Nationwide CareMatters II Hybrid Long Term Care Insurance Review

When it comes to planning for long term care, hybrid insurance products have become the go-to solution for Americans who want both asset protection and a guaranteed benefit. Among these products, Nationwide CareMatters II consistently ranks as one of the most popular and well-regarded hybrid long term care insurance policies available. In this comprehensive review, we cover everything you need to know about CareMatters II, from how it works and what it costs to the pros, cons, and the type of person it is best suited for.

What Is Nationwide CareMatters II?

Nationwide CareMatters II is a hybrid life insurance policy that combines a permanent life insurance death benefit with long term care (LTC) coverage. It is classified as a linked-benefit or asset-based product, meaning your premiums are never “use it or lose it.” If you never need long term care, your beneficiaries receive a death benefit. If you do need care, the policy pays out substantial LTC benefits that can cover years of home care, assisted living, or nursing home expenses.

First introduced as a successor to the original CareMatters product, CareMatters II was redesigned to offer more flexibility in premium payment options, improved benefit structures, and competitive pricing. It is underwritten by Nationwide Life and Annuity Insurance Company, a subsidiary of Nationwide Mutual Insurance Company, which holds strong financial ratings from A.M. Best (A+) and Standard & Poor's (A+).

How Does CareMatters II Work?

At its core, CareMatters II is a universal life insurance policy with an integrated long term care benefit rider. Here is a step-by-step explanation of how the product functions:

1. You pay premiums — CareMatters II offers flexible premium payment options including a single lump sum payment, payments over 5 or 10 years, or annual payments to age 65. This flexibility allows you to choose the funding approach that best fits your financial situation.
2. A death benefit is established — Upon issue, your policy includes a guaranteed death benefit. If you pass away without ever needing long term care, this benefit pays out to your named beneficiaries, income-tax-free.
3. LTC benefits are available if needed — If you are certified as chronically ill (unable to perform two or more activities of daily living, or suffering from severe cognitive impairment), the policy begins paying long term care benefits. The LTC benefit pool is typically two to three times the death benefit amount, providing substantial coverage.
4. Benefits are paid monthly — Once activated, the policy pays a monthly LTC benefit amount that can be used for a wide range of qualified care services including home health care, adult day care, assisted living facilities, and nursing home care.
5. If you change your mind — CareMatters II includes a return of premium feature. If you decide to surrender the policy, you can receive a significant portion of your premiums back, depending on how long the policy has been in force.

Key Features and Benefits

Guaranteed Death Benefit

Unlike traditional long term care insurance where your premiums are lost if you never file a claim, CareMatters II guarantees a death benefit. This means every dollar you put into the policy is working for you or your family, regardless of whether you need care. The death benefit is paid income-tax-free to your beneficiaries under current tax law.

Substantial LTC Benefit Pool

The long term care benefit pool in CareMatters II is one of its most attractive features. Depending on the benefit multiplier you select (typically 2x or 3x the death benefit), you can create a pool of LTC funds that could cover three to six or more years of care. For example, if your death benefit is $150,000 and you select a 3x multiplier, your total LTC benefit pool would be $450,000.

Inflation Protection Options

CareMatters II offers several inflation protection riders to help your benefits keep pace with rising care costs. Options typically include:

• 3% compound inflation protection
• 3% simple inflation protection
• CPI-based inflation protection
• Future purchase option (ability to increase benefits periodically)

Selecting inflation protection is particularly important for younger applicants in their 50s, as care costs may rise significantly by the time benefits are needed.

Return of Premium

If your financial circumstances change or you simply change your mind about the policy, CareMatters II includes a return of premium provision. In the early years of the policy, a cash surrender value is available that can return a substantial percentage of your premiums. This feature provides a financial safety net that traditional LTC insurance simply does not offer.

Flexible Care Settings

Benefits can be used across a comprehensive range of care settings, including:

• Home health care and home-based personal care
• Adult day care centers
• Assisted living facilities
• Memory care facilities
• Skilled nursing facilities (nursing homes)
• Hospice care

Spousal and Partnership Discounts

Nationwide offers premium discounts when both spouses or domestic partners apply for coverage. Even if only one partner qualifies for coverage, the other may still receive a discount. Additionally, CareMatters II is approved under the Long Term Care Insurance Partnership Program in most states, meaning benefits received from the policy can help protect an equivalent amount of personal assets from Medicaid spend-down requirements.

Who Is CareMatters II Best For?

CareMatters II is particularly well-suited for the following types of individuals:

• Adults ages 40 to 70 who want to plan ahead for potential long term care needs while also leaving a legacy for their loved ones.
• People with liquid assets of $75,000 or more who want to reposition some of those assets into a product that does double or triple duty (death benefit, LTC coverage, and return of premium).
• Those who are uncomfortable with “use it or lose it” traditional LTC insurance and want a guaranteed return on their premiums in one form or another.
• Individuals doing a 1035 exchange from an existing life insurance policy or annuity. CareMatters II is commonly funded through tax-free 1035 exchanges, making it an excellent option for repositioning underperforming assets.
• Married couples who want to take advantage of spousal discounts and ensure both partners have a plan for potential care needs.

How Much Does CareMatters II Cost?

The cost of a Nationwide CareMatters II policy varies significantly based on several factors:

• Age at application — Younger applicants pay lower premiums. Applying in your early 50s versus your late 60s can make a substantial difference in cost.
• Health status — Nationwide requires medical underwriting, and your health classification (preferred, standard, or substandard) directly affects pricing.
• Benefit amount and multiplier — Higher death benefits and higher LTC multipliers increase premiums.
• Inflation protection — Adding compound inflation protection significantly increases the premium compared to no inflation protection or simple inflation options.
• Payment schedule — Single premium payments result in a lower total outlay compared to paying over 10 years, due to the time value of money.

