Long Term Care Rider vs Chronic Illness Rider [Top Benefits of Each]

Written by: Steven Gibbs | Last Updated on: May 23, 2024
Fact Checked by Jason Herring and Barry Brooksby (licensed insurance experts)

Insurance and Estates, a strategic life insurance provider composed of life insurance professionals, is committed to integrity in our editorial standards and transparency in how we receive compensation from our insurance partners.

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In this comprehensive guide, we’ll tackle the nuances of Long Term Care Riders versus Chronic Illness Riders, highlighting the critical distinctions essential for crafting a tailored insurance plan from the leading long-term care insurance providers. Whether you’re exploring options for life insurance with a Long Term Care Rider or a Chronic Illness Rider, you will benefit from understanding the differences and similarities.

Life Insurance with Long Term Care Rider or Chronic Illness Rider

Fidelity Investments reports that the average couple that retires at age 65 can expect to pay approximately $240,000 in medical expenses during retirement. Keep that number in mind, because Fidelity also reported that only 20% of workers over the age of fifty-five have managed to set aside $250,000 or more for retirement. Do you see the problem?

80% of the population over 55 has less money saved for retirement than they will likely need to cover their medical expenses alone.

That’s bad. But it gets worse. That number ($240,000) doesn’t include Long Term Care costs. And of course it doesn’t include rent, food, gas, utility costs, or that sweet vacation to visit the children and grandchildren.

Below we discuss two solutions to the problem that are available to almost everyone. A Long Term Care Rider and a Chronic Illness Rider can be be added to a cash value life insurance policy and provide financing options for the medical costs that will come during retirement.

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How Does a Long Term Care Rider or Chronic Illness Rider Work?

Years ago the life insurance companies started adding terminal illness riders to their policies at no extra charge. These accelerated benefit riders would give a portion of the death benefit to the policy owner prior to the death of the insured, based on the requirement that the insured was terminally ill with less than 12 months to live. In other words, the insured was likely to die soon, and so a portion of the death benefit was given in advance to make the final months more tolerable.

This living benefits rider is called an “accelerated death benefit” rider, because it allows the death benefit to be — that’s right — accelerated. It is a wonderful thing to have when a person is terminally ill. For some it provides the money to go on one last vacation, or to visit family, or to provide gifts to grandchildren.

These accelerated death benefits became a selling point, and others were added. The Long Term Care rider and the Chronic Illness rider are both accelerated death benefit riders. They allow the insured to gain access to their death benefit prior to death. In some cases many years prior to death.

Long Term Care Rider

The Long-Term Care (LTC) rider, also known as asset based long term care, provides several advantages, including financial benefits and flexibility in care options. Here are the key takeaways:

Guaranteed Monthly Cash Benefit

Once your LTC claim is approved, you will have 100% of your monthly cash benefit available, ensuring consistent financial support.

Flexible Usage

A LTC rider monthly cash benefit has no policy restrictions, and there’s no need to submit monthly bills or receipts, offering ease and flexibility in managing your care expenses.

Home-Based Care

The LTC rider allows for care in the comfort and familiarity of your home, including the option to be cared for by immediate family members, enhancing comfort and improving recovery or maintenance of health.

Diverse Care Options

You can choose licensed, facility-based care or more personalized care options like foster care, allowing for a tailored approach to your long-term care needs.

Asset and Income Protection

By covering care expenses, the LTC rider helps protect your assets and income sources from depletion, helping maintain your and possibly your spouse’s standard of living.

International Care

The LTC rider provides the flexibility to receive care outside of the U.S., with access to 100% of your available monthly LTC benefit, offering peace of mind even when abroad.

Legacy Protection

If you don’t use the LTC funds, you pass on a legacy to your family members.\

How It Works:

  • You select the long-term care specified amount when you purchase the policy.
  • If you use the LTC benefits, 100% of the monthly cash benefit is guaranteed, and your beneficiaries still receive guaranteed minimum death benefit proceeds, provided the policy is in force at the time of your death.
  • If you don’t use the LTC benefits, your beneficiaries receive the full death benefit proceeds income tax-free.

