Combo policies provide a new tool for long-term care planning

By February 8, 2011Uncategorized

As we have discussed on numerous occasions, people in need of long-term health care really have limited options.  For financing such care, choices are pretty much limited to paying out-of-pocket, purchasing long-term health care insurance, or qualifying for a public benefit, such as Arizona Medicaid.  ALTCS planning is something that everybody ought to consider, but it isn’t always the best alternative.  Those who have a substantial amount of assets, for instance, may find that qualifying for the benefit is impractical, and could thus benefit from long-term care insurance.

Unfortunately, long-term health care insurance tends to be difficult to qualify for.  Insurers generally charge steep premiums, and only offer policies to buyers who are relatively young and healthy.  This problem has long been recognized, and new products are making their way to market that may help remedy this issue.  A recent article in the Wall Street Journal discussed a new life insurance product, referred to as a combo product, that many big life insurers are offering.  These combo products may provide a much more workable alternative for individuals shopping for long-term care insurance.

Combo products are life insurance products or annuities that have the added benefit of allowing policyholders to draw a cash flow from them in the event that they become terminally or chronically ill.  These combo policies are growing more widely available, and seem to be more affordable than traditional long-term care policies.  One thing that prospective buyers should consider, however, is that combo policies may not offer as much coverage as tradfitional long-term care policies.

We will discuss long-term care insurance, as well as these new combo policies, more in upcoming blogs.  These products may definitely be useful to a certain group of people; importantly, however, they will not replace the need for ALTCS planning.  Before making any permanent decisions about how to best prepare for your long-term health care needs, it might be a good idea to discuss your situation in detail with an Elder Law attorney.