Nationwide CareMatters Hybrid Long Term Care Insurance

Jason Stolz, CLTC, CRPC, DIA, CAA, is Chief Underwriter at Diversified Insurance Brokers, and Nationwide CareMatters II is one our office places regularly for clients who want long-term care protection without the risk of future rate increases or the worry of paying for coverage they may never use. As an independent long-term care insurance broker representing Nationwide alongside more than one hundred other carriers, our office can show you exactly how CareMatters II compares with other hybrid and traditional policies and help you decide whether it is the strongest fit for your situation, rather than assuming one well-known carrier is automatically the right answer.

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Nationwide CareMatters II at a Glance

What a Linked-Benefit Policy Actually Is

A traditional long-term care policy does one thing. You pay premiums, and if you need care, it pays benefits. If you never need care, the premiums are gone, the same way a homeowners premium is gone in a year the house does not burn down. A linked-benefit policy like CareMatters II is built differently. It starts with a fixed-premium universal life insurance policy and attaches long-term care riders to it. The life insurance death benefit, called the specified amount, becomes the foundation for the long-term care benefit, and the policy pays out in one form or another no matter how your life unfolds. Our guide to understanding hybrid long-term care insurance covers the category more broadly.

That structure creates three possible outcomes, and all three return value. If you need long-term care, the policy pays a monthly cash benefit for the duration you selected. If you never need care, your beneficiaries receive the death benefit, income tax-free, which Nationwide describes as typically at least equal to the premiums paid. And if your plans change and you decide to cancel, the refund of premium option you chose determines what you get back. For many of the clients who come to our office, that is the whole reason for choosing a hybrid: they understand the risk of needing care, but they cannot stomach the idea of paying for decades and walking away with nothing.

The trade-off is cost structure. A hybrid policy generally requires more premium up front, or over a shorter payment period, than a traditional policy offering a similar monthly benefit, because it is also funding a death benefit and a refund feature. Whether that trade is worth it depends on how you weigh guaranteed premiums, the death benefit, and liquidity against getting the largest possible care benefit for each premium dollar. Jason walks clients through that comparison side by side, because it is the single most important decision in long-term care planning, and it is rarely obvious until you see both options priced for your age and health.

It is also worth being clear about what CareMatters II is not. Nationwide states plainly that it is not intended to be a primary source of life insurance protection. The death benefit is there to protect the premium you put in, not to replace income for a young family. If you still need significant life insurance, that need should be covered with a policy designed for it, and our office looks at both needs together rather than letting one product try to do two jobs.

The Guarantee That Sets Hybrid Policies Apart

The guarantees are the heart of CareMatters II. Premiums are guaranteed never to increase. Long-term care benefits are guaranteed never to decrease. A minimum death benefit is guaranteed even if you use some or all of your care benefits. The amount you would get back if you cancel is guaranteed under the refund option you chose. And if you stop paying premiums, the portion of the long-term care benefit you have already paid for is locked in as a paid-up benefit. Nationwide describes the underlying policy as noncancelable, which means that as long as you pay the scheduled premium on time, Nationwide cannot change the policy’s terms on its own and cannot change the scheduled premium.

That stands in sharp contrast to traditional long-term care insurance. Traditional policies are generally guaranteed renewable, which means premiums can be raised for an entire class of policyholders with state regulatory approval. We cover this in detail on our pages for Thrivent long-term care insurance, which carries a five-year initial rate guarantee in most states, and Mutual of Omaha MutualCare coverage, where regulators have reviewed rate increases on policies issued before the product’s rate refresh. Both are strong traditional products, and both can make sense, but neither offers the lifetime premium guarantee that CareMatters II does.

That does not automatically make a hybrid the better choice. A traditional policy often delivers more long-term care benefit per premium dollar, it can offer features hybrids do not, and for someone focused purely on the largest possible care benefit, it may be the right answer even with rate increase risk. Our comparison of hybrid life versus traditional LTC lays out the trade-offs in depth. What the guarantee does is remove one specific risk entirely, and for people who have watched a parent struggle with rising long-term care premiums late in life, removing that risk is often worth a great deal.

