Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
How is a long-term care (LTC) rider attached to a life insurance policy typically funded?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
An LTC rider on a life insurance policy uses the policy's death benefit as the funding source: when the insured qualifies for long-term care, the insurer pays monthly or periodic care benefits by accelerating a portion of the death benefit. The amount used for care is deducted from what beneficiaries would otherwise receive. This design lets a policy serve a living need while still leaving some death protection, and it explains why the rider is an alternative to a standalone LTC policy.
Why the other options are wrong
- B) There is no separate health premium; the rider is funded out of the life policy's own death benefit.
- C) Medicare does not fund LTC riders; the rider is a private contract feature of the life policy.
- D) The death benefit is reduced by the care benefits paid; it is not guaranteed to remain fully intact.
Memory hook
LTC rider spends the death benefit early on care. What the care costs, the beneficiaries do not get.