Baygroup Insurance

Maryland's premier Long-Term Care insurance agency

Combination Long Term Care Products

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Combination Long Term Care insurance (LTCi) products are relatively new, but are quickly gaining popularity.  These products allow long-term care benefits to be paid either by a life insurance plan or an annuity.

Regardless of  health situation there is a plan  to pay long-term care (LTC) expenses.  The alternatives available will determine on health, whether perfect health or already receiving care.

Life Insurance with Long-Term Care Benefits

As with traditional life insurance, these combination policies will pay a benefit to your beneficiaries upon your death.  However; with a combination policy you are able to use your death benefit (all of it or a portion of it) to pay for qualified long term care expenses, should you need it.   (IRC Code Section 7702B).


  • Premiums are guaranteed, no rate increases in the future, this is a plus.  Where as, traditional long term care insurance policies are guaranteed renewable and can have future rate increases on a class basis.
  • If you change your mind, you can have your premium returned, with and optional guaranteed return of premium rider.
  • Death benefit to beneficiaries
  • Some have cash surrender value
  • One carrier offers a shared benefit.  It is a 2nd to die life insurance policy, that permits either or both spouses to access the policy to cover long term care benefits.

Medical underwriting for both life and long term care is performed to determine eligibility for a life insurance policy with a long term care rider.   Some life insurance policies do not underwrite for the LTC benefit. These plans allow you to accelerate some portion of the death benefit to pay for LTC expenses.

Premium can be paid with a transfer of accumulated cash surrender from a life insurance policy or an annuity that you no longer need or use cash from a checking, money market or another account.   Single pay to 20 pay option is available with various companies.

Inflation protection is available.  

These policies are not partnership qualified long-term care.  

If the rider is a separate premium, it may be tax-qualified long term care and eligible to tax benefits.

Case Study Life with LTC Rider

Life Insurance with A Chronic Illness Rider (IRC Section 101g)

  • Some plans require a permanent illness/condition.
  • Benefits are paid as a cash indemnity
  • Built-in riders may discount the death benefit before acceleration; easier underwriting
  • Riders at an additional acost include additional underwriting and provide a defined benefit
  • A portion of the death benefit can be used to pay for qualified long term care expenses.

Annuities and Long-Term Care Benefits

There are a range of annuities that can provide long term care benefits, if you need them.  Some require medical underwriting, others do not.    

If you have a non-qualified deferred annuity with a taxable gain, you can do a tax-free exchange into another annuity with a long term care rider.  

More lenient medical underwriting is applied to annuities with long term care rider, than life/long-term care and traditional insurance.

Premiums are guaranteed.

Gains in annuity received as LTC benefits are tax-free.

Tax-Qualified dollars may be used to fund policy.

One carrier offers shared benefits, lifetime LTC coverage and indexted annuity.

These products have a low interest rates stifle growth in annuity values.  Initial LTC benefits are a return of cleint's own money, then the rider portion is used for more long term care.

Indexed Annuity with Income Rider

There is no medical underwriting  nor telephone interview for this option.   Accumulate assets in a  safe investment set aside specifically for LTC expenses in an indexed annuity with an income rider.  Principal is protected and a guaranteed stream of income for life through a guaranteed withdrawal benefit that will increase if you enter a nursing facility.

Qualified and non-qualified funds may be used to purchase.

Remainder after the death, goes to beneficiaries.

Some may be on joint lives

Benefits are subject to taxation.

Medically Underwritten Immediate Annuity

This is an option for someone who is currently receiving care.  In exchange for a single premium to an insurance company,  a guaranteed income payment is received by the annuitant for the rest of his or her life to pay for qualified long term care expenses.  The monthly income payment is based on age, health and life expectancy at the time of application.  The monthly income payment is determined at the time of underwriting using factors such as age, gender and health of the annuitant along with the income plan chosen and any optional benefits selected. The lifetime income payment can be used for ANY purpose, including to help: provide lviings expenses, medical expenses, offset long term care expenses, ease family's financial burden...

Case Study

For more information about combination LTCi products, visit our FAQ's or contact us.