I am getting more and more questions about so-called “hybrid” investment products like annuities or life insurance that also include a long-term care rider to provide some benefits for long-term care down the road if needed.

I am not a fan of these products in most cases. Among other reasons, it is because it requires an investment of a significant amount of hard assets to be able to produce any really meaningful benefit that can be used for long-term care. It also makes it difficult to keep up with rising costs of care later on. This means that even though you may have adequate funds for providing care now after putting $100,000 or so in your annuity that has a long-term care rider, it does not mean that those funds will be adequate 20 - 30 years from now when you actually need them.

Here is an excerpt from an article that discusses these kind of “hybrid” offerings and who may be best served by them. By the way, I agree with this assessment:

“Hybrids are not right for everyone, but they could be right for some, experts said. For instance, they could be a good fit for someone who planned to self-insure and set money aside in a rainy-day fund for long-term-care costs, or someone who doesn’t qualify to purchase a stand-alone LTC insurance policy, or someone who wants to do a 1035 exchange to switch from a paid-up policy into the hybrid.”

You can read the rest of the article here.