Linked/Hybrid policies are policies that “link” LTC to a life insurance or annuity policy. Often it is possible to roll over the cash surrender value of an existing policy into one of these policies and obtain the additional benefit of being able to use the policy for long term care costs if needed.
While there are several varieties of these policies, the typical policy provides a multiple of the death benefit if long term care services are needed.
Conversely, if you never need care, the death benefit or remaining value of the annuity is paid out at your death.
It is essential that any accounts that are rolled over or investments used to pay for this type of policies are NOT funds that are needed for income in the future or needed to provide for someone else at your death because that death benefit could be depleted if you were to need care before your death.
In some circumstances it is possible to fund this type of policy using an IRA or other qualified funds.
Please be aware that many life insurance policies now are promoting a “chronic care rider”—these riders are far more limited in scope than a true long term care rider or true hybrid or linked policy.