Each company defines this differently however when I hear of a Hybrid Term Life Insurance Policy this means to me that there is a Living Benefits type addition to the policy such as Critical Illness or Long-term Care.
Critical Illness means if you have a heart attack, stroke or cancer you may have access to your death benefit. Note that the definitions or type of illness covered will vary between companies so be sure to look at the details.
Long-term Care usually means Chronic Illness. If you are diagnosed by a qualified doctor, and you cannot perform 2 of the 6 activities of daily living such as transferring, eating, toileting, dressing, etc. then you may have access to the death benefit.
The Key is access BEFORE you die.
I hope that helps. Be sure to get an illustration and details to the policy before just filling out an application.
Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada
A hybrid life insurance policy blends both non-medical and fully underwritten coverage.
The idea is you get a portion of the death benefit being applied for as full coverage without an exam (the rest being AD&D coverage) and the rest turns into full coverage after an exam is completed and you're approved. The initial process can be completed in just a few days (typically 48 hours or so) - when the exam is completed, it can take a few weeks for the underwriting to be wrapped up.
Once the initial non-medical coverage is in force, you can then decide to take an exam to turn the rest of the coverage into full coverage (you generally have a window of about 6 months to complete the exam - can vary by carrier). Even if you come up with poor numbers and are declined for the rest of the coverage being turned into full coverage, you can still keep the initial format of the plan because it's already in force.
It's probably easier to envision with an example. If you apply for $250,000 of coverage with a 20-year term period under a hybrid life policy and you're approved for the non-medical side (again, typically takes only a couple of days), only a portion of the coverage will be full coverage. So let's say the coverage is actually $100,000 of full coverage and $150,000 is AD&D (actual ratios will vary by carrier). This means that if you died without completing the exam and getting the rest of the coverage approved, only $100,000 would be paid out instead of the full $250,000. The only way the full $250,000 would be paid is if you died under accidental means (e.g. a car accident).
It sounds like a great idea on paper, right? You're getting coverage quickly and you've got something locked in in case you can't qualify for the full coverage transition.
There's a huge issue with this type of program!!!! The RATE PER $1,000 of full coverage that you're paying under a hybrid life policy can (and likely will be) A LOT higher than you would be paying for coverage under a traditional life policy - meaning you can end up spending a ton of extra money on premiums unnecessarily that could easily be in your own pocket. The chances of a claim for AD&D coverage is slim to none. You're most likely to die from illness than you are to die from injury.
***You want to be paying the lowest cost per $1,000 of full coverage - this is the key point you want to look at when you're buying your coverage.***
Think about it this way. If you've got a $250,000 non-medical policy and a $250,000 hybrid policy, and the premium for the hybrid policy is less, you're actually paying a much higher rate because only a portion of the face amount is full coverage, where as the entire face amount under the regular non-med policy is 100% full coverage.
But you can just take the exam and turn it into full coverage right? Problem solved? - NO!!! If you're willing to take an exam in the first place, you may as well have just done a traditional fully underwritten program to start with, because the premiums for those programs are substantially less than they are for hybrid policies and you have full coverage from day 1.
The long and short of it is this - if you don't want to take an exam, buy a non-medical policy. If you're willing to take an exam to lower your premiums or secure a higher amount of coverage, apply for a fully underwritten program because you're going to get much better rates.
The idea with hybrid policies is to try to get the best of both worlds, but the process just doesn't make much sense with how much you're spending for full coverage.
I hope this provides some clarification for you. Please feel free to contact me for further assistance. Thanks very much.
Hybrid Life Insurance refers to a type of policy that is a blend of two types of coverage. E.g. A blend of Term and Whole Life, or Term and Universal Life, or Universal Life and Long Term Care.
Hybrid Term Life is also the name of a policy offered by Fidelity Life. It starts out as a blend of Life and Accidental Death coverage, then changes to all Life insurance after the Insured person takes an exam within 6 months.
The advantage of starting out with the hybrid policy (which goes into effect almost immediately), vs binding coverage with other policies, is that the Insured gets to keep the policy regardless of whether or not they are approved for the pure Life policy later. In fact, the Insured could have a heart attack or be diagnosed with cancer and still get to keep that blend of Life and Accidental Death that is not graded.
Another advantage can be for those who need something quick. E.g. They are going on a trip, or need a policy to satisfy a divorce decree, or get a loan, or to wait until their blood pressure medication kicks in.
