How riders and hybrid policies are reshaping protection against long-term care costs
October 28, 2026
Traditionally, life insurance has served one primary purpose: providing a payout to your family after you die. These days, however, consumers want more from it. About half say they'd be interested in a policy that could create retirement income, pay for long-term care services, cover critical illness costs or provide money for emergencies, according to the 2026 Insurance Barometer Study from LIMRA and Life Happens.
Some of those features already exist, and they’ve already changed how Americans protect themselves against long-term care costs. In 2024, standalone long-term care insurance accounted for just 8% of new individual long-term care policies, according to LIMRA.
Today, most people who buy long-term care protection get it through a life insurance policy.
“The old deal was to pay premiums for 30 years so someone else gets a check after you’re gone. Now people are planning for the more likely event: about 70% of people turning 65 will need some kind of long-term care,” says David Fisher, managing broker & CEO at Summit Income Planning Group.
Here's what consumers say they want, which living benefits are actually available, and what to consider before paying for them.
Living benefits are features that let you use part of a life insurance policy's value while you're still alive, typically if and when you become seriously ill or need long-term care. Most work by paying out part of the death benefit early, which means your beneficiaries receive less later. Some permanent policies also build cash value you can borrow against or withdraw.
People are living longer, and many are concerned about outliving their savings, or how they would manage a serious illness without a financial cushion. Traditional life insurance answers only one question: what happens to my family when I die? Consumers today are asking a second question: what happens if I get sick, need care, or have an emergency along the way? Living benefits are built to answer both questions.
For a full breakdown of the advantages and drawbacks, see our guide to the pros and cons of living benefits life insurance. This article focuses on what the latest data shows about demand for these features and how that demand is reshaping long-term care coverage.
The 2026 Insurance Barometer Study, now in its 16th year, surveyed more than 5,200 U.S. adults in January 2026. The results suggest that people want life insurance to do more than provide a death benefit.
A majority of people still buy life insurance to cover burial and final expenses. However, about half said they'd be interested in a policy that could also create retirement income, pay for long-term care services, cover critical illness costs, or provide emergency funds.
LIMRA describes a paradox in the results: consumers want life insurance with more features, but they also want products simplified so they're easier to understand. There's an important caveat, though: the survey asked people to react to a list that mixed existing features with invented ones, so not every feature consumers found appealing is something you can buy today.
That interest in living benefits is already reflected in the long-term care market. LIMRA tracks sales of individual products that provide long-term care protection, and in 2024 the large majority were sold as part of a life insurance policy:
Product type | New policies sold (2024) | Share of new policies |
|---|---|---|
Life insurance with a chronic illness rider | 327,025 | 67% |
Life/long-term care hybrid (life insurance with a long-term care rider) | 91,619 | 19% |
Standalone individual long-term care insurance | 38,715 | 8% |
Life/long-term care with an extension of benefits | 32,268 | 7% |
Source: LIMRA 2024 Annual Individual Long-Term Care Sales Survey and 2024 Annual Combination Product Sales and In Force Survey. Shares are rounded and may not total 100%.
More than 11 life insurance policies with some form of LTC or chronic illness protection were sold for every standalone LTC policy in 2024. That shift reflects both the appeal of combining benefits and concerns consumers have about standalone LTC coverage.
Lack of trust and the use-it-or-lose-it problem are big factors. A lot of standalone policyholders faced significant premium increases years after they bought their policies, and many carriers eventually left the market. And if you never needed care, you got little or nothing back. A hybrid policy addresses that concern: If you need care, it pays. If you don’t, your family gets a death benefit, and many policies let you get some or all of your money back if you change your mind.
The product types in the table aren't interchangeable. A chronic illness rider usually lets you take part of your death benefit early if you can't perform basic daily activities on your own, but it may have stricter qualifying rules and smaller payouts than dedicated long-term care coverage. A long-term care rider is designed specifically to pay for care services. An extension of benefits rider can keep paying long-term care benefits after the death benefit has been used up.
Most people will need some help as they age, and few are prepared to pay for it:
Someone turning 65 today has almost a 70% chance of needing some type of long-term care services, according to the Administration for Community Living, part of HHS.
Women need care longer than men, an average of 3.7 years compared with 2.2 years.
About a third of today's 65-year-olds may never need long-term care, but 20% will need it for more than five years.
Medicare doesn't pay for long-term care, also called custodial care, such as help with bathing, dressing and eating. Medicaid can cover it, but only if you meet your state's income and asset limits.
Those costs can make a policy that offers both care protection and a death benefit particularly appealing. Standalone long-term care insurance pays nothing if you never need care, while a hybrid life policy pays out either way. To see what standalone coverage typically costs, read our guide to the cost of long-term care insurance by age.
Here's how the most common living benefits work. Terms vary by insurer and state, so always read the policy itself.
