LTCi Saving Tip: How Couples can Save through Shared Care

May 11, 2014


If the price of long-term care insurance is hindering you and your spouse from getting insured, this kind of policy can be made affordable for couples through a shared care rider.

What is a shared care rider?

As its name suggests, it is a feature that allows couples to share their individual LTCi benefits.

It has two types: The most common allows spouses to tap into their partner’s benefits once their own coverage runs out. The second, meanwhile, builds a third pool of money. When either spouse need long-term care coverage beyond what their benefits can pay for, they can tap into this separate fund instead of each other’s policy.

It’s important to note that not all insurance companies offer both types of shared care rider. Just like with a traditional policy, make sure to understand how a particular insurer’s shared care rider works.

Commonly, insurance companies require that spouses buy the same level of coverage in order to use the shared care feature. So if the husband buys a three-year policy with a $150 daily benefit amount and 5 percent compound inflation protection, the wife should also buy a policy that has a $150 daily benefit amount and 5 percent compound inflation protection.

How can couples save through a shared care rider?

A shared care rider is a cost-effective option for couples because it gives them a more flexible way of using their LTCi policy by giving them access to a wider pool of benefits than what they individually signed up for. Should they need more coverage than what their benefits can pay for, they don’t need to apply for a new policy because they have the other’s benefits ready for use. It’s like having a level of coverage that is twice the size of your individual policy.

For instance, both spouses bought individual insurance policies that have benefit durations of 3 years. With a shared care rider, each of them will immediately have access to 6 years worth of benefits. Should one spouse needs 4 years of long-term care, the couple will not need to tap into their savings or pay out of their own pockets.

Furthermore, having a shared care rider saves couples from the underwriting process that comes with purchasing a new policy, as well as the higher rates that will likely be imposed on them because they are re-applying at an older age and with possible pre-existing conditions.

When one spouse dies, what’s left of his or her coverage is usually still available for the surviving spouse with no increase in premiums. However, some insurers charge 25 percent of the deceased spouse’s premium so that the other can still use what remains of his or her benefits.

Experts advise to take advantage shared care rider because it is practical and a sure-fire way of making LTCi more affordable. Though it adds to the cost of an individual policy, this rider allows you to opt for shorter individual benefits period because it gives you an extended pool of benefits to work with.

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