Let’s Talk About Long Term Care Insurance Riders
Since we’re still in November and it’s National Long Term Care Insurance Month, let’s look at a few of the “riders” that are available with long term care insurance policies. Buying long term care is no different than walking onto a car lot to buy a car. You can get a car with the best radio system and leather seats, but once you drive it off the lot, it’s still just a vehicle to get you where you’re going. From a long term care (LTC) stand point, consider the radio and leather sets as “riders”
The first rider I want to discuss is a “Non Forfeiture” rider. Fancy words, but what do they mean? If you have this rider on your LTC policy, it basically says that if you walk away from your life insurance policy at any time, the carrier is on the hook to give you a paid-up policy for the amount of premiums you paid in. For example, if your LTC policy costs $3,000 a year, and you paid for 10 years and want out, then they have to give you a long term care policy with a $30,000 benefit. What’s interesting is I think of this as a dinosaur rider. Why? Because these days less than 1% of people who own long term care policies walk away from them. They understand the value of what they have and how important it is.
Next is the “Joint Waiver Rider”. With long term care, it’s an individual contract and the owner has to be the insured. If you go on claim, your premiums stop, but your spouse does not, until they go on claim. With this rider, as soon as you are able to trigger the policy and go on claim, both spouses premiums would stop. Similar to this is a “Joint Survivor Rider”, as this applies if the opposite spouse passes away. Just like the car radio and leather seats would cost you extra, so do these riders. Reality is, for clients who are similar in age, I do not recommend these riders. The reason is, the likelihood of both going on claim is much higher when they are similar in age. These riders really should be considered when there is a large gap in ages between the spouses.
Another popular rider is called a “Zero Home Health Care” rider. This simply means that instead of having to satisfy an elimination period, usually 90 days, the policy will start paying out from day one for in-home care. This one is a tough call because Medicare in most states will pick up the first 20 days of custodial care, then there is a deductible from day 21 to day 100. So depending on how you start to need the care, this rider may not be worth it because Medicare could potentially start from day zero as well.
The last, and probably the most important rider is the “Shared Care” rider. When you have a husband and wife, this one is critical. Basically they each have an individual policy with a benefit “pool” of money to use for long term care. The “Shared” rider allows you to access your spouse’s pool should you exhaust your own. A very powerful rider since we never know how and when we’re going to need the care.
Long term care life insurance riders might seem complicated, and of course since there are many moving parts to these contracts, they can make things even more confusing.
About the author: Mark Yurkovic has been in the life insurance business for over 12 years, and holds CLTC, LUTCF, and CES designations. He enjoys building remote control boats, and playing instruments including the piano, guitar, banjo, and mandolin. Mark would love to discuss life insurance options and work towards finding the best policy fit for your family. You can contact Mark at 1-800-651-1953 or MYurkovic@Pivot.com.