One important qualifier applies to every guarantee in the policy: benefits can be reduced by outstanding policy loans, unpaid monthly deductions, and partial surrenders. The guarantees protect you from Nationwide changing the deal. They do not protect you from reducing the policy’s value yourself by borrowing against it or withdrawing from it, which is why our office generally recommends leaving a CareMatters II policy untouched unless there is a clear reason to access its value.

How the Benefit Is Built: Acceleration, Then Extension

CareMatters II builds its long-term care benefit in two stages. The first two years of every benefit period are an acceleration of the specified amount, paid under the LTC Acceleration Rider. In plain terms, the policy pays out its own death benefit to you, monthly, while you are living and need care. Because the specified amount is spread over the first 24 months, the monthly benefit works out to the specified amount divided by 24, which is why the $500,000 maximum specified amount pairs with the $20,833 maximum monthly benefit, and the $36,000 minimum specified amount pairs with the $1,500 minimum. Our guide to how accelerated death benefit riders work explains the acceleration concept in more detail.

If you choose a benefit duration of three years or longer, the LTC Extension of Benefits Rider takes over once the acceleration benefit has been exhausted, continuing the monthly benefit for the remaining years of the duration you selected. That is where the leverage in a hybrid policy comes from. The death benefit funds the first two years, and the extension rider funds everything after that. Choosing the right duration is one of the most important decisions in the design, and our guide to how a benefit period actually works is a useful starting point.

Here is how the arithmetic works for a policy with a $150,000 specified amount. This is an illustration of the structure, not a quote, and it assumes the extension rider continues the same monthly benefit and that no inflation rider, loans, or withdrawals apply. Your own illustration will show exact figures.

In every row, if long-term care benefits are used in full, a residual death benefit of 20% of the specified amount, $30,000 in this example, remains payable to beneficiaries. A longer duration costs more, because the extension rider is doing more of the work, but it also multiplies the care protection far beyond the death benefit itself. The right balance depends on your savings, your family history, and how long you want the policy to be able to carry the cost of care before other resources take over. Durations of eight years or less also mean CareMatters II does not offer unlimited lifetime benefits, which is worth weighing if extended cognitive decline runs in your family.

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Cash Indemnity: 100% of the Monthly Benefit, No Receipts

Most traditional long-term care policies are reimbursement policies. Every month, you or your family submit bills and receipts, the insurance company decides which services qualify, and it sends a check for only what is covered, up to the monthly limit. Anything that does not qualify is paid out of pocket. CareMatters II is a cash indemnity policy, and that difference changes the entire experience of a claim. Once your claim is approved and the elimination period is satisfied, you receive the full monthly benefit, 100% of it, and Nationwide places no restrictions on how it is used. There are no monthly bills or receipts to submit after the claim is approved.

That flexibility matters most for care at home. Nationwide’s own consumer research found that 82% of people say they would prefer to receive care at home, and home care is exactly where reimbursement policies create the most friction, with a patchwork of agency visits, informal helpers, equipment, and household costs that do not always fit a claims form. A cash benefit can pay for all of it. Our overview of what in-home care services include shows how wide that range of costs can be.

Cash indemnity also opens the door to family care. CareMatters II allows you to pay a family member or friend to care for you, provided the plan of care prepared by a U.S.-licensed health care practitioner states that care from family members or other informal caregivers is appropriate. Traditional reimbursement policies commonly exclude care provided by immediate family members unless they work for a licensed agency, so this is a meaningful difference for families who want to keep care close to home. The benefit can also be used for traditional options such as home care, assisted living, adult day care, nursing home care, and hospice, as well as alternative long-term care services and care options that may be developed in the future.

One structural detail deserves attention. Nationwide pays the long-term care benefit to the policyowner. When the insured and the owner are the same person, that is simple. When someone else owns the policy, such as an adult child or a trust, there is no guarantee the owner will use the benefit for the insured’s care. Ownership is a decision Jason discusses carefully with clients at application, because the right answer depends on your estate plan and your family.