Feature | When it pays | What to watch for |
|---|---|---|
Terminal illness (accelerated death benefit) rider | After a diagnosis that you have a limited time to live | Reduces the death benefit your beneficiaries receive |
Chronic illness rider | When you can't perform a set number of daily activities on your own or have a severe cognitive impairment | May pay less than dedicated long-term care coverage and can have stricter qualifying rules |
Critical illness rider | After a diagnosis of a covered condition, such as a heart attack, stroke or cancer | Only covers the conditions listed in the policy |
Long-term care rider | When you need qualifying long-term care services | Usually adds to the premium and reduces the death benefit as it pays |
Linked-benefit (hybrid) policy | Pays for long-term care if you need it, or a death benefit if you don't | Often requires a larger premium, sometimes paid up front or over a few years |
Cash value access (permanent policies) | When you borrow against or withdraw from the policy's cash value | Unpaid loans and withdrawals reduce the death benefit |
Our guide to life insurance riders covers these and other add-ons in more detail, and our explainer on cash value life insurance explains how cash value builds and how you can use it.
Retirement income, one of the most widely appealing features in the Barometer study, isn't a standard rider. For now, the closest option is borrowing against or withdrawing from a permanent policy's cash value, which we explain in how to withdraw money from a life insurance policy.
“Cash value life insurance may be sold as a retirement plan, but it actually works as a loan. Most of that income is borrowed against the policy, the loan grows with interest, and the policy has to stay in force for the income to stay tax free,” Fisher explains.
According to McMahan, the safest approach is to treat cash value as one of many options for funding your retirement, alongside dedicated retirement savings such as 401(k)s, IRAs, or annuities. It shouldn’t be your sole source of income when you quit working.
A hybrid life/long-term care policy or a long-term care rider may be worth considering if you:
Want protection against long-term care costs but don't want to pay for a policy that might never pay out
Have savings you'd otherwise set aside for future care and would rather use some of them to fund a policy
Want to leave money to your heirs if you don't need care
Are healthy enough to qualify now, since underwriting gets harder with age
They may be a poor fit if you:
Mainly need affordable coverage to replace your income while you're working, which term life insurance usually provides at a much lower cost
Can't comfortably afford the higher premiums that permanent and hybrid policies typically require
Would likely qualify for Medicaid long-term care coverage based on your income and assets
If you're weighing term against permanent coverage, our guide to the difference between term and whole life insurance lays out the trade-offs.
A hybrid policy is convenient because you get one premium, one underwriting process, and a benefit that gets used one way or another. With separate policies for separate risks, some people end up dropping coverage altogether.
“That said, combined isn't always better. Standalone LTC can buy more care per dollar. The right choice comes down to what you're protecting, what your income is, whether you have a spouse and what you’d leave behind,” Fisher says.
Is the feature built in or an added cost? Some accelerated benefit riders come with the policy at no extra charge, while others raise your premium.
What exactly triggers a payout? Ask for the specific definitions, such as how many daily activities you must be unable to perform.
How much will it pay, and how? Find out whether benefits are paid as a monthly amount, a lump sum or a reimbursement of actual care costs, and whether early payouts are discounted.
How does it affect the death benefit? Most living benefits reduce what your beneficiaries receive.
Are the benefits taxable? Accelerated benefits are often tax-free when they meet federal requirements, but the rules are complex, so check with a tax professional.
This article draws on the 2026 Insurance Barometer Study from LIMRA and Life Happens, which surveyed more than 5,200 U.S. adults in January 2026, and on LIMRA's 2024 individual long-term care and combination product sales surveys. LIMRA is an insurance industry trade association, and Life Happens is a nonprofit supported by insurance companies, so we paired their findings with government data from the U.S. Department of Health and Human Services and Medicare. The 2024 sales figures are the most recent product-level breakdown LIMRA has made public.
Yes, if your policy includes a long-term care or chronic illness rider, or if it's a linked-benefit hybrid policy. These features let you use part or all of your death benefit to pay for care while you're alive. In 2024, these combination products accounted for most new long-term care policies sold, according to LIMRA.
Both can pay out if you can't care for yourself. A long-term care rider is designed specifically to pay for care services and is typically regulated as long-term care coverage. A chronic illness rider pays part of your death benefit early and may have stricter qualifying rules and lower payouts.
Usually, yes. Most living benefits pay out part of the death benefit early, so your beneficiaries receive less. Some hybrid policies and extension of benefits riders can pay long-term care benefits beyond the death benefit amount.
Some term policies include an accelerated death benefit for terminal illness, and some offer chronic or critical illness riders. Term policies don't build cash value, so they don't offer loans or withdrawals.
No. Medicare doesn't pay for long-term custodial care, such as help with bathing, dressing and eating, though it may cover short-term skilled nursing care after a hospital stay. Medicaid covers long-term care for people who meet their state's eligibility rules.
About half of Americans say they want life insurance that can help them while they're alive, and the long-term care market has already moved in that direction: most new long-term care protection is now sold as part of a life insurance policy. Living benefits can be valuable, but they usually reduce what your family receives and can raise your premium. Before you pay for one, find out exactly what triggers a payout, how much it pays and what it costs, and compare it with simpler options such as term life insurance or standalone long-term care coverage.
Anna Baluch is an insurance and finance expert at BestMoney.com. With over a decade of writing experience, she specializes in insurance, banking, mortgages, personal loans, and retirement planning. Her work has been featured in publications like Forbes, Newsweek, Fox Business, Credit Karma, Insurify, and Realtor.com. Anna holds a bachelor’s in marketing from Northwood University and an MBA from Roosevelt University. Her goal is to empower consumers to make smart financial decisions.
