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Overview
Long-term care insurance usually is a standalone insurance policy. However, some insurance companies offer a combination of life insurance and long-term care riders. These riders give special long-term care benefits that do not exist in a normal life insurance policy. These riders give the insured a living benefit in addition to the death benefit of life insurance policies.
Features
There are generally two types of long-term care riders that can be added to life insurance policies. Acceleration riders allow the insured to take an advance on the death benefit if long-term care becomes necessary. This type of rider is particularly useful if the insured is diagnosed with a terminal illness. The advance can be taken up to the limit stated in the policy. Extended riders allow the insured to keep drawing money even after the death benefit amount is exhausted. Some insurance companies offer the rider on voluntary life insurance policies made available through employers.
Considerations
The long-term care rider in an individual's life insurance policy should be an adequate substitute for a standalone long-term care policy. If a long-term or terminal illness is diagnosed, it should help cover the expenses. The fact that the death benefit for a beneficiary will be reduced should be kept in mind before adding the rider to the life insurance policy. The terms of the policy should be carefully perused before accepting the rider as a worthwhile step in aid. Quotes from many insurance companies should be compared before making a decision on the type of rider to be included in the policy.
Warning
Combination life insurance policies with long-term care riders differ from insurance company to insurance company and are based on the laws of each state. The riders can be used only when long-term care becomes necessary or when a health disaster strikes. The riders are suitable for mid to high income groups. The face value is very high.
Significance
Long-term care riders in life insurance policies enable the insured to use the death benefit of the life insurance policy for living coverage of long-term care. The insurance policy with a rider costs less than standalone long-term care policy premiums. The rider allows the insured to draw money to cover medical costs for terminal illnesses. Long-term hospital or nursing home stay is also covered by the long-term care rider. Chronic illnesses like Alzheimer's disease and dementia are covered by the policy. Any remaining amounts are used to pay death benefits to the beneficiaries of the insured after death.
Effects
Long-term care riders in life insurance policies reduce death benefits to give a life benefit. It spares the family of the insured from shouldering the high medical costs in the event the insured contracts a long-term illness. Insurers need a forecast of death within 12 months before allowing the insured to make use of the rider. The rider may not cover all long-term care expenses, unlike a standalone long-term care policy.
