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Long Term Care Insurance Riders: What Should You Need To Know

Most long term care policies today have added "riders" that sizzle the overall policy benefits

. This is one of the strategies of insurance companies to encourage policyholders of adding such enticing package of special features, discounts, and riders. It seems these companies are trying to spoon-feed clients with those extra features, and, thus, triggers the question: are those riders really important?

Determining the right type of policy entails strategic planning, and what's more in choosing the important rider. A rider can add important benefits, but it also heightens the cost of the premiums. Take note that the features or riders offered vary from company to company. To make things less complicated, you should weigh what your needs are and stick to that. Here are the some riders offered by long term care insurance companies:

Spousal Benefit Rider

This is one of the most worth considering type of rider according to LTC experts. The spousal benefit rider allows both spouses to tap each other's pool of benefits. Each individual may be able to purchase three-year protection plan that is way cheaper than the five-year benefit. This rider may also increase the costs by 15 percent, but the policyholders can access this for five or six years of benefits.

Home Health Care Rider

This is a typical rider. Most insurance companies incorporate the home health care rider in the policies, even the basic ones.

The most known type is the "tax qualified' policy. This policy is said to follow the consumer protection guidelines set forth by the National Association of Insurance Commissioners and the Health Insurance Portability and Accountability act (HIPAA). According to Robert Zirkelback, America's Health Insurance Plans (AHIP) spokesperson, the overall (or 95 percent) of long term care policies are tax-qualified. Tax-qualified policy means that the amount paid under that qualified LTC benefit is excluded in your income. Before, many insurance companies considered home health care as a rider; however, almost all tax-qualified policies today include some type of home health care.

Non-forfeiture Benefit Rider

Most states require all tax-qualified LTC policy comes with non-forfeiture benefit riders. This means that the rider will not forfeit all the benefits even if the policyholder stops paying the premiums. There are two common types of non-forfeiture riders: the cash back and the shortened benefit period. The cash back rider ensures the refund of the premium to the policyholder or the beneficiary in case of death and freeze payment. The "shortened benefit period", on the other hand, returns certain amount depending on the length or time frame the policyholder had paid for the premiums.

Return-of-premium upon death rider

This rider is not offered in most long term care companies or state, and is only paid upon death. The policyholder's estate or beneficiary will receive the returned premiums if the former did not use the benefits throughout his/her lifetime.

This rider is designed to attract people in their 40s and 50s to make sure the premiums will be passed through the policyholder's beneficiary or estate. This can also benefit workers with a business. The business can pay the premiums and entitled for tax deduction.

Inflation rider

This is always a crucial rider for long term care. This rider protects the premiums against the sky rocketing costs of long term care. This are sold either equal or compound inflation. Although it hedges the inflation, it does not increase the price of the premium.

Long Term Care Insurance Riders: What Should You Need To Know

By: christine
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