Free Long Term Care Insurance?

You may already have coverage and not know it or you may be able to get it for free. ©2013 by Paul Stevick

Long Term Care Insurance

Long Term Care Insurance

As a Certified Financial Planner®, I regularly come across situations where people have protection against the costs of long term care and aren’t aware of it. Many do not realize they can get protection simply by asking for it.

We can either die too soon or live too long. There is a change in our protection needs as we age. When young, our family needs to be protected against the financial impact of loss of income or a caregiver. At this time in our lives, our children are small and our mortgage is big. As time passes, our children get bigger and, hopefully, so does our income. If all goes reasonably well, we reach a point where we have less to worry about as children go off to their own adult lives. Our mortgage slims down and may even disappear. What we may not notice, or want to admit, is that as this protection need recedes, another threat advances and grows.

As we age, our ability to care for ourselves may diminish to the point that we need assistance. Since we don’t die from good health, we all face the prospect of becoming debilitated or incapacitated by whatever is pushing us to the end of our life. Some of us will become victims of diminished mental capacity, and may live with this condition for years. The cost of care can be devastating. What many do not know is that help can often be found in their life insurance policy, and it is usually free.

To understand the long term care protection embedded in many life insurance policies, we need to review a little history. In the 1980s, the AIDS epidemic was a new and little understood cause of death. Many people were destitute as they awaited their end. Some did have life insurance, but that would only pay out after they died. Enterprising individuals offered to purchase these life insurance policies from the terminally ill patients at a price far below the death benefit that would be paid out. This, the purchasers claimed, provided the terminally ill patient with much needed cash. In return, the investor became the owner and beneficiary of the death benefit to be paid out in the near future. The business of “viatical settlements,” long a tiny niche, grew and flourished.

Life insurers became concerned about individuals purchasing policies purely for speculative purposes. Today, many states regulate viatical and life settlements and many more are developing legislation and regulations. The insurance companies also took action by developing the “Accelerated Death Benefit Rider.”

This rider was attached to most new life insurance policies at issue and many companies allow it to be attached to existing policies no matter when they were issued. The owner of the policy may withdraw a portion of the death benefit if the insured is terminally ill. The benefit may vary among insurers and states. Since insurance companies are regulated by the state in which they do business, there is some difference in how and when this benefit may be accessed. In Washington State, there is a very generous definition of “terminally ill.” In fact, this definition, which is written into law (WAC284-23-620 Definitions), turns many life insurance policies into a form of protection against the costs of care near the end of life. Best of all, this rider is usually put on existing or newly issued policies at no cost! Why would an insurance company do this? They simply don’t want their life insurance policies, which were designed to protect the purchasers, from being used as a speculative tool.

Washington State defines terminally ill as having the “reasonable expectation” of less than 24 months to live. The law goes on to name several specific medical conditions that would trigger this benefit, no matter how long the life expectancy. It even requires the benefit to be available when the insured has “any condition which requires either community-based or institutional care.” It also allows the benefit to be available when “any condition which usually requires continuous care in any eligible institution …if the insured is expected to remain there for the rest of his or her life.” This seems to include coverage, for example, for an institutionalized dementia patient. There are many other specific designations in this law, all of which provide access to a life insurance death benefit for the insured. The money accessed from the policy does not have to be used specifically for long term care costs. It can be used for anything.

The big advantage of long term care protection inside a life insurance policy is that a benefit is guaranteed to be drawn from a life policy. Long term care insurance is a form of term insurance. If you own a policy and pay premium for years, or even decades, and you die without drawing any benefits, you paid for something that has no value after your death. With a life insurance policy, you can draw the money out if you need it for end of life care. If you die without drawing anything out, the full death benefit is paid to your beneficiaries. Someone always benefits from the life policy strategy.

Do you have an old life insurance policy? Would you like to find out if it contains this potential protection against end of life costs? Would you like to compare the cost of long term care insurance against the coverage by a life insurance policy? Have you been declined for long term care insurance? In many case, you may still qualify for life insurance. Give us a call for a no cost or obligation opinion on what your options are. For a free copy of the law and it’s definitions, just give us a call.

