There are significant differences between joint and linked long term care insurance policies. One type allows for couples to share a policy while the other allows a husband or wife to tap into the benefits of their spouse’s policy.
There are certain advantages to each type of LTC policy and through the help of an agent, couples can usually decide which insurance best fits their present and future needs.
Linked policies simply allow the first spouse to tap into the benefit pool of the second if all of the first spouse’s benefit dollars have already been spent on care. Thus, two policies are purchased – one for each spouse – and they are joined by a rider that allows couples to share benefit pools.
Long term care insurance coverage allowing for a linked benefit was most common far many years. Many consumers came to know these types of coverages as shared care. Several insurance companies offered shared care riders at an additional cost to the insured.
Knowing there were two available benefit pools helped reassure a husband and wife that extra dollars would be available if only one spouse became ill or injured and was on claim for an extended period of time.
The advantage is fairly straightforward in that there are two separate policies that can be shared in succession thus doubling the amount of money and time available to one of the insureds.
However, it is important to know that both policies cannot be used at the same time by the same spouse. The benefits can be drawn upon separately by each respective spouse, but the two policies will not payout simultaneously for one person who is on claim. The first policy must be exhausted before the second policy will offer benefits to the same insured.
The primary disadvantage to a linked long term care policy is cost. Two separate policies must be purchased (one for each spouse) and then a shared care rider must also be purchased allowing the coverages to be linked.
In some cases, less coverage can be purchased by each spouse and then linked, but that may not help if more dollars are needed over a shorter period of time from one of the policies.
All considered, linked policies can be very valuable to an insured couple. While the coverage costs more overall, the benefits that can be paid out over time can more than make up for the price if only one spouse needs extended care and exhausts his or her own pool of money.
Long term care insurance that is joint will be equally owned by a husband and wife or qualifying couple. In this case, only one policy (or benefit pool) is purchased from the LTC provider and both couples can draw from the policy simultaneously or separately when care is needed.
Joint insurance policies offer the same types of riders that linked policies do; such as inflation protection, restoration of benefits, non forfeiture clauses and the like. However, only one pool of money is available for both the husband and wife.
Typically, joint long term care is more flexible in that extra shared care riders are not needed. Both spouses can make claim at the same time and draw benefits up to the daily or month maximums allowed for by the policy.
Additionally, insurance companies offering joint policies have also introduced hybrid life and annuity plans that can be owned and drawn from by both spouses. Hybrid plans are popular as they offer present and future value to the insured in the event long term care is never needed by either spouse.
The primary advantage of a joint policy is lower yearly premiums. It is unlikely, although not impossible, that both spouses will need extended long term care coverage. By purchasing a joint policy, couples can reduce their overall premiums and share the same benefit pool unlike a linked plan. And there would be no need to purchase a shared care rider.
The disadvantage is if more care is needed than was originally purchased. In the event that both spouses become ill or injured at the same time, the insurance may simply not provide enough benefit to cover such significant expenses. While it would provide some benefits, it can still leave the family without enough readily available resources at their disposal.
When considering a joint plan, it is wise to purchase a little more daily benefit and to also consider a stronger inflation rider (5% compounding for example) in order to account for LTC expenses for both spouses simultaneously. A larger inflation rider will help the benefit pool grow and allow for more daily or monthly dollars payable for care.
Hyers and Associates is an independent insurance agency specializing in traditional and hybrid long term care insurance policies. We offer, direct to consumer, coverage from several highly rated and well known LTC providers.
Contact us today to request quotes and/or to compare coverage options.