Qualifying for Benefits and the Retroactive Elimination Period

To begin receiving benefits, a U.S.-licensed health care practitioner must certify one of two things: that you require substantial supervision to protect yourself from threats to health and safety because of a severe cognitive impairment, or that you are unable to perform two of the six activities of daily living (bathing, eating, continence, toileting, dressing, or transferring) because of a loss of functional capacity expected to last at least 90 days. These are the federal standards used across tax-qualified long-term care coverage.

Before benefits begin, you must complete a 90-calendar-day elimination period. What makes CareMatters II unusual is what happens next. Once the elimination period is satisfied, benefits for those first 90 days are paid retroactively, along with the benefit for month four. In practice, the waiting period delays the first payment but does not cost you those three months of benefits. Using the $6,250 monthly benefit from the example above, the first payment would be $25,000, covering the first 90 days plus month four. Most traditional policies treat the elimination period as a true deductible, where the benefit for those days is simply never paid, so this is a genuine financial advantage.

The elimination period is counted in calendar days and only has to be satisfied once for the life of the policy, so a second claim years later does not restart the clock. Claims must be recertified at least every 12 months, and sooner if the insured’s condition or likelihood of recovery calls for it. Our guide to how LTC elimination periods are satisfied compares calendar-day and service-day counting across the market.

Premium Payment Options

CareMatters II offers five ways to pay: a single premium, premiums over 5 years, 10 years, or 20 years, or premiums to attained age 100, which is available for issue ages 30 through 65. Every option except single pay can be paid annually or monthly. For level-pay options, premiums for both the long-term care riders and the base life insurance policy are waived while you are receiving long-term care benefits.

Each option fits a different kind of buyer. Single pay suits people who already have savings earmarked for long-term care, often sitting in a savings account, a certificate of deposit, or a low-yielding cash position, and who want to reposition a portion of it into guaranteed care leverage while keeping a death benefit for heirs. Five-pay and ten-pay suit buyers who want the obligation finished before or early in retirement. Twenty-pay and pay to age 100 make the product accessible to people who would rather pay from current income than commit a lump sum. It is worth illustrating at least two payment options side by side, because the total premium, the refund value, and the leverage change noticeably from one to the next.

If you ever stop paying premiums before the schedule is complete, you do not lose everything. The long-term care benefits are reduced in proportion to the premium actually paid compared with the original scheduled premium, and the policy continues with a paid-up benefit. For example, a ten-pay policy with level annual premiums that stops after six of its ten payments would keep roughly 60% of its original monthly benefit, and Nationwide sets a minimum paid-up benefit of $250 per month. That paid-up feature is an important safety net for people choosing longer payment schedules, where a change in circumstances over twenty or more years is a real possibility.

Inflation Protection

Care costs rise over time, and a monthly benefit that looks adequate today may fall short when a claim occurs decades from now. CareMatters II offers an optional LTC Fixed Rate Inflation Protection Rider, available at an additional cost that varies by option, with three choices. With 3% compound inflation for 20 years, the monthly benefit increases by 3% each year for 20 years and then stays level. With 3% compound for life, it increases by 3% every year for the life of the policy. With 5% compound for life, it increases by 5% every year. You can also choose no inflation protection, in which case the monthly benefit stays the same.

The differences compound quickly. A $6,250 monthly benefit grows to roughly $11,288 after 20 years at 3% compound, and to roughly $16,583 after 20 years at 5% compound. For a buyer in their forties or early fifties, whose claim is most likely decades away, the stronger options can make the difference between a benefit that still covers a meaningful share of care costs and one that does not. For buyers in their late sixties or seventies, a lower rate or a larger starting benefit can be the more efficient choice. Illustrating at least two inflation options side by side shows the premium difference against the added protection.

