"One way or another, someone will benefit from the policy," said Scheil. "Either you'll pay for long-term-care costs, or your beneficiaries will get the money when you pass away."
Going this route assumes you can afford the premium as well as pass a medical review. Unlike a straight long-term-care policy, the premium can never increase, Scheil said. Some people put a big chunk of money in at one time — say, $50,000 or $100,000 — or pay premiums over time. The cost tends to be 5 percent to 15 percent more than a straight life insurance policy.
Scheil said the typical retiree who uses this insurance typically has amassed a nest egg worth $300,000 or $400,000, and has limited sources of retirement income.
"These aren't wealthy people, but they've saved well and want to protect it," Scheil said.
In contrast to the hybrids, straight long-term-care insurance can involve rising premiums and no death benefit.
And while they come with tax advantages — premiums are considered medical expenses and thus can be deducted — these policies can be pricey. A married couple, both age 60, would pay a combined $2,200 yearly for $328,000 of coverage, according to the American Association for Long-Term Care Insurance. If inflation protection were added, the yearly cost jumps to $3,790.
Worse, if you never use the benefits, the money you paid is gone unless you purchased a rider that provides for premium reimbursement or a partial benefit.
"People need to accept the reality that this happens to a lot of families," Scheil said. "And the consequences of needing care are devastating to the family if you haven't financially planned for it."