Types of Hybrid Life Insurance Products are becoming increasingly popular as people get educated about long term health issues. Although term life insurance has been around for many years, the newest kinds of plans being offered are quite attractive. Term life insurance is designed to cover burial expenses and a set amount until termination of the policy by death or cancellation at the time of the policy owner’s choice. Most insurance companies offer some kind of dental plan, but there is no plan for long term care like that.
In a hybrid life insurance product, you are purchasing a policy that will provide coverage for burial expenses and a designated amount for coverage up until the termination of the policy by death or cancellation at your discretion. Most policies are of long duration, which means that the premiums paid may not be repaid until a predetermined amount of time after death. There are some different forms of these hybrid policies. You can find policies in which the amount for coverage is based on income, lifestyle factors, age, gender, race, and the insurance company’s particular list of pre-existing conditions. Some policies don’t specify a specific dollar amount for long term care benefits.
A good example of a hybrid policy is a “pure” permanent life policy. This is one with a lower premium than a traditional permanent policy but an unlimited benefit. If you use it at the end of your life you will receive a benefit equal to the difference between the cost of your premiums and the benefit you would receive under a pure permanent policy. Some people who do not use it early Terminate their policies without paying the costs. Never use this option if you want coverage for burial expenses. It is only a good choice for the small monthly premiums.
Another kind of Hybrid policies are those that provide some of the benefits of both traditional long-term care coverage and “pure” insurance. These types of Hybrid policies usually have a daily benefit rate that is less than the cost of traditional long-term care coverage but can be used as cash value at death and are tax free. Dona says this type of policy may not be worth considering if you have significant concerns about the potential for high tax liability. She advises clients to be wary of stand alone long term care policies with higher premiums and limited benefits. Take a look at https://paradigmlife.net/blog/long-term-life-insurance-hybrid-policies-defined/ for more details on this topic.
Another hybrid policy that is worth considering is a VEOGLE. VEOGLE stands for “voltage versus wagered value.” VEOGLE policies pay the benefit if the policyholder dies during the policy period or if they remain in the plan until the policy expires. They allow policyholders to cover the cost of long term care expenses up to the end of the policy’s term.
Although it may take more money out of your pocket to purchase a VEOGLE than a traditional long-term care policy, a VEOGLE has more benefits than stand-alone long-term care policies. Many consumers prefer VEOGLEs because they offer a cash value that continues to increase along with your investment in the policy. The tax-free nature of the cash value makes these hybrid policies appealing to consumers with relatively stable financial circumstances. In addition, some VEOGLEs also allow policyholders to choose from a fixed income option. You can learn more about this topic here: https://en.wikipedia.org/wiki/Whole_life_insurance.