Why Hybrid Life Insurance Complements Group Life Insurance

Supporting Employees During Their Working Years and Beyond

As long term care costs continue to rise, employees are placing greater value on benefits that help them prepare for future care needs. According to LIMRA, more than two in five employees consider long term care insurance benefits very important, with millennials showing the highest level of concern about potential long term care costs, followed by Generation X.¹

Hybrid life insurance policies can help employers address this growing interest while expanding their benefits offerings.

How Hybrid Life Insurance Works

Hybrid life insurance combines permanent life insurance with long term care benefits.

If a covered individual becomes unable to perform at least two of the activities of daily living, the policy can provide a monthly benefit to help cover long term care expenses. If long term care is not needed, a death benefit remains available to beneficiaries.

Because hybrid life insurance is often offered on a voluntary basis, employers can easily add it to their benefit offerings. Employers can also provide a base amount of coverage while allowing employees to elect additional coverage based on their individual needs. Both approaches can be valuable attraction and retention tools.

Why It Works Well Alongside Group Life Insurance

Hybrid life insurance and group life insurance serve different but complementary purposes.

Group life insurance provides financial protection primarily during an employee’s working years, when financial obligations such as mortgages, loans, child care and education expenses are often at their highest. Employees can typically secure higher coverage amounts at a lower cost because group life insurance is generally offered as a group term product and does not include a long term care benefit.

While many group life insurance policies are portable, they aren’t typically intended to be carried into employees’ retirement years, as costs may increase significantly at older ages.

Planning for Retirement and Long Term Care

Hybrid life insurance is designed to provide protection that can continue into retirement and be used for long term care costs or death benefits.

The premiums are based on an employee’s age when coverage is purchased, allowing employees to lock in rates earlier in life. Coverage amounts do not decrease due to age, and premium rates remain level over time.

Employees often purchase smaller benefit amounts under hybrid life insurance than they would under group life insurance. If needed, the policy’s long term care benefit may provide access to funds that help cover care expenses. The long term care benefit is generally paid at a percentage of the face amount, such as 4% or 6% each month, and the total benefit may equal up to twice the policy’s death benefit amount.

On average, individuals who require long term care services need them for two to four years.² Some hybrid life insurance policies may also include a restoration feature, which restores the life insurance death benefit after the long term care benefits have been paid.

Why It Matters for Employers

As long term care costs continue to increase, hybrid life insurance can be a valuable addition to an employer’s benefits strategy.

Offering both group life insurance and hybrid life insurance can help employees address financial protection needs during their working years and into retirement, while supporting attraction, retention and overall financial wellness.

For more information, see The Standard’s Group Life and Voluntary Life offerings.