Two Solutions for Your Long-term Care Needs.
There’s been quite a bit of news lately about the cost of long-term care. Many people, particularly those in or approaching retirement, are concerned. After all, the cost for a bed in a skilled nursing facility can be over $350 a day in many areas.
Purchasing a rider on a life insurance policy can help pay for these costs.
You have two choices: a long-term care insurance rider or a chronic illness insurance rider.
Both are effective, but the long-term care insurance rider has a little more flexibility. Both long-term care insurance and chronic illness rider are intended for people who are no longer able to care for themselves – whether permanent or temporarily. Here’s what you need to know.
Qualifying for Chronic Illness Benefits
If your rider is a chronic illness rider, the insurance company will usually require confirmation from your doctor that you are unable to perform two or more ADLs and that your condition is permanent.
Specifically, six areas are identified as ‘activities of daily living’ (ADLs), or things that you need to be able to do for yourself to be considered independent.
These are bathing, eating, dressing, toileting, continence, and transferring (moving from a chair to a bed, for example).
A person’s inability to do some of these things is what determines whether they qualify for benefits under a chronic illness rider. Once your benefits are approved, the cost of your care will be covered, up to the amount specified by the policy…
…for the rest of your life.
For example, suppose Ann has Alzheimer’s Disease. She has been living at home with her husband, who has been taking care of her. As her disease progresses, however, she begins to have more and more difficulty doing things for herself. Eventually, Ann is unable to bathe and use the bathroom without assistance. Her doctor confirms that her disease will only worsen and that she will not recover from it. She now qualifies for assisted living or skilled nursing care, paid for by the chronic illness rider on her life insurance policy.
Qualifying for Long-term Care Benefits
A long-term care rider is a little more flexible.
Long-term care benefits may also be paid if you have severe cognitive decline-
-regardless of your ability to perform ADLs.
In other words, if you have Alzheimer’s disease or some other form of dementia that requires care, you may qualify for benefits even if you are still able to perform all six ADLs.
A long-term care rider can also pay benefits for care that are not permanent.
If, for example, you need to go to a rehabilitation center after surgery, your long-term care rider may pay the cost. After your rehab is complete, you may go back home again and the policy stops paying benefits. If you need rehab again, or skilled nursing care on a permanent basis, additional benefits will be paid up to the limits of the policy.
Here’s an example. Bill is an 80-year-old widower in relatively good health. One day, he falls at home and breaks his hip. He has surgery to repair the broken hip and has to go to a rehabilitation center for three months to recover from the surgery since he has no one to care for him at home. His long-term care insurance policy pays the cost of his stay at the rehabilitation center. After he returns home, the benefits stop until he needs them again.
It’s important to note that Bill’s hip replacement recovery is temporary, so if he had a chronic illness rider instead of a long-term care rider, his rehab stay would not have been covered.
Rider or Separate Policy?
Both of these types of insurance can be purchased as riders on a life insurance policy.
Long-term care insurance can also be purchased separately, but the advantage to buying a rider as opposed to a separate policy is that, if you don’t use a rider, the death benefit remains in the policy and is paid to your beneficiaries when you die. If you buy a separate long-term care policy and don’t use it, the money you paid for the premiums is gone.
Having a chronic illness rider or a long-term care rider on your life insurance policy is a good idea, especially considering the high cost of skilled nursing care and the likelihood that you will need it someday. If you don’t need it, the underlying life insurance policy will provide the funds your family will need when you die. These riders are a good way to provide for your care and still leave an inheritance for your heirs.
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Asurea offers Life Insurance, Mortgage Protection Life Insurance, Medicare Supplement Insurance, Final Expense Insurance, Disability Insurance, Long-term Care Insurance, Retirement Planning products and more. For additional information, click on the ‘Learn more’ button below. Want to have articles just like this delivered to your inbox? Just enter your email address in the box below and click ‘Subscribe.’
This information is provided for general consumer educational purposes only and is not intended to provide legal, tax or investment advice. Dollar amounts are for illustrative purposes, not actual.
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