Hybrid Long-Term Care

One strategy, two possible outcomes

by Carroll Golden

September is National Preparedness Month, a reminder that the best time to prepare for a risk is before it becomes a crisis.

For financial professionals, that makes it an ideal time to talk with clients about a risk that can dramatically alter even a well-designed retirement plan: the need for long-term care.

The numbers make the case for having the conversation. According to the U.S. Department of Health and Human Services, 56% of Americans turning 65 can expect to develop a level of disability that requires long-term services and supports. Nearly 22% will have needs lasting five years or longer.

The cost can be substantial. CareScout’s 2025 Cost of Care Survey puts the national median annual cost of a private nursing home room at $129,575 and assisted living at $74,400. Non-medical home care averages $35 an hour (or more than $80,000 annually for 44 hours of care per week).

For advisors, the question is not simply whether clients could pay those costs; it is what paying for care could do to the retirement income, investments and legacy plans they have spent decades building.

That is where hybrid long-term care solutions deserve consideration.

The Ins And Outs Of Hybrid Policies

Hybrid policies generally combine life insurance with long-term care benefits, addressing one of the longstanding objections to traditional LTC insurance: clients may hesitate to pay premiums for coverage they believe they may never use. With a hybrid solution, the policy can provide funds for qualifying long-term care needs while retaining a death benefit if those benefits are not fully used.

That can make the value proposition easier for some clients to understand. But advisors also need to make the tradeoff clear.

In many hybrid policies, the long-term care benefit and death benefit are essentially one pool of money with two possible paths. If the client needs long-term care, benefits are drawn from that pool to help pay for it. The more that is used for care, the less may remain as a death benefit for beneficiaries. If little or no long-term care is needed, more of the death benefit remains.

That distinction is important because clients may hear “life insurance plus long-term care” and assume they are buying two separate benefits. Advisors should position hybrid coverage primarily as a strategy for funding care, with a legacy benefit if those funds aren’t fully needed.

Hybrid products can be particularly worth exploring with clients who have assets they have mentally earmarked for emergencies or future healthcare expenses, are concerned about exposing retirement assets to potentially significant care costs, want more predictability in their insurance costs, or have an existing life insurance policy that may no longer fit its original purpose.

Some clients may also have assets or existing policies that can potentially be repositioned to fund coverage, including through a 1035 exchange when appropriate.

The appeal of hybrid coverage also reflects how long-term care itself has changed. Long-term care does not necessarily mean entering a nursing home. It can include assistance with bathing, dressing and other activities of daily living, care in an assisted living community, or support that allows someone to remain at home.

That distinction can help advisors move the conversation away from, “I don’t want to go into a nursing home,” and toward a more useful question: “If you need help remaining independent, how do you want to pay for it?”

Hybrid coverage will not be right for every client. Advisors need to evaluate the policy’s benefit structure, inflation protection, elimination period, care settings covered, reimbursement versus cash-benefit provisions, premium guarantees and what happens to the death benefit as LTC benefits are used.

But National Preparedness Month offers advisors a natural reason to start the conversation. Long-term care planning is ultimately about protecting choices. A client who plans ahead may have more options about where care is received, how it is paid for, how much responsibility falls on family members and how much of the retirement portfolio remains intact.

The advisor’s job isn’t to predict whether a client will need care. It’s to make sure the client has considered what happens if they do.