A long-term care rider in a life insurance policy typically pays out when the policyholder becomes so frail that they are dependent on care. It is a living benefit to cover medical expenses for long-term care needs.
A long-term care rider in a life insurance policy may trigger a benefit in the event that the policyholder becomes frail to the point of dependency on care. This type of rider is an addition to the standard death benefit offered by a life insurance policy, which pays out upon the policyholder's death. The long-term care rider specifically addresses the costs associated with needing long-term care, such as nursing home care or in-home assistance, due to a chronic illness or disability.
While the standard death benefit is focused on providing financial support to beneficiaries after the policyholder dies, a long-term care rider allows the policyholder to access a portion of the death benefit early should they require long-term care services. This rider acts as a form of living benefit, with the payouts typically structured to help cover medical expenses incurred due to the policyholder's long-term care needs.