If they do go on to get the pure Life policy, the rates are quite competitive with other medically underwritten policies. The only downside I see with Fidelity's Hybrid Term Life Insurance is that it is hard to explain and understand.
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Critical Illness means if you have a heart attack, stroke or cancer you may have access to your death benefit. Note that the definitions or type of illness covered will vary between companies so be sure to look at the details.
Long-term Care usually means Chronic Illness. If you are diagnosed by a qualified doctor, and you cannot perform 2 of the 6 activities of daily living such as transferring, eating, toileting, dressing, etc. then you may have access to the death benefit.
The Key is access BEFORE you die.
I hope that helps. Be sure to get an illustration and details to the policy before just filling out an application.
The idea is you get a portion of the death benefit being applied for as full coverage without an exam (the rest being AD&D coverage) and the rest turns into full coverage after an exam is completed and you're approved. The initial process can be completed in just a few days (typically 48 hours or so) - when the exam is completed, it can take a few weeks for the underwriting to be wrapped up.
Once the initial non-medical coverage is in force, you can then decide to take an exam to turn the rest of the coverage into full coverage (you generally have a window of about 6 months to complete the exam - can vary by carrier). Even if you come up with poor numbers and are declined for the rest of the coverage being turned into full coverage, you can still keep the initial format of the plan because it's already in force.
It's probably easier to envision with an example. If you apply for $250,000 of coverage with a 20-year term period under a hybrid life policy and you're approved for the non-medical side (again, typically takes only a couple of days), only a portion of the coverage will be full coverage. So let's say the coverage is actually $100,000 of full coverage and $150,000 is AD&D (actual ratios will vary by carrier). This means that if you died without completing the exam and getting the rest of the coverage approved, only $100,000 would be paid out instead of the full $250,000. The only way the full $250,000 would be paid is if you died under accidental means (e.g. a car accident).
It sounds like a great idea on paper, right? You're getting coverage quickly and you've got something locked in in case you can't qualify for the full coverage transition.
There's a huge issue with this type of program!!!! The RATE PER $1,000 of full coverage that you're paying under a hybrid life policy can (and likely will be) A LOT higher than you would be paying for coverage under a traditional life policy - meaning you can end up spending a ton of extra money on premiums unnecessarily that could easily be in your own pocket. The chances of a claim for AD&D coverage is slim to none. You're most likely to die from illness than you are to die from injury.
***You want to be paying the lowest cost per $1,000 of full coverage - this is the key point you want to look at when you're buying your coverage.***
Think about it this way. If you've got a $250,000 non-medical policy and a $250,000 hybrid policy, and the premium for the hybrid policy is less, you're actually paying a much higher rate because only a portion of the face amount is full coverage, where as the entire face amount under the regular non-med policy is 100% full coverage.
But you can just take the exam and turn it into full coverage right? Problem solved? - NO!!! If you're willing to take an exam in the first place, you may as well have just done a traditional fully underwritten program to start with, because the premiums for those programs are substantially less than they are for hybrid policies and you have full coverage from day 1.
The long and short of it is this - if you don't want to take an exam, buy a non-medical policy. If you're willing to take an exam to lower your premiums or secure a higher amount of coverage, apply for a fully underwritten program because you're going to get much better rates.
The idea with hybrid policies is to try to get the best of both worlds, but the process just doesn't make much sense with how much you're spending for full coverage.
I hope this provides some clarification for you. Please feel free to contact me for further assistance. Thanks very much.
Hybrid Term Life is also the name of a policy offered by Fidelity Life. It starts out as a blend of Life and Accidental Death coverage, then changes to all Life insurance after the Insured person takes an exam within 6 months.
The advantage of starting out with the hybrid policy (which goes into effect almost immediately), vs binding coverage with other policies, is that the Insured gets to keep the policy regardless of whether or not they are approved for the pure Life policy later. In fact, the Insured could have a heart attack or be diagnosed with cancer and still get to keep that blend of Life and Accidental Death that is not graded.
Another advantage can be for those who need something quick. E.g. They are going on a trip, or need a policy to satisfy a divorce decree, or get a loan, or to wait until their blood pressure medication kicks in.
If they do go on to get the pure Life policy, the rates are quite competitive with other medically underwritten policies. The only downside I see with Fidelity's Hybrid Term Life Insurance is that it is hard to explain and understand.