One limitation is worth knowing. Inflation rider benefits paid alongside the extension rider are not available while living outside the United States, as described in the international coverage section below. For most buyers that will never matter, but for anyone planning to retire abroad, it is part of the picture.

Refund of Premium Options and Liquidity

If you decide to cancel, what you receive depends on the refund of premium option chosen at issue. CareMatters II offers two. The Minimum Refund of Premium with Maximum LTC Benefit option sets the refund value equal to the policy’s cash surrender value. It provides the lowest refund in the early policy years and the most long-term care benefit for a given premium, it is available with every payment duration, and it is the only option available with premiums paid to age 100. The Vested option sets the refund value equal to all premium paid, minus any withdrawals, multiplied by a vesting percentage that starts at 85% in the first policy year and rises toward a full return of premium over time, with the pace depending on the payment option. The Vested option is not available with premiums paid to age 100 and is limited to younger issue ages.

The choice comes down to what you value more: liquidity or leverage. If there is a realistic chance you will need the money back, the Vested option protects most of your premium from the first year. If you are confident the money is committed to long-term care and legacy, the Minimum Refund option buys more care protection for the same premium. For clients who worry that they will pay into a policy and never use it, and who ask whether long-term care insurance is worth it at all, this choice is usually where that concern gets resolved.

The policy’s cash surrender value is also subject to surrender charges in the early years. Those charges begin at 8% in the first policy year, decline gradually to 2% in year ten, and reach zero in year eleven. Policy loans are available, but loans, like partial surrenders, reduce both the cash value and the death benefit and can reduce long-term care benefits as well. The liquidity is real, but it works best as a safety valve, not as a savings account.

The Death Benefit and the Built-In Illness Riders

If you never need long-term care, your beneficiaries receive the death benefit income tax-free, reduced by any outstanding loans, unpaid monthly deductions, or partial surrenders. Any long-term care benefits paid during your lifetime reduce the death benefit, because the first two years of care benefits are an acceleration of it. Even if you use all of your long-term care benefits, a residual death benefit equal to 20% of the specified amount remains payable, so the policy always leaves something behind.

Two additional riders are issued automatically with the policy, and no charges are deducted for either one until it is used. The Critical Illness Rider lets you request an elected portion of the specified amount if the insured is diagnosed with a critical illness as defined in the rider, including any required survival or treatment period. The Critical Illness Rider is not available in California. The Terminal Illness Rider pays an accelerated death benefit to the policyowner when the insured has a terminal illness with a life expectancy of 12 months or less, or 24 months or less in Illinois. Benefits paid under either rider reduce the death benefit, the long-term care benefits, and the cash surrender value, so they are best viewed as an emergency option rather than a separate pool of money. Our overview of life insurance with living benefits explains how these riders compare across policies.

International Coverage

CareMatters II provides international benefits, but with an important structure to understand. While benefits are being paid under the LTC Acceleration Rider, which covers the first two years of a claim, 100% of the maximum monthly benefit, along with 100% of any benefit from an inflation protection rider, is available while the insured is living outside the United States. No international benefits are available under the LTC Extension of Benefits Rider or any inflation benefit associated with it.

In practice, that means up to two years of full benefits abroad, which is generous by the standards of long-term care coverage, followed by no benefits from the extension period while living outside the country. For clients who travel extensively or spend part of the year abroad, two years of coverage outside the United States can be valuable. For someone planning to relocate abroad permanently and expecting to need care there for many years, it is an incomplete solution. Our overview of using long-term care insurance overseas covers how to plan around limits like this one.

Underwriting and Who Qualifies

Issue ages run from 30 to 75, based on age last birthday, although some payment and refund options are limited to younger issue ages. Pay to age 100, for example, is available only for issue ages 30 through 65, and the Vested refund option is limited to younger applicants than the Minimum Refund option. Rate classes are Nontobacco Single, Tobacco Single, Nontobacco Couple, and Tobacco Couple, so tobacco use and whether a couple is applying both affect pricing. Approval is subject to underwriting, and a medical exam may be required. Some states require higher minimum benefit amounts than the national minimums.

