Long Term Care Rider

Written by Jeff Root

Recent surveys indicate that upwards of 70% of Americans require long-term care at some point.

Right now the cost for such facilities can range between $70,000 a year and $150,000 per year, depending on whether you use a private nursing home or semi-private nursing home. The average length of stay in a long-term care facility is 3 years.

At this rate, it is easy to see how expensive it can be. As such, the Long Term Care Rider is a feature you can add to your life insurance policy to help offset this cost.

There are three ways that you can have long-term coverage.

  1. Purchase a long-term care insurance policy
  2. Get an annuity that has a long-term care benefit
  3. Get a life insurance policy that has the long-term care Rider

The third option is a much better option compared to the first two because stand-alone long-term care policies are incredibly expensive with no cash value and the premiums go up with time.

Using the Long Term Care Rider means that you already have your life insurance policy and your company either provided the long-term care benefits at no additional cost or you opted to add the long-term benefits that a personal cost.

This feature is almost always included with permanent policies and in limited cases, you can get it with term policies but only through Prudential Life Insurance.

How Does The Long Term Care Rider Work?

long term care riderThe Long Term Care Rider provides you with access to a portion of your death benefit in order to cover the costs of long-term care. This feature is not uncommon to have especially when tied to an accelerated death benefit feature on your policy.

The difference is you can only use this benefit if you have a chronic illness that leaves you unable to tend to your own needs. The money can be used for nursing homes, private nurses in your house, or any combination necessary.

Understand that the rules for long-term care benefits will vary slightly from one state to another. If you choose to take out a portion of your death benefit as part of your Long Term Care Rider,  and it has been used for qualifying assisted living or Adult Day Care Services, any excess money you have can be used however you see fit. The benefits are paid as income tax free as long as you meet the qualifying requirements.

If you never end up using your long-term care than your beneficiaries will get an income tax free death benefit, given that you had paid your premiums on time. If you do end up using the long-term care benefit your beneficiary still receive  any of the unused long-term care benefits and the remaining death benefit.

With this benefit you should review whether there is an elimination period associated with it, how often you can adjust your features if at all, if there are alternative plans for care available, whether you can eliminate this Rider after the policy has been issued should your circumstances change,  and whether your life insurance company has a requirement for a licensed care provider.

What Life Insurance Policies Offer This Rider?

The Long Term Care Rider for life insurance policies is only available if you have a permanent life insurance policy or if you take out a Term Life Insurance Policy from Prudential. Once you have the benefits your eligibility for long-term care is going to fluctuate based on the company you have.

Generally speaking, in order to qualify for these benefits your physician has to certify that you are unable to perform at least two out of the six activities of daily living for at least 90 days, or they have to certify that you have suffered from severe cognitive impairment.

Who Is It Best For?

Anyone who currently doesn’t have any plans in place to cover the potential need for long-term care or in-house nursing should absolutely consider getting the Long Term Care Rider with their life insurance policy.

If you could not afford the average cost for an average length of 3 years, strongly consider getting this benefit.

Pros and Cons of the Long Term Care Rider 


1. Money to be Able to Plan

The main benefits are the monetary benefits that allow you to pay for the help you need in situations where a critical illness has rendered you unable to care for yourself.

Again, most people do not financially prepare for this possibility and yet 70% of people needed at some point in their lives.

2. Tax Free Benefits that Pay

Another benefit is that any money you receive as part of this feature is tax free.

With some companies like Nationwide, if you have this benefit and you use it, they give you a lump sum from your death benefit and you can choose to use that for all of your long-term care costs, and once those costs have been paid if there is any money left over between the benefit you were given and the cost you had to cover, you can use it however you see fit.

3. Policy Remains in Place

Assuming you only need long-term care temporarily, your policy will continue to remain in effect as long as you have paid your premiums and once you no longer need long-term care, you can still take advantage of the remaining features associated with your policy and the remaining death benefit.


1. Your Death Benefit is What is Used to Pay for Your Long Term Care

The main drawback is that you have less of a death benefit to leave behind.

Some companies have stricter stipulations as to what services qualify as long-term care. You can also only use this benefit if you need long-term care because of a critical illness not just because of old age.

2. Only Available on Permanent Life Insurance Policies

As we have said, unless you are purchasing specific term life insurance coverage from Prudential, the Long Term Care Rider is only available on permanent life insurance policies, which means that it is largely unavailable to a majority of people who are insured.

How Much Does the Long Term Life Care Rider Cost? 

This benefit has underwriting requirements which means there are separate charges deducted from your policy cash value. If it was already included with your permanent policy the cost might simply be the loss of total death benefit for your beneficiaries rather than an out-of-pocket initial cost.

This cost differs based on the life insurance company you choose and the amount of life insurance coverage your policy offers.

Best Life Insurance Companies

Company A.M. Best Rating
Protective A+
Banner A+
Prudential A+
Lincoln Financial A+
North American A+
Phoenix Life B
Principal A+
American National A
Ameritas (FLX Living Benefits Products) A+
Sagicor A-
Assurity A-
Americo A
John Hancock A+
About Best Life Insurance Companies
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