Keep Your Cash - 1% Interest Rate Example:

  • 60 Year Old Couple - Good "Standard/Non-Smoker" Health
  • $4,000/month starting LTC benefits for each
  • 3% compound automatic benefit inflation increases
  • ​Six-year maximum benefit period for each
    • ​​(Traditional LTC includes "shared benefits")
  • Hybrid insured death benefit of $104,000 each
  • Hybrid policy surrender cash value = $123,000
  • Single-premium "cost of money" & interest earned on the Keep Your Cash account = 1%*
    • ​Traditional LTC premiums paid out of the Keep Your Cash account​
PLAN DESIGN:
HYBRID LIFE+LTC
"KEEP YOUR CASH"
​+ TRADITIONAL LTC
PREMIUMS:
- $175,000
(Liquid cash remaining = $0)
- $5,800 per year
(Liquid cash year 1 = $171,000)
LIQUID CASH
​AT AGE 70:
$0
$127,000
LIQUID CASH
AT AGE 80:
$0
$85,000
TOTAL DEATH BENEFITS
​AT AGE 80:
$208,000
$85,000 (cash)
TOTAL PREMIUM COST
​BY AGE 80:
- $214,000
(NET DB = - $6,000)
 - $116,000
(NET DB = + $85,000)
LTC BENEFITS PAID FOR 2-YEAR CLAIM ON EACH SPOUSE FROM AGES 80-82:
$352,000
$352,000
DEATH BENEFIT REMAINING IF BOTH HAVE A 2-YEAR LTC CLAIM:
$10,400
$90,000
(cash to heirs)
NET BENEFITS AFTER PREMIUM COSTS & 4-YEARS
​TOTAL LTC CLAIMS: 
$148,400
$326,000
Hypothetical, for illustrative, comparative, educational purposes only.  All amounts rounded to nearest $100 or $1000.  T-LTC premiums are designed and assumed to remain level, but are not guaranteed.  Hybrid LTC premiums and benefits are guaranteed.*  Click here to see what happens even with excessive future T-LTC rate increases.

1% ANALYSIS:  Hybrid LTC is still "Use it AND lose it"

Plan for CARE!

Hybrid LTC only "wins" if both spouses die with neither one needing long-term care, and then not by much.  The NET death benefit is actually higher when you Keep Your Cash!

Traditional LTC "wins big" if either spouse needs care!  A short, two-year LTC claim for both spouses - or an average four-year LTC claim for the wife only - creates a dramatically more favorable financial outcome even assuming only 1% interest/"cost of money".
Project a worst-case, 8-year dementia claim, and the Traditional LTC policy puts more than $200,000 ADDITIONAL LTC benefit dollars into the family's hands when they need it most!  

Hybrid LTC cannot compete if you ever need care.
When you factor in the dramatic loss of cash liquidity for 20+ years, there is no reasonable justification to purchase a Hybrid LTC policy like this versus implementing a Keep Your Cash + Traditional LTC insurance plan.

LTC PLANNING NOTES:  
During a Hybrid LTC claim the cash value is NOT available, therefore the only money available from the plan is the policy's LTC benefit.

With the Traditional LTC policy, the liquid cash you keep - $85,000 at the start of a claim - is available to use IN ADDITION TO the LTC insurance benefits for extra care costs, other out-of-pocket medical expenses or non-covered supplies, or for any other immediate needs along the way.  The liquidity advantage when you Keep Your Cash continues even once a LTC claim begins.

​Don't buy the hybrid hype.  Keep Your Cash!
* Examples are not reflective of any particular individual or specific company's policy and are for illustrative and general educational purposes only.  Not all options may be available in all states.  Contact us for more information and for a personalized illustration including disclosures and exclusions.
by Bill Comfort, CSA, CLTC, LTCCP
Published May 7, 2020