Questions or comments? paulstevick@allstate.com

 

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Financial Procrastination

Financial Procrastination
Financial Procrastination

It is human nature to procrastinate. I even procrastinated writing this month’s newsletter! It is so much easier to put off for tomorrow that which needs to be done today. After all, does it really make a difference if I clean my room now or tomorrow? Probably not, but when it comes to financial procrastination putting things off until tomorrow can have a dramatic impact. The problem is that tomorrow never comes. Days turn in to weeks, weeks into months and months into years. Financial speaking, you may miss out on years of compounding interest, pay higher insurance premiums or miss out on years of savings as a result of procrastinating. Whatever your situation may be, here is a list of common items I see clients delaying action on:

Bundling Your Insurance

By bundling your auto, home and life insurance with Allstate, you save more on each policy. Depending on your situation, you could be save 30-40% with multiple policy discounts.

Rolling Over An Old 401K

Have you changed employers in the past 5 years or longer? If so, you may have a 401K sitting at an old employer that is not actively being managed for your benefit. You have the option to roll that 401K into an Individual Retirement Account (IRA), often with lower fees and more investment options.

Buying Life Insurance

A lot of people consider life insurance a luxury. I consider it a necessity, especially if you have people that depend on you financially. Allstate just came out with a new term life insurance policy that requires no exam, ages 18-45. With the convenience of doing the application over the phone and signing via email, now is a great time to get that policy your family needs.

Exploring LTC Insurance

There are over 10,000 people turning age 65 everyday is this country. The cost of health care is constantly increasing. If you have ever had an experience with a loved one that needed Long Term Care, you know that it can cost on average $6,000/mo. For a fraction of that cost you can get an LTC policy that will provide care if needed and protect your retirement nest egg at the same time.

There Is No Time Like The Present

These are just a few of the many financial topics that people tend to put off. Did any of them resonate with you? Did you think of something not mentioned here? If there is something on your financial to-do list that you would like me to help you check off, please reply to this email or give me a call at the agency 360-452-9200.

Want more information? Please visit Matt Elwood - Allstate Insurance to get more information on the Allstate products and services I can offer in Port Angeles, Sequim or anywhere Washington State. 

 

 

Why You Need Two Umbrellas Living In Port Angeles

Two Umbrellas
Two Umbrellas

It has been said that summer doesn’t start around here until after July 4th. Too bad it only lasts through Labor Day! Living on the Olympic Peninsula, the need for a good umbrella to shield you from the rain is almost year-round. However, the need for a Personal Umbrella Policy (PUP) to shield you from lawsuits is constant.

Your nightmare

Here is the worst case scenario: It is raining out, your car skids and side-swipes an on-coming car causing an accident with a doctor and his wife aboard. The wife is killed and the doctor is hurt so badly that he will never be able to work again. A jury awards him millions of dollars and you are liable. Even though you have great limits of liability on your auto and homeowners policy of $500,000, the lawyers continue to go after your home, life savings and even garnish your future income until the full amount is paid. To protect you from one of these lawsuits, we recommend a PUP. A PUP is excess liability coverage over your current car and home policies. PUPs take care of the liability for the lawsuits and medical bills of the auto accident victim or any other situation where you become legally obligated to pay. The great thing is that PUPs also pay for the cost of lawyers and other legal expenses. Whether lawsuits are valid or not, you wind up having to defend yourself against them. In situations like these, it is great to have Allstate on your side with a Personal Umbrella Policy. There are countless examples of claims we see that reach the liability thresholds of traditional auto and homeowners insurance policies. No one is immune to these types of situations and they could happen at any time. Don’t leave yourself financially exposed.

Your Solution

Allstate offers a range of coverage amounts from $1 million increments up to a maximum limit of $5 million. They cost as low as $15 per month and that is truly money well spent. Call us today at 360-452-9200 to see if this policy might be right for you.

Want more information? Please visit Matt Elwood - Allstate Insurance to get more information on the Allstate products and services I can offer in Port Angeles, Sequim or anywhere Washington State. 

Three Great Benefits of Permanent Life Insurance

Permanent Life Insurance
Permanent Life Insurance

Permanent life insurance tends to get some bad press, mainly because it is misunderstood by “experts” who don’t how these policies work. I will be the first to admit that there are some bad performing whole life and universal life policies out there, but the opposite is true as well. That’s the way it is with most products. There are positives and negatives associated with most everything. Since permanent life insurance gets so much negative press, here are three positive features that often get over-looked.

