![]() People who were certified as needing long-term care would get a guaranteed bump-up in their monthly annuity rather than having to seek reimbursement for individual expenses such as nursing care. In their vision, the premium for the hybrid coverage would be paid in full upfront and benefits could never be cut. Insurers could offer the two protections together more cheaply than each one separately because of the offsetting risks - the hedge, in finance lingo. If they lived long enough to suck up lots of annuity payments, it’s probably because they hadn’t needed much long-term care early in retirement. The idea that appeared in a 2001 article by the economist Mark Warshawsky and two other scholars is that insurers could charge less for long-term care insurance and annuities by combining them, because the risks to the insurer would partly offset each other: If customers needed lots of long-term care early on in the policy, they probably wouldn’t live long enough to get a lot of annuity payments. Many wrote about the challenges of trying to protect themselves and their families from the vicissitudes of either ill health or such good health that they outlive their savings. ![]() Others wanted to know when or where they could buy one. Some readers said such policies already exist. ![]() Readers were intrigued by my newsletter last Friday, “The Perfect Retirement Investment Nobody Wants.” It was about a concept, never realized, for a hybrid product combining long-term care insurance with an immediate annuity - a stream of monthly payments that begins right away and lasts as long as you live.
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