What to Know Before Purchasing a Long-Term Care Rider

Do you know the difference between a long-term care rider and chronic illness rider? Section 7702B and Section 101(g)? If you're contemplating a life insurance policy or annuity with a long-term care rider, make sure to understand the key terms.

(Image credit: UWE_UMSTAETTER (UWE_UMSTAETTER (Photographer) - [None])

The insurance industry has changed since I began my career. Long-term care insurance policies were the recommended option, and the company I started with even had their own stand-alone home health care policy.

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Long-Term Care RiderCritical Illness Rider
IRC §7702BIRC §101(g)
Classified as long-term care coverageNot classified as long-term care coverage
Pays both temporary and permanent claimsTypically only pays for permanent illnesses where condition must be met and likely to last the rest of the insured's life
Two types of policies: 1.) reimbursement; and 2.) indemnityAll are indemnity policies
Available on both life insurance and annuity policiesAvailable on both life insurance and annuity policies
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Type of policy transferred toLife insuranceAnnuity
Life insuranceYesYes

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Carlos Dias Jr., Wealth Adviser
Founder and President, Dias Wealth LLC

Carlos Dias Jr. is a financial adviser, public speaker and president of Dias Wealth LLC, in the Orlando, Florida, area, offering strategic financial planning services to business owners, executives, retirees and professional athletes. Carlos is a nationally syndicated columnist for Kiplinger and has contributed, been featured or quoted in over 100 publications, including Forbes, MarketWatch, Bloomberg, CNBC, The Wall Street Journal, U.S. News & World Report, USA Today and several others. He's also been interviewed on various radio and television stations. Carlos is trilingual, fluent in both Portuguese and Spanish.