Benefit Duration:

  • The duration of LTC benefits depends on the chosen payout option, the amount elected to take, and other policy factors.
  • Benefits can last a minimum of 25 to 50 months, based on the selected payout percentage. 
  • You can take less than the total monthly benefit, potentially extending the duration of LTC benefits and preserving a more significant portion of the life insurance benefit for your beneficiaries.

Qualifying for LTC Benefits:

  1. A U.S. licensed healthcare practitioner must certify that you have a severe cognitive impairment or cannot perform at least two ADLs for 90 days or more.
  2. You must pass a 90-calendar-day elimination period before benefits begin.
  3. To maintain eligibility for benefits, a healthcare practitioner must submit a plan of care and annually recertify.

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Chronic Illness Rider

The Chronic Illness Rider provides financial support to policyholders who are diagnosed with a chronic illness that severely impacts their ability to perform daily activities or results in severe cognitive impairment. The Chronic Illness rider provides a valuable option for policyholders, allowing them to access part of their death benefit early to cover medical expenses and other financial needs.

Eligibility and Conditions

The Chronic Illness rider becomes applicable if the insured is permanently unable to perform at least two of the six Activities of Daily Living (ADLs) or has severe cognitive impairment, as certified by a physician within the last 12 months. There is a 90-day elimination period before policyholders can claim benefits.

Benefit Amounts

The minimum accelerated death benefit amount varies, with some companies providing 5% of the initial death benefit or $75,000, whichever is less. The maximum amount per election also varies, with 25% of the initial death benefit or $250,000, whichever is less, with a lifetime maximum of $1,000,000 across all policies.

Impact on Policy

Electing to use the Chronic Illness Rider reduces the policy’s overall death benefit, account value, and surrender value. Certain policy features, such as partial surrenders and changes to the death benefit, may be restricted or unavailable once an election is made.

Limitations and Exclusions

The Chronic Illness rider does not cover chronic illnesses arising from self-inflicted injuries, substance abuse, participation in illegal activities, or acts of war, among other exclusions.

Qualifying for Benefits

For a Chronic Illness rider to trigger, a physician must certify that the insured is chronically ill as defined in the policy.

Election of Benefits

Policy owners can receive the accelerated benefit as a lump sum or in payments.

Effects of Accelerated Benefit Payments

Accelerating benefits will affect the availability of loans, partial surrenders, and changes to the policy’s death benefit. A residual death benefit is required to ensure that a death benefit remains at the time of death, which must be at least 5% of the initial death benefit or $10,000, whichever is greater.

Long Term Care Rider vs Chronic Illness Rider Comparison Table

Life Insurance with Living Benefit RiderLong Term Care RiderChronic Illness Rider
What is the Benefit?Accelerated benefit via advancement from death benefit that may be further supplemented by an extension of benefits rider.Pays an accelerated benefit which is an advancement of the death benefit
Eligibility RequirementsLicensed health professional certifies insured cannot perform 2 of 6 ADLs or severe cognitive impairment, both temporary and permanentLicensed health professional certifies insured cannot perform 2 of 6 ADLs for last 90 days or severe cognitive impairment with likely no potential for recovery
Benefit Payment Reimbursement or Cash IndemnityCash Indemnity
Benefit Payment RequirementMay require evidence of actual expenses paid or may be used for any purposeGenerally, can be used for any purpose
Is Benefit Payment Taxed?*Typically not taxable (see IRC Section7702B)Typically not taxable (see IRC Section 101g), but may be taxed if per diem limit is exceeded
Elimination PeriodVaries but typically 0, 90, 180 or 365 daysVaries but typically 0-90 days
Benefit Amount2% to 4% of DB or IRS Per Diem Limits with potential increasing benefits over time due to inflation protection rider, up to full death benefit, with additional extension of benefits possibleGenerally based on lesser of 2% to 4% of policy DB or IRS per diem limits
Return of PremiumTypically included. 100% ROP after specified period. Not typically included.
Increasing Death Benefit?Some insurers allow for Option B, increasing death benefitSome insurers allow for Option B, increasing death benefit
Inflation Protection RiderIncluded at an additional costNot Available

What is Long Term Care?