Because the policy combines life insurance with long-term care coverage, underwriting considers both mortality risk and the likelihood of needing care. Conditions affecting mobility, balance, memory, or the ability to live independently weigh heavily, while some conditions that matter a great deal for life insurance matter less for long-term care, and the reverse. Our overview of how to qualify for long-term care insurance covers the broader picture. Jason reviews a client’s health history before an application is submitted so the design you see is one you are likely to be approved for, and so any concerns can be addressed before underwriting rather than after a decision comes back.

Timing matters as well. Premiums are based on your age at issue, and a single new diagnosis can move you from approval to decline. Many people wait until their sixties to look at long-term care, and by then options narrow quickly. The broad issue age range on CareMatters II, starting at 30, and the long payment schedules make it realistic to lock in coverage earlier, while health is on your side.

Exclusions

Like every long-term care policy, CareMatters II has exclusions, and they are best understood before you buy. Benefits are not paid for intentionally self-inflicted injuries or attempted suicide; for committing or attempting to commit a felony; for alcoholism or drug addiction, unless the addiction results from drugs prescribed by a physician for treatment; or for war or any act of war, whether declared or undeclared. The policy also contains other limitations, reductions of benefits, and terms under which it may be continued or discontinued, all of which are spelled out in the policy itself.

Nationwide also notes that there is no guarantee the rider will cover the entire cost of all of an insured’s long-term care, because needs vary widely from person to person. That is true of every long-term care policy on the market. A policy is designed to carry a meaningful share of the cost for a defined period, and the rest of a care plan, whether savings, income, or family support, fills in around it. Our office looks at the whole plan, not just the policy.

Claims Support and the Caregiver Advocate

When a claim arises, Nationwide provides personalized support throughout the process. That includes explaining how the process works, helping file the claim, creating a plan of care, finding local care services such as home care agencies, facilities, adult day care, and community services, and providing ongoing support as needs change. For families facing a care event for the first time, that guidance can be as valuable as the benefit itself.

Insureds, policyowners, and their immediate family members also have access to a Caregiver Advocate service at no additional cost. It provides information and referrals for long-term care providers and community services in the family’s area, and there is no obligation to use it. The service is currently provided through a nonaffiliated third party. Families often do not know where to start when care is suddenly needed, and a knowledgeable point of contact can save weeks of searching.

Jason and our office stay involved as well. Clients often call us first when a care need arises, and we help them understand what the policy provides, what documentation Nationwide will need, and how the retroactive elimination period and cash benefit will work in their specific situation.

Tax Treatment

Long-term care benefits from CareMatters II are income tax-free up to the greater of the HIPAA per diem limit in the year of the claim or the actual qualifying long-term care costs incurred. Benefits may be taxable in certain circumstances, so the specifics should be confirmed with a tax professional. The death benefit paid to beneficiaries is generally received income tax-free. Our guide to the tax advantages of hybrid LTC policies explains how these rules generally apply.

The per diem rule matters because of the cash indemnity design. Because benefits are paid without receipts, the amount that is automatically tax-free is tied to the federal per diem limit, which adjusts over time. If the monthly benefit exceeds that limit, the excess can still be tax-free to the extent it is matched by actual qualifying long-term care costs. For most buyers choosing a benefit in line with local care costs, this will not be an issue, but it is worth understanding before choosing a very large monthly benefit.

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Financial Strength

CareMatters II is issued by Nationwide Life and Annuity Insurance Company in Columbus, Ohio. AM Best rates Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company A+ (Superior), as confirmed in AM Best’s rating announcement, and Nationwide reports ratings of A+ from Standard & Poor’s and A1 from Moody’s for the same companies. Ratings reflect the agencies’ opinions of claims-paying ability and can change, so our office confirms a carrier’s current ratings before finalizing a recommendation.

