Optional Provisions or Riders

Last updated: March 29, 2016

3 Important Options

Optional features may be added to your policy. Most optional features will add to the cost of your plan. While each policy may have its own specific options, 3 common optional riders include:

  • Inflation protection
  • Waiver of premium charges 
  • Nonforfeiture benefits

Inflation Protection: 

Inflation will affect the cost of long-term care services. 

  • For example, a nursing home that costs $70 a day now will cost $186 a day in 20 years, (assuming an inflation rate of 5% a year). 

Providing inflation protection is an important addition to your policy because it ensures that your policy’s value will increase with inflation. It may also significantly increase the cost of your coverage. 

  • The added cost will depend on your age when you purchase the policy and when you expect to use the policy. The younger you are when you purchase a policy, the more important it is for you to consider adding inflation protection. 

Inflation benefits may be increased on either a "simple" or "compounded rate basis". 

  • If the inflation adjustment is simple, the dollar amount of the increase added to the benefit stays the same every year. 
  • If the adjustment is compounded, the benefit grows by an increasing dollar amount each year because interest grows on the principal and the interest previously earned. 
  • For example, a $75 daily benefit that increases by a simple 5% a year will provide $150 a day in 20 years. If it’s compounded, it would provide $199 a day. (Interest rates vary. Make sure you know what applies to your policy.)

In Kansas, every company must offer you an inflation protection option. It is your decision whether to buy the coverage. If you refuse the coverage, you will be asked to sign a statement saying you don’t want inflation protection. Be sure you understand what you are signing.

Inflation protection is most commonly offered in one of two ways: 

  1. Benefits automatically increase each year.
  2. Optional increases are offered to you on a periodic basis, such as every three years. 

Inflation protection isn’t the same as a future purchase option. This allows you to choose to increase your benefit periodically. 

  • Your premium will initially be lower under this option but will increase each time you buy additional coverage.

Waiver of Premium Charges:

Most companies provide a waiver of premium provision. This provision allows you to stop paying premiums (a.k.a. "waive the premium") once you are in a nursing home and the insurance company has started to pay benefits. 

  • Some companies waive the premium as soon as they make the first benefit payment. Others wait 60 to 90 days. This provision may not apply if you are receiving care in your home.

Nonforfeiture Benefits: 

With this benefit, if you cancel the policy or stop paying the premiums you won't forfeit all benefits at the end of the period covered by your final premium. You will be eligible for a reduced benefit for a limited period of time until the non-forfeiture benefit is exhausted. 

  • For example: If your annual premium is $4,000 and you cancel the policy after 5 years, you would have coverage with a maximum lifetime benefit of $20,000. 

A nonforfeiture benefit can add significantly to a policy’s cost, depending on such things as your age at the time of purchase, the type of nonforfeiture benefit offered and whether the policy provides inflation protection. 

  • However, if your policy lapses without a nonforfeiture of benefits, you may not receive any benefits.

This article is published on KansasMoney.gov. Find more information by contacting these state agencies: