Everything You Need To Know About Long Term Care Riders

  • Fifty-two percent of Americans who are currently 65 years old will need long-term care.
  • The annual costs of long-term care range from $19,500 for adult day healthcare to $102,000 for a private single room in a nursing home.
  • A long-term care rider can cover the costs of long-term care on a monthly basis.

You’re doing everything right. You’re paying off your mortgage, you have good health and property insurance, and you even have a generous life insurance policy that will take care of your dependents if you pass away.

But what happens if you need care later in life?

The Need for Long-Term Services and Supports

According to the Department of Health and Human Services, 52 percent of Americans aged 65 will develop a disability that’s serious enough to require long-term services and supports—or LTSS. The average costs involved with receiving LTSS are approximately $138,000 per person. And while there are some public programs that can help defray some of these costs, the rest are the individual’s responsibility.

A long-term care rider can help

Of course, the prospect of having to pay thousands of dollars out of pocket for care when you’re sick is intimidating. Fortunately, your life insurance policy might be able to help—if you purchase a long-term care rider.

Investopedia reports that a long-term care rider is a living benefit on a life insurance policy that allows you to use a portion of the death benefit each month to pay for LTSS. You’ll need to prove that you need significant supervision to protect your health and safety due to a cognitive impairment—like dementia or Alzheimer’s disease—or that you’re unable to perform at least two activities of daily living independently.

Do you need a long-term care rider?

So how do you know whether or not you need a long-term care rider?

Long-term care is expensive. A 2019 study showed that the median cost of adult day healthcare is $19,500 per year. A private one-bedroom unit in an assisted living facility or community costs almost $50,000 per year; a home health aide costs approximately $52,500 per year; and a private single room in a nursing home costs $102,000 on an annual basis.

If you have sufficient money to cover all of these expenses, then you probably don’t need a long-term care rider. At the other end of the spectrum, if you’re on Medicaid and have low income and limited assets, you may qualify for coverage from Medicaid for long-term care. But if you’re one of the many Americans who falls somewhere between these two extremes, then it’s worth considering purchasing a long-term care rider.

How to purchase a long-term care rider

You can purchase a standalone long-term care insurance policy—but that’s expensive, and if you never use it, you lose the accrued value. However, some insurance companies offer long-term care riders on top of regular life insurance policies.

To learn more about purchasing a long-term care rider, contact us. We’ll advise you on the best policy for your needs—and we’ll even help you apply!