The JH LTC Opportunity Series - Part 4: Why the reimbursement model matters

There seems to be a lot of confusion surrounding how reimbursement LTC riders differ from indemnity or chronic illness type riders, and rightfully so. The language is almost perfectly backwards.

LTC Rider Seller's Guide

Claims Support and Payment 

John Hancock's reimbursement model LTC rider pays all approved long-term care bills directly to the care provider. Although the name suggests the family might have to submit bills for reimbursement, this is not the case. 

Indemnity model riders, contrary to what the name suggest, do saddle the family with the burden of collecting payment from the insurer, collecting bills from the care provider, and making sure those bills get paid. This model also leaves the insureds family on their own to determine if the care provider selected is licensed and qualified to establish and execute an appropriate plan of care.

Taxation and benefit preservation

Since benefits under an indemnity rider can be accessed for more than the actual care expenses, they are subject to IRS limits. This creates the possibility that benefits may trigger taxes and that benefit money might be spent on non LTC expenses, therefore eroding the overall benefit.

Rider Cost and Stability

John Hancock's reimbursement LTC rider has a fixed cost which is generally less expensive than indemnity model riders. Most carriers can increase rates for their in-force indemnity riders.

Below is a link to John Hancock's LTC Rider Sellers Guide, which is one of their most comprehensive resources. Page 4 provides more detail on the difference between reimbursement and indemnity riders. We hope this helps you to make a more informed decision on which type of rider will best serve your clients needs.

Get the Guide Now

Contact Kirk to get started with LTC Riders!

If you missed parts 1, 2 & 3 you can view them here:


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