Long-term care insurance has long been dogged by a reputation among producers and consumers alike as one of the most complex forms of insurance. Although waves of standardization sweep through our industry periodically, carriers continually introduce new product options in a race to offer something distinguishing and unique. Some of these long-term care insurance riders may only appeal to a niche audience, while others are soon copied by the competition.
As a long-term care producer, even your rigorous 8 hours of specialty training will not be enough to familiarize you with the gamut of LTCi Riders you are going to encounter in the field. However, in this overview article and the series of spotlight pieces to come, I will attempt to describe some of the most common riders offered today, and provide advice regarding the circumstances when each is sold.
Today’s modern couple can choose from nearly a dozen standard long-term care insurance riders. To their advantage is the trend of carriers moving more and more features off the base product: by purchasing only what they truly need or desire, your clients can benefit from “a la carte” pricing. At the other extreme, some carriers use their “built-in” benefits as a selling point, arguing, “Why pay extra for something we include for free?” I would simply caution you to be mindful when running your side-by-side comparisons. There is no such thing as a “free lunch”: if a rider is built-in, it most assuredly means its cost has been built-in to the pricing as well. Take care that your client can actually use the features he is paying for (e.g. a single client paying for a built-in Dual Waiver of Premium rider he can’t possibly use).
Listed below are the most common Long-Term Care Riders we encounter today, in no particular order of importance. Many (but not all) of these will receive their own, dedicated column as I explore their nuances and uses in further detail. (Please note: where “spouse” is indicated below, “domestic partner” is also understood almost universally.)
1. Inflation Protection:
Although it can double the price of one’s coverage, it’s dangerous to omit. What used to come in simple flavors (“strawberry, chocolate and vanilla”) has exploded into a veritable Ben & Jerry’s of varieties, and it’s now the determining factor whether your client will receive Partnership protection or not. For a full description of the different types of inflation riders for long term care insurance click here.
2. Reimbursement or Cash Design:
A decade ago (or more), most policy designs were either reimbursement (you’d submit your bills, and they’d be reimbursed up to your policy limits) or indemnity (you’d submit your bills, and you’d be paid the maximum daily benefit each day). While reimbursement has survived the test of time, the indemnity design has decreased in popularity, overtaken by pure cash (you submit proof of chronic illness, and you’re paid cash up-front, in advance of any bills at all).
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