Is all long term care (LTC) coverage the same? When comparing LTC insurance vs LTC riders, there are a few differences you should know.

Learn more about LTC insurance vs LTC riders so you can make an educated decision for your future.

What Is LTC Insurance?

LTC insurance is a policy which pays for long term care services. Benefits are triggered when the insured can no longer perform two out of six activities of daily living (ADLs) after an elimination period (typically 90 days). These ADLs are: eating, bathing, dressing, transferring (i.e. from a bed to a chair), toileting, and continence.

An insured is also eligible for benefits when a doctor confirms they have a cognitive impairment such as dementia or Alzheimer’s.

LTC insurance pays for care received at home, an assisted living or skilled nursing facility up to the benefit amount purchased including any increases in coverage over time due to inflation protection.

LTC coverage may also include additional benefits for home modifications (i.e. railings, ramps, grab handles, etc.), useful resources, and access to a care coordinator such as a personal care advocate.

What Is an LTC Rider?

LTC riders are an optional add-on benefit for life insurance or annuity products.  These benefits typically come with an additional fee.

These products package life insurance or an annuity with LTC coverage. They can be summarized as a “live, quit, or die” option.  If you live and need care, the policy has a LTC benefit.  If you quit or drop your policy, you can get a portion or all of your money back.  If you die, the plan pays a death benefit to your heir(s).  LTC benefits paid from an LTC rider will reduce the death benefit based on the dollar amount paid. LTC benefits are available until they are exhausted. Any remaining life insurance benefits at the time of death are paid to beneficiaries. Depending on the insurance carrier, premiums for life insurance may continue even as LTC benefits are being paid.

How Are They Similar?

LTC insurance and LTC riders both pay an LTC benefit based on the insured’s inability to do two out of six ADLs or due to a cognitive impairment. Benefits are determined by the features selected at the time of purchase including inflation protection which grows the benefit over time.

How Are They Different?

LTC insurance premiums typically stop when the insured goes on claim and may provide additional benefit features. The policies are highly flexible and have the ability to build in a lot more bells and whistles when applying. Lastly, since LTC insurance only covers LTC, there are no additional costs required for life insurance benefits and these policies are generally less expensive.

LTC riders for life or annuity products bring guarantees to never have a premium increase but at a higher initial cost. They are beneficial if life insurance is needed or if the insured has cash from an annuity upfront.  The LTC benefits may not be as robust as you may see with a traditional LTC insurance policy.

Curious which LTC option is right for you? Speak with a Long Term Care Specialist to learn more about your options.

LTC Consumer is an independent, free online service to help consumers understand what long term care insurance is, how it works, and how to evaluate coverage options. Our mission is to provide an educational, no-pressure resource for learning about long term care planning, with the opportunity to speak with specialists who can help them.