Annuity Long-Term Care Rider vs. Crisis Waivers

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Understanding Annuity Long-Term Care Riders

When planning for retirement and potential long-term care (LTC) needs, it’s essential to understand the options available within annuities. Two popular features are the long-term care rider and the crisis waiver. This guide will help you compare these two options, understand their benefits, and decide which may be best suited for your financial and healthcare needs.

What is a Long-Term Care Rider?

A long-term care rider is an add-on to an annuity contract that provides additional benefits if you require long-term care services. This rider can help cover the cost of care in settings such as nursing homes, assisted living facilities, or in-home care.

How Does it Work?

  • Activation: The rider activates when the policyholder can no longer perform a specified number of activities of daily living (ADLs), such as bathing, dressing, eating, or transferring, without assistance.
  • Benefits: Once activated, the rider provides a specified monthly benefit to help cover long-term care expenses. This amount is typically a percentage of the annuity’s value.
  • Premiums: Adding a long-term care rider to an annuity often increases the premium cost. However, it can be a valuable addition for those concerned about potential long-term care expenses.


  1. Comprehensive Coverage: Provides significant financial support for various long-term care services.
  2. Peace of Mind: Offers a safety net, reducing the worry about depleting your retirement savings due to long-term care costs.
  3. Tax Benefits: In some cases, the benefits received from a long-term care rider may be tax-free.


  1. Increased Costs: Higher premiums can be a financial burden for some policyholders.
  2. Eligibility Requirements: Activation depends on meeting specific ADL criteria, which may not cover all situations.
  3. Taxable Benefits: Benefits from a long-term care rider may be taxable, unlike a true long-term care annuity.

Understanding Crisis Waivers

What is a Crisis Waiver?

A crisis waiver, often referred to as a waiver of surrender charges for a nursing home or terminal illness, is a provision in an annuity contract that allows you to withdraw funds without incurring surrender charges under certain crisis conditions.

How Does it Work?

  • Activation: This waiver typically activates if the policyholder enters a nursing home, becomes terminally ill, or experiences another qualifying crisis as defined in the annuity contract.
  • Benefits: The primary benefit is the ability to access the annuity’s account balance in a lump sum without facing the usual surrender charges, providing more financial flexibility during a crisis.
  • No Additional Cost: Crisis waivers are often included in the annuity contract at no extra cost, unlike long-term care riders.


  1. Immediate Access: Provides quick access to funds without the penalty of surrender charges, which can be crucial during a crisis.
  2. Cost-Effective: Typically included at no extra charge, making it a budget-friendly option.
  3. Flexible Use: Funds can be used for any purpose, not just long-term care expenses.


  1. Limited Scope: Only activates under specific conditions, which may not cover all healthcare needs.
  2. Taxable Lump Sum: The lump sum received is generally taxable, unlike benefits from a true long-term care annuity.

Comparing The Two Options

Purpose and Coverage

  • Long-Term Care Rider: Specifically designed to cover long-term care expenses, offering broader and more comprehensive coverage through regular payments.
  • Crisis Waiver: Provides financial flexibility during a qualifying crisis by offering the annuity’s account balance in a lump sum.

Cost Considerations

  • Long-Term Care Rider: Higher premiums due to the extensive coverage provided.
  • Crisis Waiver: Generally included at no extra cost, making it a more affordable option.

Eligibility and Activation

  • Long-Term Care Rider: Activates based on the inability to perform ADLs.
  • Crisis Waiver: Activates under specific crisis conditions like entering a nursing home or terminal illness diagnosis.

Tax Implications

  • Long-Term Care Rider: Benefits may be taxable, unlike a true long-term care annuity.
  • Crisis Waiver: The lump sum received is typically taxable.

The Better Solution: True Long-Term Care Annuities

A true long-term care annuity provides a more comprehensive solution compared to both a long-term care rider and a crisis waiver. This type of annuity is specifically designed to cover long-term care expenses with benefits that are tax-free, providing a significant advantage.

Advantages of True Long-Term Care Annuities

  1. Tax-Free Benefits: Unlike the long-term care rider and crisis waiver, the benefits received from a true long-term care annuity are tax-free.
  2. Comprehensive Coverage: Provides extensive financial support for long-term care needs.
  3. No Additional Premiums: Unlike riders, true long-term care annuities are designed with long-term care benefits built-in, avoiding additional premium costs.


  1. Initial Cost: This may require a higher initial investment compared to standard annuities with riders.
Penalty Withdrawals And Crisis Waivers For Annuities

How We Can Help

At The Annuity Expert, we understand the challenges you face when planning for retirement and potential long-term care needs. With 15 years of experience as an insurance agency, annuity broker, and retirement planner, we are dedicated to finding the best solutions at the lowest costs for our clients. We believe in providing comprehensive and tax-efficient long-term care coverage that aligns with your financial goals and ensures your peace of mind.

What We Recommend

  • Step 1: Schedule a Free Consultation
    • The first step is to schedule a free consultation with one of our experts. During this consultation, we will assess your current financial situation and long-term care needs. The main benefit of this step is gaining a clear understanding of your options and how they align with your goals.
  • Step 2: Personalized Plan Development
    • Next, we will develop a personalized retirement plan that includes the most suitable annuity options for your needs. This plan will outline the benefits and costs of each option, helping you make an informed decision. The main benefit of this step is having a tailored strategy that maximizes your financial security and long-term care coverage.
  • Step 3: Implementing Your Plan
    • Finally, we will assist you in implementing your chosen plan, ensuring all paperwork is completed accurately and promptly. We will provide ongoing support and adjustments as needed to keep your plan on track. The main benefit of this step is achieving financial peace of mind, knowing that you are well-prepared for your future.

Features and Benefits:

  • Expert Guidance: Our experienced team offers personalized advice to help you make the best decisions.
  • Comprehensive Solutions: We provide a range of annuity options tailored to your needs.
  • Ongoing Support: We offer continuous support and adjustments to your plan as your needs change.

Common Objections and Responses:

  • High Costs: While some options may have higher premiums, the long-term benefits and financial security they provide can outweigh the costs.
  • Complexity: We simplify the process and explain all options in easy-to-understand terms.
  • Trust Issues: Our 15 years of experience and client testimonials demonstrate our commitment to your financial well-being.

Choosing not to work with us can lead to inadequate long-term care coverage and financial insecurity. However, partnering with us ensures comprehensive coverage, peace of mind, and a secure financial future. You will experience the satisfaction of knowing that you are well-prepared and supported throughout your retirement journey.

Contact us today for free advice or a quote and take the first step towards securing your future.

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Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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