As long term care insurance skyrockets in price, many people are looking for alternative funding.
Hybrid life insurance policies are beginning to take the place of long term care insurance policies. Traditional LTC products have plummeted in popularity due to their spiking premiums in recent years.
To pay for long term care needs, consumers are turning to new types of insurance coverage.
Hybrid life insurance policies are becoming a leading option in that area. These policies come in the form of life products that back long term care financing strategies. In fact, last year, the life-LTC hybrid policies saw a very healthy 5 percent growth rate in newly sold policies. This brought the total number of new policies sold last year to 260,000.
Comparatively, there were only 70,000 new stand-alone long term care insurance policies sold last year. In the year 2000, there had been more than 750,000 new policies sold. This helps to illustrate just how much consumers are stepping away from those products.
Hybrid life insurance new policy premiums have risen by more than 18 percent.
Around a quarter of all new American life insurance premiums that were paid last year were for policies that offer long term care or chronic illness benefits. Though there have been a limited number of new stand-alone long term care insurance policies developed for the market, the majority have been hybrids. For instance, New York Life did launch a new stand-alone product over the summer. Still, it was in the minority.
Even though the life-LTC hybrid insurance policy marketplace has seen notable growth, consumer education is lacking, said a Forbes report. Many consumers don’t have a solid understanding of the different kinds of life, long term care and hybrid products available to them. This can mean that consumers aren’t necessarily making the best choices for their financial needs. Moreover, it may also mean that the industry is being held back by a lack of consumer education about what is available.
The lack of consumer education is particularly present when it comes to newer products such as hybrid life insurance. These hybrid products, also known as asset-based products, are typically divided into two primary categories: linked-benefits products, and accelerated death-benefit riders.