LTC Riders: Tips For Insurers

Check interaction with the life contract: If the rider is an acceleration vehicle, consider its impact on existing life values. This is less of an issue with stand-alone LTC riders. (Note: Interest is growing in adding LTC riders to term and universal life policies as a way to meet younger buyer needs. The term policies may provide for continued stand-alone coverage even when the term need ends.)

Look at pricing: These riders, especially the acceleration types and sometimes the stand-alones, take on the lapse experience of the life policy. Take into account interest discounting from time of LTC payout to death.

Consider the tax issues: LTC rider benefits are income tax-free if the rider is a qualified LTC. Thats desirable, but the insurer must meet a host of requirements.