A Guide to Customizing Long-Term Care Insurance with Riders and Add-Ons

Concept of Long Term Care with lightbulbs

Long-term care insurance provides essential coverage for individuals planning for their future healthcare needs. While standard policies offer a foundation of protection, the true power lies in the ability to customize your coverage through riders and add-ons. At AIB, our team understands the need for customization and personalization to find a policy that fits individual needs. Let’s dive into what riders and add-ons are, and how they play a crucial role in shaping your long-term care insurance policy.

Understanding the Basics

What Are Riders?
Riders are optional provisions that policyholders can add to their insurance policies to enhance or modify the coverage. In the context of long-term care insurance, riders offer a way to tailor the policy to better suit individual preferences and needs.

What Are Add-Ons?
Add-ons, often used interchangeably with riders, refer to additional features or benefits that can be incorporated into a base insurance policy. These features provide extra layers of protection beyond the standard coverage.

The Role of Riders and Add-Ons in Long-Term Care Insurance

Monthly Home Care Rider
Certain Long-Term Care (LTC) policies incorporate a daily home care framework, wherein reimbursement for home care is calculated based on the charges incurred within a specific day. Alternatively, some carriers provide either a monthly home care framework or a monthly home care rider, affording individuals the opportunity to be reimbursed for home care services up to the entire monthly benefit, offering a more flexible approach compared to a rigid daily cap.

Inflation Protection
While the concept of inflation is well-known, its impact on the cost of long-term care services can be underestimated. The “Inflation Protection” rider acts as a shield, ensuring that your coverage keeps pace with the rising costs of healthcare. By incorporating this rider, your policy’s benefit amount is adjusted over time, preserving its value and safeguarding your financial well-being in the face of evolving healthcare expenses.

Return of Premium
The “Return of Premium” rider introduces a unique layer of financial security. While the prospect of never needing long-term care is ideal, this rider offers peace of mind by allowing you to recoup a portion of your premiums if you remain carefree. Though this rider may elevate the overall cost of your policy, the assurance that you won’t lose your entire investment in the absence of a claim adds a valuable safety net to your long-term care planning strategy.

Shared Care
The dynamics of caregiving can profoundly impact families. The “Shared Care” rider recognizes the interdependence between partners by allowing them to pool their long-term care benefits. If one partner exhausts their coverage, they can seamlessly tap into the coverage of their spouse or partner, ensuring that both individuals have access to the necessary care without undue financial strain. Also, upon the death of the first spouse any remaining dollars in the deceased spouse’s pool of money will roll over to the surviving spouse. This cooperative approach embodies the essence of shared commitment and support.

Nonforfeiture Benefits
The “Nonforfeiture Benefits” rider introduces a layer of flexibility for policyholders facing financial challenges. Even if you find yourself unable to continue paying premiums, this rider ensures that you don’t lose your entire investment. While the exact benefits may vary, having some level of coverage even after ceasing premium payments provides a crucial safety net, offering a measure of financial protection during challenging times.

Survivorship Rider
The “Survivorship Rider” rider is available to spouses on the same policy. This rider states that upon the first spouse passing the surviving spouse’s premium will be waived. This rider often has a requirement that the policy is sustained for a number of years for the clause to take effect.

Joint Premium Waiver Rider
A baked in benefit to all LTC policies nowadays is a waiver of premium when one goes on claim and has met their elimination period. This benefit allows policy holders to have their premium payments waived for each month they are receiving care as defined in their policy. The “Joint Waiver of Premium Rider” states that when a couple takes out coverage and one spouse goes on claim while having waiver of premium, the healthy spouse will no longer have to pay their portion of the premium for the duration of their claim.

Waiver of Home Care Elimination Period Rider
With the addition of the “Waiver of Home Care Elimination Period” rider, the chosen elimination period would only apply to care received in a facility. The elimination period for home care is therefore waived. This allows for care to be paid on day one of a home care claim. Additionally, for every day of home care received at home, the policy holder will be credited towards the facility elimination period to lessen or potentially remove that elimination period in the facility.

Looking for a Long-Term Care Insurance Policy that’s Right for You?

Customizing your long-term care insurance policy through riders and add-ons empowers you to tailor your coverage to align with your unique preferences and circumstances. As you explore long-term care insurance options, consider the riders and add-ons available to create a comprehensive policy that offers the flexibility and protection you need for the years ahead. Visit our website or contact our Advisors Insurance Brokers team for more information on what policies are right for you or your clients.