Standard vs. Hybrid Life Insurance: Which Is Better?

Standard life insurance has a single purpose – to provide death benefits to your beneficiaries. Hybrid life insurance combines long-term care insurance and life insurance in a single policy. If you become disabled and unable to live independently, it covers the costs of your care, at home or in a facility. It will not cover medical expenses, such as doctor visits, surgical procedures, or prescription drugs, that are normally covered by your health insurance.

How Does Hybrid Life Insurance Work?

A hybrid policy combines elements of permanent life insurance with long-term care protection. If you purchase a hybrid policy with, for example, $200,000 in benefits and die without needing long-term care, the full benefit amount of $200,000 is paid out to your beneficiaries. If, on the other hand, you need long-term care at some point, death benefits in your hybrid policy can be converted to cash to pay for your long-term care expenses. The death benefit your beneficiaries receive will be reduced accordingly, dollar for dollar.

What Are the Pros of Hybrid Life Insurance?

Many people are buying hybrid life insurance because it solves a major problem with long-term care insurance – if you never need long-term care, the money you spent on premiums is wasted. With a hybrid policy, if you die without needing long-term care, your beneficiaries get the full benefit amount. At the same time, you have some protection in case you become disabled and need care. This type of policy offers tax-free reimbursement for qualified long-term care expenses, as well as tax-free death benefits.

Advantages of hybrid life insurance policies include:

What Are the Cons of Hybrid Life Insurance?

There are some disadvantages with hybrid life insurance:

There may be a number of factors to consider in choosing between standard and hybrid life insurance. Our agent is happy to review the pros and cons of both types of policies with you.