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Why is Long Term Care insurance so complicated?

July 28, 2017

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Buy More Than One LTCi Policy? Why?

May 4, 2017

Sounds strange?  More than one policy?  You can barely afford one, right?  

 

The truth is that buying more than one policy can help you customize your Long Term Care solution. Let's say that you can't quite find the right policy.  You like the price of the traditional policies, but you don't like use it or lose it.  You like the return of the life insurance or hybrid policies, but you don't like the cost.  What if you buy multiple policies to mitigate each of the situations.  

 

So, you've decided that you want $5,000 of coverage per month, but you don't want all of your eggs in a traditional policy because rates could increase and if you don't use the benefits, you lose the premiums you've paid. In addition, you might end up paying for thirty or forty years before you use the benefits.  

 

Maybe you can't afford the premiums of a hybrid policy, but you could purchase a smaller policy with a single premium. In addition, you want some lifetime protection, but you aren't sure you need the full $5,000 of benefits for a lifetime.  

 

One possible solution is to divide that $5,000 into chunks and buy a different policy for each chunk of benefits.  For simplicity's sake let's say you buy $2,000 of monthly benefits in a policy with a lifetime rider.  You buy $1,000 of benefits in a policy that is a single premium hybrid policy for fifty months.  Then you purchase a $2,000 monthly benefit traditional policy.  This splits up your premium into pieces that you may be able to better afford and it splits the risk.  You only stand to lose part of the premium of the traditional policy.  It also allows you to control the elimination period, which you may want to be longer.  

 

You can put down one larger sum of money on the single premium hybrid policy that is affordable, then you can fund the other hybrid policy over a number of years with guaranteed premiums.  

 

This strategy isn't for everyone, but it's a strategy that can work to both reduce premiums and to mitigate some of the concerns of each type of policy and still provide most or all of the benefits needed.  This is a little cumbersome, but with such a large use of funds and for such an important decision, the extra time to think about this is definitely worth it.

 

 

 

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