Long-term care (LTC) is a combination of services which provide the medical and non-medical needs of people with a chronic illness or disability who cannot care for themselves for a long period of time. Oddly enough, the reason LTC is so expensive is not because it pays for highly skilled medical professionals. The opposite is typically true. See: What is long-term care insurance?

LTC is usually paying for rather unskilled care providers, but it is costly because the care needs to be provided around the clock – seven days a week, such as in-home care, assisted living facility or nursing home. Qualifications for long term care benefits usually necessitate being unable to do two of the six basic tasks for everyday living. These tasks are called activities of daily living (ADLs).

If two of the below ADLs are something you can’t do for a long period of time (typically 90 days), you would qualify for long-term care insurance benefits.

ADLs (Activities of Daily Living)

  1. Feeding.
  2. Toileting.
  3. Bathing.
  4. Selecting proper attire (Dressing).
  5. Maintaining continence.
  6. Walking and transferring.

In addition to the ADLs there are other “instrumental” activities of daily living (IADLs). These IADLs are required for living on your own.

IADLs (Instrumental Activities of Daily Living)

  • Managing finances
  • Handling transportation (public transit or personal driving)
  • Shopping
  • Preparing meals
  • Using the telephone
  • Managing medications
  • Housework and basic home maintenance

For many patients with serious cognitive impairment, such as Dementia or Alzheimer’s Disease, the IADLs are an assessment that determines the need for LTC, even though they may not have any problem with the ADLs. Specifically, if your cognitive impairment is so severe that you are seen as a potential danger to yourself, you will qualify for your long term care rider benefits.

What is a Chronic Illness?

A chronic illness is one that lasts a long time, typically longer than 3 months, and has no medical cure and does not disappear on its own.

Examples of chronic illness include:

  • Heart disease
  • Stroke
  • Diabetes
  • Arthritis
  • Kidney disease
  • Multiple sclerosis

The ideal situation for anyone looking for a LTC riders or Chronic Illness riders is to apply before you have the need for the insurance policy. Once the illness or mental condition arises it is much more difficult to get coverage.

LTC Riders or Chronic Illness Riders FAQs

I doubt I’ll qualify with my poor health.

Often, asset-based LTC riders require a phone interview without a medical exam.

I’ll lose it if I don’t use it.

Not true. With asset-based LTC the insured either uses it, or passes the benefit along to the beneficiaries with the rest of the death benefit. Many companies also offer a return of premium option that allows you to terminate the policy and get all your premiums back.

I want a policy that covers me and my spouse and my life insurance policy is only for me.

There are riders that will specifically add a spouse to the long-term care insurance coverage even if the underlying life insurance policy is insuring just one person.


The statistics don’t lie, most people will need long term care services as they age. And yet most people are unprepared. The LTC rider or Chronic Illness rider options are a significant way to safeguard your family from financial ruin in the event of a serious illness. These riders also provide wealth and legacy preservation, so all your assets you diligently created in life are not depleted in the end.

Insurance & Estates is committed to connecting you with the best company and the best features, based on your unique need and goal. If you want to talk about your long term care insurance options, please contact us today to speak to a financial professional who can help you put together a strategy for your long term care needs.

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  • Kelly a Brach
    Kelly a Brach

    Excellent article. Very well written.

    • Insurance&Estates

      Thank you Kelly, nice to hear great feedback:)

      Best, Steve Gibbs for I&E

  • Dorel Elliott
    Dorel Elliott

    I have some serious health issues and will need to activate my policy. The policy number is . Please call me at your convenience.
    Dorel Elliott

    • Insurance&Estates

      Dorel, sometimes people get us confused with their insurance company because we write articles about many. We recommend you go directly to the company’s website or if you worked with an agent then to them directly.

