Spouses, Share Benefits of Long-Term-Care Insurance

How does a shared-benefit rider for long-term-care insurance work? How much does it cost?

Paying Health Insurance Premiums From a Health Savings Account

A shared-benefit rider gives you and your spouse a pool of long-term-care benefits to split between the two of you. Instead of a three-year benefit period for each of you, for example, you’ll have a total of six years of coverage that either one of you can use. If your spouse ends up needing care for two years, you’ll still have four years of coverage to use yourself. (The rules are slightly different with some insurers.)

When buying long-term-care insurance, a big unknown is how long you may need care. The average nursing-home stay is about three years, but some people need care for much shorter periods, and others with a condition such as Alzheimer’s disease may need care for much longer. It has become very expensive to buy a policy with coverage for more than five years – and nearly impossible to find ones offering lifetime benefits. Adding a shared-benefit rider to policies you and your spouse own can help you hedge your bets when choosing policies with a shorter benefit period.

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A shared-benefit rider can add from 15% to 30% to the cost of your policies. A 55-year-old couple who buys separate Genworth policies that pay $150 per day for three years with a 3% compound inflation adjustment would each pay about $1,350 per year for the coverage. Adding the shared-benefit rider (for a shared pool of six years) would increase each spouse’s premiums by about $300 per year – a 22% surcharge. The shorter the pooled benefit period, the higher the cost because you’re more likely to use the extra coverage.

For more information about buying long-term-care insurance and other ways to plan for these potential expenses, see our Long-Term Care Insurance special report.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.