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Hybrid Annuity with Long Term Care Riders

How it Works

A Hybrid Annuity contract with a Long Term Care rider will typically have a maximum monthly benefit based upon the Account Value at the time of the first benefit claim payment.  The Account Value at that time will define the initial lifetime benefit amount for the Initial Benefit Rider (IBR).  The initial lifetime benefit amount for the Extended Benefit Rider (EBR) is typically a multiple of the IBR lifetime amount. 

The maximum monthly (or daily) benefit amount is derived when the initial lifetime benefit amount is established by dividing the initial lifetime benefit amount (the account value) by the number of selected benefit periods for the IBR rider.  The maximum monthly (or daily) benefit amount for the EBR will be the same as that calculated for the IBR maximum. 

The benefit period for the EBR is typically derived based upon the multiple associated with the selected EBR.  An example follows:

Account Value at the time of the first benefit claim payment = $150,000
IBR Benefit Period chosen                                                 =           24
IBR Lifetime Benefit                                                          = $150,000
300% EBR chosen                                                                
EBR Lifetime Benefit                                                         = $300,000

Maximum monthly benefit  =  $150,000 / 24 = $6,250
EBR Benefit Period derived = $300,000 / 6250                    =          48

As claim payments are made, the account value is reduced by the full amount of the payment.  If less than the maximum benefit amount is paid, then the benefit continues until the aggregate lifetime benefit amount is paid.

Once the Initial Benefit Amount is depleted, the Long Term Care benefits stop unless you had purchased the Extended Benefit Rider (EBR). This benefit initiates the Long Term Care insurance component.

These contracts also typically provide for cost of living or scheduled increases.



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