      Best, I&E

  • Patrick Arbucci
    Patrick Arbucci

    Good article, except you left out the most important part, which is the legal definition of what constitutes an acceptable claim on many critical illness policies and riders. They have a MUCH MORE NARROW RANGE OF ACCEPTABLE ILLNESSES AND DOCTOR CERTIFICATIONS THAN A QUALIFIED LONG TERM CARE POLICY. That is why these critical illness rider and policies are NOT tax deductible as the IRS has not found that they are true long term care policies under Section 7702 (b) of the code. A warning should be posted on here that anyone who buys a critical illness policy or rider over a qualified long term care policy must take into consideration that they are more likely to NOT have a claim paid than under a qualifed long term care policy, and that the critical illness riders and policies are NOT tax deductible under section 7702(b); and that the LOSS RATIO of a qualified long term care policy is considerablly higher than a critical illness rider or policy and that a high loss ratio is actually a good thing for the consumer as a greater percent of premiums received a paid out in claims than you will find on cricial illness riders or policies.

    • Insurance&Estates

      Hello Patrick, thanks for your comment although it warrants some clarification and appears to be a bit biased from a traditional long term care insurance perspective. First, your reference a “critical” illness is potentially misleading given the fact that most definitions for authorizing coverage in my experience are based upon finding a “chronic” vs. “critical” condition. These riders as well as traditional long term care coverage is generally for “chronic” care (not critical care) meaning a long term medical condition which lasts generally over 90 days AND is debilitating resulting in an inability to perform at least 2 of 6 (or 7) defined activities of daily living. Yes, the types of life insurance policy riders and definitions can differ between companies. So, I do agree it is very important for folks to read policies and disclosures very carefully. Yes I do agree with your point as to tax deductability and that traditional long term care insurance may be more comprehensive (depending on the company). However, the benefits are often outweighed by the costs and inflexibility. Yes tax deductability is a top benefit of traditional long term care policies, particularly now given the tax law changes. The downside of a traditional long term care policy as we’ve seen demonstrated in the market is of course the likelihood of increasing premiums. Anyway, it is all good to inspire a careful look at what is and isn’t covered and guaranteed in the coverage being proposed.

      Best, Steve Gibbs, for I&E

  • Marge

    I have recently been looking into hybrid ltc plans as my health situation doesn’t qualify me for standalone policies. I am concerned about the critical illness definition when it comes to paying out claims in these type of policies. I am being told that critical illness is one that will last 90 days or more, however, this article added another extended definition with the words “and has no medical cure and does not disappear on its own”. Is this what hybrid plans are all using in reality to base whether or not they will pay claims”

    • Insurance&Estates

      Hello Marge, thanks for reading and commenting. That language in the article actually refers to a general definition of “chronic” medical condition vs. “critical” and this is a big distinction in the world of medical treatment because long term care coverage is generally for chronic long term conditions whereas other medical insurance and Medicare is typically for critical care (such as injuries and life threatening emergencies requiring emergency procedures. So the short answer is yes, hybrid plans would use this kind of standard. However, I suggest you connect with Jason Herring for more specific information at jason@insuranceandestates.com.

      Best, Steve Gibbs, for I&E

  • Private Investigator in GTA
    Private Investigator in GTA

    I enjoyed visiting your webiste. I rarely leave comments,
    you definately deserve a thumbs up!

    • Insurance&Estates

      Thank you Ruth, awesome feedback!


      Steve Gibbs for I&E

  • Dorothy Spencer
    Dorothy Spencer

    Hello, it is late so I haven’t been able to really get into this to read. I will read it tomorrow & maybe send it to an agent friend of mine. I have Mitochondrial Myopathy. There is NO cure for this & it will kill me. I am in my 70’s. This disease attacks the cells in UR body & kills them. I have an horrible time with muscle & joint pain. I have lost my hearing, sight, sense osf smell & taste, & I’m on O2. I still very short of breath. I really need some Ins. help. Last Nov. I had to have surgery to remove my Galbladder. Who knows if it was attact by the disease I have. I really need some help getting funded for help Thank U, Ms. Spencer

    • Insurance&Estates

      Hi Dorothy,

      Sorry to hear about your condition. We will have an agent reach out to you shortly. I also did a quick search on your condition and found this article on Pub Med. Apparently, the ketogenic diet has been shown to slow down the progression of the disease in mice. Who knows how that will translate to humans but I thought I would bring it to your attention in case it may help you in any way. We are not doctors, just trying to do what’s right and help who we can, anyway we can.

      All the best,


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