For many, long-term care (LTC) insurance can help protect personal assets from a catastrophic illness. However, some may find LTC premium costs are too high to justify the expense for a benefit they may never use.

Hybrid products could offer a solution for this high-cost situation.

Traditional Long-term care insurance

Traditional long-term care policies require you to pay monthly premiums that typically increase over time. In return, when a triggering event occurs (for example, an illness requiring an extended stay in a long-term care facility or home improvements that let you stay in your home), the policy pays all or some of the qualified costs to the facility.

Hybrid products combine long-term care benefits, death benefit, or return of premium*

Insurance options are available that combine long-term care insurance with traditional insurance benefits such as payouts to your heirs at your death. These products help reduce concerns you may have about paying for insurance you might not use. With these hybrids, you pay premiums to the insurance company, either in one lump sum or annually.


In return, the insurance company provides one or more of these things:

  • Income-tax-free reimbursements for qualifying long-term care expenses
  • Income tax-free death benefits if care is not needed
  • Options that return all or a percentage of your premium after a certain period of time*
The advantage over traditional long-term care insurance is that you now receive a guaranteed benefit based on how your life unfolds. If you do require long-term care, you can receive tax-free reimbursements for qualifying long-term care expenses.

If you don’t need this kind of care, your heirs receive a tax-free death benefit, as they would with traditional life insurance.

And, if your circumstances change, or you decide to stop using the product, a return-of-premium feature can allow you to get all or a portion of your principal back.*

These options may make the decision to purchase long-term care easier.

Of course, long-term care, like any other insurance product, should be considered as part of your total financial plan.

1 Source: 2016 Social Security Life Expectancy Table:

2 Source:, 2017:

* Return of premium features vary by insurance carrier and generally apply to lump-sum policies only and after a period of time, such as five years.

Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting, or legal advice. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor. Janney makes no representation that an individual will obtain gains or losses similar to those illustrated. The concepts illustrated here have legal, accounting and tax implications.


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