As a general guideline, single premium payments for CareMatters II typically range from $50,000 to $250,000 or more, depending on the factors above. Multi-year payment plans may start in the range of $5,000 to $20,000 per year. The best way to get an accurate quote is to work with a licensed insurance professional who can tailor the policy to your specific needs and budget.

Underwriting and Eligibility

Nationwide uses a thorough but fair underwriting process for CareMatters II. Here is what you can expect:

• Age requirements — Applicants are typically accepted between ages 40 and 80, though the most favorable pricing is available for those in their 50s and early 60s.
• Medical review — The application process includes a health questionnaire, review of medical records (attending physician statements), and in some cases a phone interview or cognitive assessment.
• No paramedical exam — Unlike many traditional life insurance products, CareMatters II typically does not require a physical exam or blood work, which simplifies the application process.
• Health classifications — Applicants are placed into preferred, standard, or substandard risk classes. Those with well-managed chronic conditions may still qualify, though at higher premium rates.

Pros of Nationwide CareMatters II

• No “use it or lose it” risk — Your money works for you whether you need care or not, thanks to the death benefit and return of premium features.
• Guaranteed premiums — Unlike traditional LTC insurance, your premiums on CareMatters II are locked in and cannot be increased after issue.
• Strong carrier backing — Nationwide is one of the largest and most financially stable insurance companies in the United States.
• Tax advantages — LTC benefits are generally received tax-free, and the death benefit is income-tax-free to beneficiaries. Premiums may also qualify for tax deductions in certain situations.
• Flexible design — Multiple payment options, benefit multipliers, and inflation protection choices allow you to customize the policy to fit your goals.
• Partnership Program qualified — Helps protect additional assets from Medicaid spend-down in participating states.
• Comprehensive care settings — Benefits cover home care, assisted living, nursing homes, and more.

Cons of Nationwide CareMatters II

• Significant upfront cost — Even with multi-year payment options, CareMatters II requires a substantial financial commitment. Single premium options of $75,000 or more are common.
• Medical underwriting required — Not everyone will qualify. Those with significant health issues may be declined or rated at higher premiums.
• Opportunity cost — Funds committed to the policy are no longer available for other investments. While the return of premium feature provides liquidity, surrendering the policy means giving up your coverage.
• Complexity — Hybrid products are inherently more complex than either standalone life insurance or standalone LTC insurance. Understanding the interplay between the death benefit, LTC pool, and cash value requires careful review.
• Limited growth potential — The cash value and death benefit in CareMatters II are not linked to market performance. While this provides safety, it also means limited upside compared to investment alternatives.

CareMatters II vs. Other Hybrid LTC Products

CareMatters II competes with several other well-known hybrid LTC products on the market. Here is how it generally compares:

• vs. Lincoln MoneyGuard — Both are strong hybrid products. MoneyGuard historically offered more flexible premium schedules, while CareMatters II has been praised for its higher LTC benefit multipliers and inflation protection options.
• vs. Pacific Life Premier Care — Pacific Life offers a similar universal life-based product. CareMatters II tends to be more competitive on pricing for certain age groups and health classes.
• vs. Mutual of Omaha LTC Annuity — Mutual of Omaha uses an annuity chassis rather than life insurance. Annuity-based products are better for those who prefer repositioning existing annuity funds or CDs, while CareMatters II is ideal for those who want a life insurance death benefit.

How to Apply for CareMatters II

The application process for Nationwide CareMatters II typically takes four to eight weeks and involves the following steps:

1. Initial consultation — Work with a licensed insurance professional to review your financial situation, care planning goals, and determine the right benefit structure.
2. Application submission — Complete the formal application, which includes personal information, health history, and financial details.
3. Underwriting review — Nationwide reviews your medical records and may conduct a phone interview. Turnaround time varies but typically ranges from two to six weeks.
4. Policy delivery — Once approved, the policy is delivered and you have a free-look period (typically 30 days) during which you can review the policy and return it for a full refund if it does not meet your expectations.

Frequently Asked Questions

Can I fund CareMatters II with a 1035 exchange?

Yes. CareMatters II is frequently funded through 1035 tax-free exchanges from existing life insurance policies or annuities. This allows you to reposition underperforming assets without triggering a taxable event.

What is the elimination period?

The standard elimination period for CareMatters II is 90 days. This is the waiting period after you are certified as chronically ill before benefits begin. Some states may allow shorter elimination periods for home care.

Are the LTC benefits tax-free?

Yes, long term care benefits paid under CareMatters II are generally received income-tax-free under IRC Section 7702B, up to applicable per-diem limits. However, tax situations vary, so you should consult with a tax advisor for personalized guidance.

What happens if I outlive my LTC benefits?

If you exhaust your LTC benefit pool, the policy's LTC benefits end. However, depending on the policy structure, a residual death benefit may still be available for your beneficiaries. It is important to select an adequate benefit pool and consider inflation protection to minimize the risk of outliving your benefits.

The Bottom Line

Nationwide CareMatters II is one of the strongest hybrid long term care insurance products available today. Its combination of a guaranteed death benefit, substantial LTC benefit pool, return of premium feature, and flexible design make it an excellent choice for individuals and couples who want to protect their assets and their families from the financial impact of long term care. While the upfront cost is significant, the guaranteed nature of the benefits and the financial strength of Nationwide make CareMatters II a policy that delivers real value and peace of mind.

If you are considering a hybrid long term care insurance policy, CareMatters II should be at the top of your list. To find out how much coverage you can get and at what price, we recommend requesting a personalized quote from a licensed professional who specializes in hybrid LTC products.