US Life Insurance Long Term Care Rider

What is Long Term Care

Long term care encompasses services beyond medical care and nursing care. These services provide help for people who have disabilities or chronic illnesses. Unfortunately, these services can become very expensive, and that's where long term care insurance comes into play. Insurance not only helps to pay for these services, but a US life insurance long term care rider also presents an opportunity for disabled or chronically ill people to retain the dignity of making their own choices in what services they will receive and where they will receive them.

Purchasing US Life Insurance Long Term Care Rider

Insurance differs from state to state. In some states, insurers can combine traditional products like annuities and life insurance with a rider designed to cover a part or the entire cost of long term care. This extra coverage is known as living benefits because they help the insured with expenses while still alive. As the need for these living benefits has increased due to longer life spans, riders for long term care are being offered on a variety of insurance policies including:

• Disability
• Certain types of term life insurance
• Whole life insurance
• Universal life insurance

Two Types of Long Term Care Riders

If you're considering the purchase of long term care coverage, for all intents and purposes there are two types of riders to look into:

Acceleration Riders

If long term care becomes a necessity for a person with an acceleration rider, the money received to help pay for services is an advance on the death benefit due when the person dies. It's called an acceleration rider because it accelerates payment of the insurance policy's death benefit. In turn, the amount to be paid upon the insured's death will be reduced by the amount paid for long term care expenses plus an additional service charge. If long term care is provided for a long enough period, the death benefit can be depleted.

While doing your research as to which type of long term care will be best for you, it's a good idea to talk with a tax adviser because accelerating the death benefit may have unfavorable tax consequences. Find out if interest will be charged if the death benefit is employed.

Extension Rider

An extension rider increases long term care coverage beyond the death benefit. Policies differ from one company to another, so you'll have to ask your insurance agent for specifics. Some riders permit the insured to draw money to cover long term care expenses even after the death benefit amount is depleted. Here are a few extended rider option examples:

• Policyholder collects a percentage of the death benefit each month
• Policyholder's long term care expenses are reimbursed as incurred up to the rider limit
• Requires policyholder to be chronically ill and unable to perform at least two activities necessary for daily living

Is a Long Term Rider Sufficient?

Unfortunately, a long term care rider isn't always adequate to cover all long term care expenses. Often the accelerated benefit pays 2 percent of the death benefit per month which helps, but many times does not cover monthly long term care expenses.

Another option is to purchase a stand alone long term care policy instead of adding a rider to your life insurance policy. These stand alone policies provide better coverage and can be combined with term life insurance.

Buy it While You're Young

Like most insurance, the older you are, the more long term care coverage will cost more because the older you are the higher your risk to be sick or injured. Often people don't consider the need for long term care until they reach their 70s and 80s and their health is failing. The ideal time to buy long-term care insurance is probably middle-age while you are most likely to qualify for a policy and premiums costs will be lower.

If you wait too long, insurance companies may consider you to be too high a risk, and even if you qualify the premiums can be prohibitive. You'll have to check with your insurance provider for specifics as some long term care policies have restrictions including age and health status.