Cash benefit is a long-term care or supplemental health insurance feature that pays benefits directly to the policyholder or designated recipient as cash, rather than reimbursing specific covered expenses. With a cash benefit, the insured can use funds for any purpose"such as paying family caregivers, modifying a home, covering travel costs, or supplementing income"without submitting detailed receipts. Cash benefits may be structured as a percentage of the full benefit, capped monthly amounts, or lump sums triggered by qualifying events. Flexibility is the key advantage, but cash-benefit designs may have higher premiums or lower maximum payouts than reimbursement-only designs.

Advisors present cash benefit options when clients value maximum flexibility and anticipate relying on informal caregivers or nontraditional arrangements that might not qualify under strict reimbursement rules. They compare premium and benefit tradeoffs between cash and reimbursement models and clarify tax treatment if benefits are paid under 7702B-qualified LTC contracts. Claims teams simply verify eligibility triggers"such as ADL impairment or cognitive decline"and then issue cash payments according to the policy schedule. Understanding cash benefits allows advisors to tailor LTC and supplemental-health solutions to clients who prioritize control and simplicity in how benefits are used.