Having basic coverage is a good place to start when building a Long Term Care Insurance policy; however, you may want to consider adding a few additional riders to your plan. Insurance companies charge extra for these optional benefits, known as “riders,” so it’s a good idea to choose your plan options carefully.
You’ll save money by not going overboard with Long Term Care Insurance options and riders.
Optional Riders for Long Term Care Insurance
Following are optional riders for you to consider when building your Long Term Care policy:
- Inflation protection
This is the most important rider you should consider adding to your Long Term Care Insurance policy, especially if you are purchasing a policy in your 40’s, 50’s, or 60’s. Over time, if your benefits do not automatically increase, you will lose purchasing power because of inflation. Most Long Term Care Insurance plans offer a 3% compound, 4% Compound, 5% compound inflation protection or a 5% simple (or equal) inflation protection. The inflation protection rider increases your policy’s benefits each year on your policy anniversary date. Your premium will not increase each year, but your benefits will.
(» More on Inflation Protection and Long Term Care Insurance)
- Restoration of Benefits
Cost: Extra 4-6%
Restoration of Benefits restores your policy benefits to the original maximum value if you come off claim for 180 consecutive days and no longer need Long Term Care assistance. For example, if your policy has a maximum benefit of four years and you have used two years, the restoration of benefits rider will add the two years of money you spent back into your policy. Essentially, you will have a brand new Long Term Care Insurance policy.
- Survivorship Benefit
Cost: Extra 10%
When both partners have held their Long Term Care Insurance policies for at least ten claim-free years and one partner dies, the surviving partner’s premium is waived for life and they have full benefits.
- Waiver of Home Health Care Elimination Period
Cost: Extra 8-15%
Also called “0-Day Home Care,” this waives the deductible or elimination period for Home Health Care coverage. This way, instead of having to wait out the elimination period, you will receive your home health care benefits on day one of your claim.
- Return of Premium Benefit
Cost: Extra 25 to 75%
Worried you may not use ever your coverage? Return of Premium will return all the premiums you have ever paid on your Long Term Care Insurance policy to a beneficiary, tax free. However, It does add about 25 to 75 percent to the cost. Depending on the Long Term Care Insurance company you choose, slight variations will apply. Your agent can explain these variations to you.
- Shared Care Rider
Cost: Extra 8-20%This option gives you and your spouse/partner the option to use each other’s Long Term Care Insurance benefits when one of your policies runs out. With some companies, there are extended benefits like Joint Waiver of Premium where both spouses’ premiums are waived when just one person is using the policy. Companies like MassMutual use a third pool of money rather than sharing two individual pools. (» Read More about Shared Long Term Care Insurance)
- Nonforfeiture Benefit
Cost: Extra 15-25%
Nonforfeiture is an added option that is included with some group long term care insurance plans. If your policy lapses, this rider will give you access to all the premiums paid if you need Long Term Care on down the road. Nonforefeiture is not to be confused with the included Contingent Nonforfeiture feature.
Included Options with Long Term Care Insurance Policies
The following benefits are offered automatically with most Long Term Care policies:
- Alternate Care Benefit
With this benefit, your Long Term Care policy will pay for additional care, services, treatment, supplies, and equipment otherwise not covered in your plan. In other words, if you, your doctor, and the insurance company all agree that items such as in-home safety devices, home-delivered meals, or medical alert devices, for example, are necessary for your plan of care, your Long Term Care Insurance policy will pay for them.
- Bed Reservation Benefit
This benefit in your Long Term Care Insurance policy will pay to reserve your bed in a nursing home for a certain number of days while you are in the hospital. This way, you do not lose your room. The bed reservation benefit is an important feature if there is a high demand for nursing homes in the area in which you live. Bed reservation benefits often range from 20 to 60 days depending on your policy.
- Waiver of Premium
On Tax Qualified policies sold today, your Long Term Care Insurance company will waive your premium immediately once you begin to receive benefits from the insurance company. Your premium will continue to be waived as long as you are on claim. (On older policies sold before 1998, this benefit varies from company to company.) Waiver of premium starts after your elimination period has ended.
- Homemaker and Chore Services
Any good Long Term Care Insurance plan will have some form of homemaker and chore services included in the policy. These benefits pay for you to have a home health care aid for activities like cooking and preparing meals, laundry, taking out the trash, light house work such as vacuuming, mopping, and washing dishes. It is important to purchase a Long Term Care Insurance policy that pays you for the homemaker and chore services because these services will almost always be required.
- Equipment and Home Modification Benefit
This pays for incidental home modifications such as a ramp, a stair lift for going between levels of your home, and rails or grab bars to help aid with bathing and toileting. Other modifications include widening doorways to accommodate a wheel chair or renovations to your shower to make it usable. The amount of money you’ll get can vary from policy to policy, so be sure you’re comparing even the nuances of policies
Long Term Care Insurance options and riders play an important role in plan design. However, like any insurance, there’s a chance you’ll never use your plan at all. Finding the balance between too much and too little coverage is key to saving money. We’ll help you find your own personal balance.