Nationwide’s roots as a mutual company go back a century, and it has offered long-term care solutions for more than two decades. That long track record matters with a product like CareMatters II, because every guarantee in the policy, from the fixed premium to the residual death benefit, is backed by the claims-paying ability of the issuing company. When a product’s central promise is that the terms will never change, the strength of the company making that promise is not a side detail. You can read Nationwide’s own overview of the product on its CareMatters long-term care page, which asks you to select your state because features vary by state.

How CareMatters II Compares With Traditional Policies

We have reviewed two leading traditional long-term care policies alongside this one, and a side-by-side view makes the structural differences clear. Each approach has real strengths, and the right one depends on what you value most.

The pattern is consistent. Traditional policies tend to offer more long-term care benefit per premium dollar, longer or more flexible benefit designs in some cases, and lower entry costs through lifetime pay. CareMatters II offers certainty instead: a premium that never changes, benefits that never decrease, a cash benefit with no receipts, a retroactive elimination period, and value returned to your family whether or not care is ever needed. Neither approach is universally better, which is why our office prices both for nearly every client who asks about long-term care.

Two practical questions usually settle the decision. First, if premiums on a traditional policy rose meaningfully in your seventies or eighties, could you comfortably absorb the increase, or would you be forced to cut benefits when you need them most? Second, how would you feel if you paid premiums for decades and never needed care? If either answer is uncomfortable, the guarantees and death benefit in CareMatters II deserve serious weight. If both answers are comfortable, a traditional policy may stretch your premium further. Jason walks through both questions with clients before any application is submitted.

Important Information About This Policy

Nationwide CareMatters II is a fixed-premium universal life insurance policy with long-term care riders, issued by Nationwide Life and Annuity Insurance Company, Columbus, Ohio. All guarantees and benefits are backed by the claims-paying ability of the issuing insurance company. Payment of long-term care rider benefits, as an acceleration of the death benefit, reduces both the death benefit and the cash surrender value, and loans and withdrawals also reduce the cash value and the death benefit. There is no guarantee that the rider will cover the entire cost of an insured’s long-term care. Nationwide pays the long-term care benefit to the policyowner.

Approval is subject to underwriting and may require a medical exam. The product and its features may not be available in all states, and state variations apply. Life insurance, and long-term care coverage linked to life insurance, has fees and charges, including cost of insurance charges that vary with sex, health, age, and tobacco use. CareMatters II is not intended to be a primary source of life insurance protection. It is not a deposit, is not FDIC or NCUSIF insured, is not guaranteed by any bank, and is not insured by any federal government agency. The benefit examples on this page are illustrations of the policy’s structure, not quotes, and this information is educational rather than tax or legal advice.

Who Fits CareMatters II, and Who Does Not

CareMatters II tends to fit people who want certainty. It is a strong match for buyers who have savings they want to reposition into long-term care protection, who refuse to risk future rate increases, who want value returned to their family if care is never needed, and who want the freedom of a cash benefit, including the option to pay a family member for care. The retroactive elimination period and the flexible payment schedules, from single pay to pay to age 100, broaden its appeal further.

It is a weaker fit for buyers whose top priority is the largest possible long-term care benefit for the lowest premium, where a traditional policy may deliver more coverage per dollar. It is also limited for people who want coverage longer than eight years, those over age 75, and anyone planning to live abroad permanently, given the international benefit structure. And because it is not designed as primary life insurance, anyone with a significant income replacement need should address that separately.

How We Help

Jason and our office help clients decide between hybrid and traditional long-term care from the first conversation. That starts with reviewing your health history, your savings, and your goals, then pricing CareMatters II alongside other hybrid and traditional policies so you can see the real trade-off between guaranteed premiums and maximum care benefit for your age and health. We illustrate multiple payment options, benefit durations, inflation choices, and refund options, because the right combination often surprises clients.

Because we are independent, we are not obligated to recommend Nationwide or any other carrier. If a different policy fits your health, budget, or goals better, that is the policy we will recommend. Our guide to why an independent LTC broker matters explains why that independence is especially valuable when choosing between product types as different as these.

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