Life Insurance - Long-Term Care Policies

Another way to cover long-term care expenses is through a rider attached to a life insurance policy. Long-term care riders attached to life insurance policies are different from long-term care policies in several respects. For example, monthly benefits for a stay in a covered nursing home are typically based on a percentage of the life insurance amount. A $100,000 policy with a 2% benefit would give you $2,000 a month. A monthly benefit for home health care, when covered under the rider, is usually half of the nursing home benefit.

Long-term care benefits under these riders are tied directly to the amount of life insurance in force. These benefits will be reduced by any loans or withdrawals against the policy. Using the long-term care benefits will also reduce the life insurance coverage under the policy.

A long-term care rider has a separate insurance charge that usually increases each year in a manner similar to the cost of the life insurance under the basic policy. The annual charge for the rider will not exceed the guaranteed cost and will normally be less.

Some life insurance companies offer annuity contracts with a rider that covers long-term care expenses. An annuity contract with a long-term care rider allows you to use the funds accumulated in your annuity to pay for long-term care expenses without applying any surrender charges. Companies charge an additional premium for this rider.

The publication Long-Term Care Insurance Policies Approved in Wisconsin provides a list of companies that sell long-term care insurance as a rider to a life insurance policy.