Insurance Riders

Imagine Long Term Care Insurance (LTCI) as a pizza. You can select a basic policy–in this example, that’s a cheese pizza. But a cheese pizza isn’t necessarily going to work for everyone. Some people want jalapenos and mushrooms. Others might want a white sauce instead of a red sauce. This requires more flexibility than a simple cheese pizza can give you. In the world of Long Term Care Insurance, one of the ways that this level of customizability is achieved is with Insurance Riders. 

Some riders are more common than others, but they all have the same essential purpose: to help you create a LTCI plan that works for you, your financial situation, and your goals. In so doing, riders provide different ways to protect your financial security as you age, an essential function for those who want to invest in Long Term Care Insurance. As you consider your LTCI options, it’s worth thinking about areas that riders may help you achieve your goals.

Do You Need LTCI Riders?

The definition of an insurance rider is relatively simple: it’s an amendment or addition to an insurance policy. Riders are used in a wide variety of insurance types, including in Long Term Care Insurance. 

In the LTCI arena, insurance riders can perform a wide variety of functions and offer clients several different types of customization. Most people will choose from several different types of pre-established riders, but more variability may be available depending on their particular needs.

While riders are not necessary for any Long Term Care Insurance policy, they do provide an essential function for policyholders. There is no penalty for attaching riders to your policy, and they can provide extra security, stability, and peace of mind. In other words, attaching LTCI riders to your policy gives you the opportunity to ensure your policy is designed for the future you imagine.  

Common Examples of Long Term Care Insurance Riders

Some of the most common LTCI riders are those that add specific benefit types or protections. Many clients will choose at least one of the following examples:

  • Inflation protection riders: In most years, the costs of medical care increase at a pace higher than inflation (even when inflation is somewhat elevated). LTCI policies that have a set benefit amount may not have as much purchasing power as the years go on. An inflation protection rider can mitigate this, tying your policy payout to a set rate of increases. You can choose either a simple inflation rider or a compound inflation rider. Compound inflation riders keep up better with inflation because your benefits will compound over time, just like expenses do. However, a simple inflation rider tends to be less expensive in terms of the premium you’ll pay. 
  • Shared care riders: Life partners are often of roughly similar ages. As a result, they may often purchase Long Term Care Insurance policies at a similar time. In these cases, they may be able to take advantage of a specific rider called a shared care rider. When a shared care rider is present, if partner A uses all of their benefits and partner B doesn’t need theirs, partner A can start using partner B’s benefits. For couples that go into the aging process together, this can be a significant benefit, as a shared care rider can help protect the overall financial security of two people covered as a couple. Of course, this is something that all parties should discuss and agree to before it is considered. 
  • Long Term Care Benefit Boost riders: It’s challenging to know what the future is going to look like, which means there are some benefits that you might not know you need in the future. Or maybe you need a bigger payout in a way you couldn’t have anticipated. A benefit boost rider gives you the option to increase your premium and purchase additional coverage every three years without needing any new medical underwriting. This gives you the flexibility to re-evaluate your needs.
  • Return of premium rider: This rider is not as common as the other three. It offers you the option to return the money you have paid in if you get to the end of the policy period and have not used your benefits. This rider should be carefully considered and may have some eligibility requirements.

Keep in mind that riders vary by carrier, product type and state availability. 

How Do You Know Which Rider is Right for You?

Many of these riders have benefits that are essential to your long term financial security. But some riders do have drawbacks. For example, they are sometimes tied to an increase in your premium costs. So how do you know when a rider is a good fit for you and when you should stick with the plan as is?

The answer will depend on your financial situation and your long term goals. That’s why it’s wise to depend on the expert opinions of Long Term Care Insurance experts who truly understand the ins and outs of long term care insurance options. At Gordon Associates, we have helped countless clients find the perfect toppings for their LTCI pizza.

So if you have questions about which policy rider you should be looking at and which ones might not fit your lifestyle, contact Gordon Associates today to talk to a highly trained expert.

 

On May 1, 2025   /   Blog