A life insurance policy can provide the comfort of knowing your family has financial security, even if you pass away. But what if you have a health crisis and are suddenly faced with the unexpected expense of long-term care? A long-term care life insurance rider may be able to help.

A rider is an extra benefit that supplements your life insurance policy. Insurers offer a variety of life insurance riders to meet different needs. If you’re worried specifically about paying for long-term care should your health ever make daily tasks difficult, you might want to consider a long-term care rider.

What is a long-term care rider in life insurance?

When you add a long-term care rider to your life insurance policy, your insurer agrees to grant you access to a portion of your policy’s death benefit if you need long-term medical care. That means if a lasting illness or injury leaves you in need of extra support for daily living tasks—including eating, dressing, using the restroom, and bathing—a long-term care rider could help.

Some expenses that your rider may cover include assisted living facilities or nursing homes and in-home healthcare like a private nurse or a home health aid. Long-term care riders usually don’t cover costs that health insurance pays for, like prescriptions or doctor’s appointments.

How does life insurance with a long-term care rider work?

With a long-term care rider, a fixed percentage of your life insurance policy can go toward covering the cost of care. Your insurer may cap it anywhere from 60% to 80%, paid out in part each month. Payments for long-term care riders work in one of two ways: reimbursement or indemnity.

• Reimbursement: With a reimbursement rider, you submit monthly receipts for your care, and the insurance company reimburses you.
• Indemnity: Indemnity riders dispense a fixed monthly amount that you can put toward care. They tend to cost a little more than reimbursement riders because you might receive more than you need.

Each insurer may have its own qualifying diagnoses that activate a long-term care rider. Some common examples include cancer, Alzheimer’s disease, heart failure, stroke, Parkinson’s, and Cystic Fibrosis. But any other chronic conditions could qualify, as long as they significantly impact your daily life. It’s smart to check with the insurer to understand what a long-term care rider covers before you commit to a policy.

What types of life insurance policies could have a long-term care rider?

Permanent policies may be eligible for long-term care riders. That includes universal, variable, and whole life insurance, all of which provide coverage through the end of your life as long as premiums are paid.

However, every insurance provider operates differently. You’ll need to speak with a representative from your insurer to confirm whether you can add a long-term care rider to the life insurance policy of your choice.

While Fidelity Life offers a number of affordable term and permanent life insurance policies, we do not have a long-term care rider.

Is there a waiting period for LTC riders?

Some insurers institute a waiting period before you can access funds from your long-term care rider. Often, that waiting period begins after you receive a qualifying diagnosis and a healthcare professional has determined that you need support to complete some activities of daily living. If you have a waiting period, your insurer may measure it in calendar days or days you receive long-term care services.

Is a long-term care rider the same as an accelerated death benefit rider?

Both long-term care and accelerated death benefit riders offer a percentage of your death benefit, but they apply under different circumstances.

If a chronic illness leaves you unable to meet daily living needs, you can use your long-term care rider to pay for extra support as long as you need it. With an accelerated death benefit rider, you can only access your policy following the diagnosis of a terminal illness. Accelerated death benefits can help you cover medical bills, pay for palliative care, take a trip with your loved ones, or cover any other end-of-life expenses if a doctor has determined you have a short time left to live.

It can sometimes be difficult to distinguish between chronic and terminal illnesses. Both usually refer to medical conditions without a known cure. While a chronic illness is any long-lasting medical condition that seriously affects one’s life, a terminal illness will progress and most likely result in death within a relatively short period. Both types of illness are often extremely challenging for individuals and their families, but an appropriate life insurance rider can offer some support.

Should you get a long-term care rider or a standalone long-term care policy?

If you’d like coverage for long-term care but aren’t sure about a rider, another option to consider is a standalone long-term care insurance policy. Each choice has advantages and drawbacks.

In many cases, you can only add a rider when you first purchase life insurance, so a separate long-term care policy could help you secure coverage if you already have life insurance.

If you withdraw money from a policy using your long-term care rider, your beneficiary will receive a smaller death benefit when you pass away. In contrast, with a standalone policy, you can take advantage of your long-term care coverage without sacrificing any portion of your life insurance payout.

While you can often add riders to your life insurance policy for little to no cost, buying a separate long-term care policy can be expensive. And if you don’t use your costly long-term care insurance policy, you’ll lose the benefit. Conversely, if you have a long-term care rider, any unused amount remains in your death benefit for your loved ones to have after you pass.

Ultimately, the best way to make an informed decision about long-term care coverage is by speaking with a licensed insurance agent or trusted financial professional.

Can you use life insurance to pay for long-term care?

With a traditional life insurance policy, your beneficiary receives your death benefit after you pass away. You can’t generally access that lump sum during your life.

However, permanent life insurance policies accrue cash value over time. As expenses like long-term care needs arise, you could borrow against that cash value or, in some cases, withdraw funds. If you can’t repay your loan, the amount will be subtracted from your death benefit.

Should you get an LTC rider?

Everyone has different life insurance coverage needs; the best policy depends on your circumstances and budget. If you or your family have a history of chronic illness, you may benefit from a long-term care rider.

While riders often have no additional cost, some providers may charge a fee or increase your premiums, so it’s important to ensure you understand the details before applying.

To discuss your life insurance needs with a licensed insurance agent, call Fidelity Life today. While Fidelity Life doesn’t offer a long-term care rider or standalone long-term care policy, an agent can still help you review other available life insurance options to find the policy that works for you.