long term care sticky note - what is long term care rider insurance planning services farmington ct
  • Posted January 11, 2019

Long Term Care Life Insurance Rider

With the increase of life expectancies and advances in the medical field, people are living longer and are more likely to require assisted living or nursing home care in their older years. According to the U.S. Department of Health and Human Services, almost 70% of 65-year-olds will require long-term care at some point in their lives.  However, with the purchase of long-term care insurance, your premiums will pay for those costs. Unfortunately, long-term care insurance can be expensive. To help pay for long-term care while attempting to be as cost-efficient as possible, some insurance companies are offering long-term care riders to their life insurance policies. A rider can be thought of as a bonus or an add-on. This rider will make your premium increase but it is less expensive than the cost of long-term care insurance by itself. This is also known as a combination, hybrid, or asset-based policies.

How Does it Work

A long-term care life insurance rider works like this: policy owners pay their life insurance premiums which provides protection over their premature death. If the insured becomes unable to do two of six daily activities independently such as dressing, bathing, eating, toileting, continence, transferring (getting in and out of a bed or chair), and walking, or have a cognitive disease, (approved by their life insurance company) then they can start collecting money from the premium because of the life insurance rider. This will cause their beneficiary’s death benefit to decrease but provides some or total payment of assisted living services or a nursing home.

Possible Additional Benefits

This specific rider is also beneficial because it can increase your household’s liquidity and can help save on taxes. Rather than using retirement savings to pay for long-term care, long-term care would be paid for from a tax-free pool of life insurance. A long-term care life insurance rider also provides a guaranteed premium whereas traditional long-term care insurance has a variable premium that may change over time.

While it may be difficult to think about growing older, it is important to evaluate your options to help minimize your financial stress later in life. Talk to us at Tenpath Financial Group to learn more.

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