Thanks to advancements in science and technology, Americans are living longer. While this is objectively good, it’s increased healthcare costs for many, especially those needing long-term care. About 70% of older adults require long-term care at some point; these services can cost anywhere from $54,000 to $108,408 annually on average.
To reduce the financial burden, many people purchase long-term care (LTC) insurance. While the benefits of LTC insurance are undeniable, some individuals hesitate to buy a policy because they might end up not needing the coverage. Adding a return of premium for long-term care rider can address this concern and help provide peace of mind.
With this type of rider, your beneficiaries can receive some or all of your premium back if you don’t use the benefits. Here’s a look at how a return of premium (ROP) rider works and the benefits it offers.
How Does a Return of Premium for Long-Term Care Work?
A return of premium upon death rider guarantees that if you (the policyholder) don’t use your insurance benefits, the premiums you’ve paid are returned in a lump sum to your beneficiaries at the time of your death.
Here’s a hypothetical example: A healthy 65-year-old woman purchases an LTC policy with a return of premium rider. She eventually passes away peacefully in her home from natural causes at the age of 75. Because she never used LTC services, her beneficiaries would receive a lump sum of the rider premiums paid into the policy.
What Are the Benefits of a ROP (Upon Death) Rider?
A return of premium upon death benefit on LTC insurance can be a true win-win, helping provide peace of mind for policyholders and financial security for beneficiaries. Here are a few advantages of selecting a return of premium for long-term care.
Less Risk, More Peace of Mind
A return of premium upon death rider is easy to understand and eases the concern that you may pay for something you’ll never use. The premiums paid into the policy (minus claims paid) are returned to your loved ones in a lump sum if you don’t need LTC services and the policy goes unused.
Is a Return of Premium for Long-Term Care Insurance Right for You?
Everyone’s situation is different, but if any of the following statements resonate with you, you may want to consider a ROP rider.
You Want to Plan for Long-Term Care While Maximizing Your Legacy
With a ROP rider, you can meet your long-term care needs while creating a safety net for loved ones.
You’re Risk-Averse
This option is ideal if you seek maximum financial protection and want to minimize the risk of purchasing insurance you may never need to use.
You’re Relatively Healthy
If you’re in good health and are less likely to need long-term care, a ROP benefit ensures your beneficiaries receive unused premium payments.
Working with a Financial Professional to Explore Your Options
The financial burden of long-term care is a pressing concern for Americans, making LTC insurance a sensible decision. However, the fear still exists that you may purchase LTC insurance but never need the coverage. A return of premium upon death rider on long-term care coverage allows you to enjoy the best of both worlds.
The long-term care policy provides coverage to ensure you receive the needed services. At the same time, the return of premium rider guarantees your loved ones receive unused premiums after your death.
To determine if this rider is right for you, connect with a trusted financial advisor. These knowledgeable professionals can help you explore coverage options that fit your lifestyle and financial goals.
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