Options: 7702B riders

As aging baby boomers expand the elder population, long-term care (LTC) will continue to escalate in importance as a focus of financial and retirement planning.

There was a time when the only way to insure the risk of long-term care expenses was through the purchase of a traditional stand-alone long-term care insurance (LTCI) policy.

While a variety of features are offered allowing customization of a policy, some consumers worry about the potential “use it or lose it” nature of the product and the potential for rate increases with no cap.

A new way to insure long-term care uses permanent life insurance as a base and allows the policyholder to accelerate the death benefit to pay for qualifying LTC expenses of the insured.

This version of LTC coverage brings a more palatable solution for some consumers.

• Any benefit not needed for LTC needs will be paid as a death benefit to the beneficiaries.
• Products are available with guaranteed premiums.
• Life insurance has a new use — living benefits the insured can use if LTC needs arise.

But with this mass addition of riders, confusion abounds.

While various companies may appear to offer the same protection, it is not necessarily the same, by any means.

All LTC and chronic illness riders on life insurance pay benefits as a tax-free acceleration of death benefit via 101(g).

However, that’s where the similarities end.

The differentiators determine which types of claims qualify for benefits, how benefits are paid out and how riders are charged. Understanding these differences is extremely important, and an insurance professional can present clients with a clear picture of what they are actually purchasing.

In this article, I will talk about the LTC riders classified as 7702B riders.

Riders with the 7702B classification offer comprehensive coverage.