of long term care.  My post of June 22, 2014 suggested a daily rate to choose when purchasing long term care insurance.  My post of July 10, 2014 advised to look carefully at the list of Activities of Daily Living that can trigger coverage from the long term care insurance policy.  My post of July 17, 2014 described the differences between a “period of time” kind of coverage and a “pile of money” kind of coverage.  My post of July 25, 2014 advised to make sure that the long term care insurance includes coverage for cognitive impairment.  My post of July 30, 2014 described the differences between tax-qualified and non-qualified policies.  My post of August 5, 2014 discussed the value of long term care insurance policies that qualify for the Partnership program.    My post of August 14, 2014 discussed hybrid policies that combine long term care insurance with life insurance.  The introductory post in the series on planning ahead for long term care costs appeared on May 15, 2014.

Today’s post discusses how a return of premium rider on a long term care insurance policy acts like life insurance to make the policy provide “hybrid” life/long term care coverage.

A “return of premium” feature in a long term care policy means that, if the insured never needs long term care, the policy will pay to the insured’s estate an amount of money equal to the premiums that the insured paid over the life of the policy.  (The premium returned will probably not include any interest on the money, so there will be no growth in the investment.)  In effect, this return of premium acts like a life insurance policy.  Money is paid to the heirs or estate of the insured upon the insured’s death.

If you want long term care insurance but worry that your premiums will be “wasted” if you never need long term care, a return of premium is a way to construct your own “hybrid” long term care/life insurance policy.

For more information, visit Jim’s website.

Jim Koewler’s mission is
“Protecting Seniors and People with Special Needs.”

For help with long term care or with planning for someone with special needs,
call Jim, or contact him through his website.

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