Life Insurance With Long-Term Care Riders

A long-term care (LTC) rider allows you to tap into your life insurance death benefits to help cover long-term care expenses. This is one of the many rider options available to help tailor your life insurance plan to your specific needs.

Policyholders can use long-term care riders to cover adult day care services, home health care services and a long-term care facility with 24-hour nursing services.

If you think you may need heavy medical assistance in the future and worry about the financial burden of health care expenses, then a long-term care rider might be right for you.

LTC riders give you access to a percent of your death benefit while you’re alive to cover long-term care expenses. The percentage you’re allowed access to vary by insurance company. The more you take out of your death benefit while living, the less your beneficiary will receive when you pass away.

Adding an LTC rider to your life insurance policy will increase your premium price. The premium price for this rider does not have a set amount, meaning it could increase each year.

Most insurance companies have a waiting period of 90 days before you can access LTC rider benefits. Once you surpass the waiting period and begin coverage, you can choose your payment preference.

Confirm with your insurance provider how much you can take from your death benefit and if your premium price is locked in before purchasing an LTC rider. You will also need to confirm if you are eligible for this rider before taking it into consideration.

To qualify for an LTC rider, you must be medically diagnosed as chronically ill, unable to perform at least two daily living activities and have a well-documented plan of care in place.

If you’ve been diagnosed as chronically ill by a medical professional and cannot do at least two of the daily living activities listed above, you likely qualify for an LTC rider benefits. Make sure you have all your necessary documents to send to your insurance provider to begin coverage.

Payout amount varies by insurance company, but typically you can access 2% of the life insurance’s face value for long-term care per month. For example, if your policy has a face value of $500,000 you could receive $10,000 per month. Where you choose to receive long-term care treatment can also fluctuate the price.

There are two payout types — indemnity and reimbursement.

Indemnity payments give you a set amount of money every month that you can use for your care expenses.

Reimbursement payments, on the other hand, require you to send your health care receipts to your insurance company for reimbursement of care expenses.

Long-term care riders can help cover expenses for common medical conditions such as Parkinson’s disease, strokes, cancer, arthritis and Alzheimer’s. If you’re at risk for a serious condition, an LTC rider can help provide coverage for services not included in Medicare.

Long-term care facilities and services can be very expensive. An LTC rider add-on is a cheaper option to help you cover such costs.

*Monthly price based on 24-hour care. Cost will vary based on length of service.
**Price varies based on type of facility and whether you have your own room or share a room.

If a long-term care rider isn’t an option for you, there are other alternatives such as short-term care insurance and long-term care annuities.