Without a crystal ball, it is impossible to know what the future hold for you or your spouse. Perhaps you may require long term care in a facility, perhaps your spouse will die before you, or perhaps you may need assisted living as you age. So what is the best way to plan for the unknown?
Long term care insurance is designed to cover the costs of a wide variety of care options for both you and your spouse. Like most health insurance policies, long term care insurance is designed as individual policies that insure one person.
You are entitled to the benefits under your policy and your spouse has a completely separate policy. The only exception to this is a shared benefit rider, which combines the benefits of both policies into one "money pool."
What is a Shared Rider?
A shared rider combines the benefits of two policies, making one pool of money for two people to pull from, depending on their needs. For example, if both you and your spouse have a long term care insurance policy with a $200 daily benefit and a five year benefit period, you each have a pool of $365,000 in daily care benefits. With a shared rider, you share your benefits, creating a pool that is twice was originally a five year policy is doubled to a ten year policy, but only for one spouse.
The shared benefit policy allows you to use your spouse's benefits when your own policy benefits have been exhausted, avoiding hefty out of pocket costs (assuming your policies carry inflation protection.) This avoids the risk of seeing a deceased spouse's or partner's unused benefits evaporate.
The risks of a shared benefit policy is the gamble that only you OR your spouse will need long term care. Imagine your spouse depletes their own policy and then depletes your policy and now you begin to suffer from a number of health conditions, but your benefits are depleted. This is a risk you take with a shared benefit rider, but can be alleviated with a replenish provision explained below.
In addition to a shared benefit rider, there are a few additional provisions you can add to your policy for additional protections. Ask your insurance agent if any of these provisions are included with your policy, or available to add on.
This gives you access to your spouse's benefits, even if your spouse dies prematurely. When one of you dies, the survivor's benefits will increase by the deceased spouse's or partner's remaining benefit dollars.
This eliminates one of the biggest risks of share riders by allowing you the option to purchase a new policy without medical underwriting if your spouse uses up all of your shared benefits. This provision requires the insurance company to issue you a new policy based on your original health - even if your current health would normally disqualify you from obtaining a policy.
By Matt Reynolds - Google+