Tax Free Death Benefit

As it stands now, death benefit proceeds payable to beneficiaries are income tax-free. Well, so is term insurance, but only permanent life insurance is guaranteed to be there when you die as long as required premium payments are made. The vast majority of term policies never pay out a death benefit because most people outlive the term. Actuaries know this and so do the insurance companies.

Tax-deferred Growth

The cash value build-up inside a life insurance policy grows on a tax-deferred basis. That means you do not pay taxes each year on the growth of the guaranteed and non-guaranteed cash values.

Living Benefits

A permanent life insurance policy allows you to take out loans or withdrawals from your cash value. Often called Living Benefits, you have easy access to cash which can be used for anything from supplementing retirement income, helping with a down payment for a house or just creating an emergency fund. There are different strategies for accessing the cash value with different implications, but if done correctly, it can be withdrawn tax-free.

The Future

Obviously, everything is subject to change in the tax law, but this is why you should be working with an experienced, licensed agent. If you would like to learn more about the ways permanent life insurance may benefit your financial situation, please give me a call at 360-452-9200.

Want more information? Please visit Matt Elwood - Allstate Insurance to get more information on the Allstate products and services I can offer in Port Angeles, Sequim or anywhere Washington State. 

Life Insurance From Your Employer

My biggest responsibility as an Allstate agent is to provide financial security to all of my clients. What does financial security mean? To me, it means protecting everything you own as well as the people you love. Most people think of Allstate for their home and auto insurance, but usually not life insurance. Life insurance tends to be ignored, delayed or purchased at work. Commonly, people say they have life insurance through work. While that is a great starting point, it can leave some major gaps in your planning. Here are a few reasons why.

Employee discussion on life insurance
Employee discussion on life insurance

Salary Multiple

The amount of life insurance offered in an employer setting tends to be only 1-2x salary. This is vastly inadequate considering the average family needs 8-10x salary.

Do you and your spouse have life insurance outside of your employers, equal to at least 8x your salary?

Portability

Group life insurance from your employer is only good while you work there. It is not portable – meaning if you decide to quit, retire or get laid-off you lose your insurance. In this economy, that can be a real concern. On the other hand, your own individual policy stays with you for as long as you pay the premium.

Cost

Life insurance at work is usually more expensive assuming you are in good health and could qualify for your own policy. Think about it this: if an insurance company has to guarantee insurance to everyone in a group they have to raise rates to account for the less healthy.

If you are in good health, purchasing life insurance on your own can be more affordable and you can take it with you no matter what happens with your current job.

I am not against group life insurance from your employer because it can be a great starting point, especially if your boss is paying for it. However, individual life insurance tends to be better solution. What’s even better is that Allstate just came out with their Auto/Life Discount for customers with both auto and life insurance. Contact me to see how much you can save!

Want more information? Please visit Matt Elwood - Allstate Insurance to get more information on the Allstate products and services I can offer in Port Angeles, Sequim or anywhere Washington State. 

What Is The Best Age To Buy Long-Term Care Insurance?

Couple considering when to buy LTC Insurance
Couple considering when to buy LTC Insurance

By now you understand that having Long-Term Care insurance is a good idea, but when the heck are you suppose to buy it? Boomers get inundated with financial advice everywhere they turn. Depending on what time of the day it is you will get a different answer on the best time to buy LTC insurance.

Dave Ramsey

Dave Ramsey says the best time to buy is after age 60. In Dave’s cost comparison example, he illustrates how it is cheaper to buy LTC at age 50 than it is at age 60. This is of course true. However, his premise that if you wait to buy at age 60 and invest the difference you will come out ahead is not always true. Even if you had the discipline to invest the difference, (which most people don’t) doing so in the stock market gave you a whopping 1.2% average from 2000-2009. I’m not sure where you can get the 5% he talks about these days. Given interest rates and returns of other investment vehicles, you are probably losing money when considering inflation. I do, however, agree with his second point that it is a personal decision and that you should buy it when you can afford it and have peace of mind.

Matt Elwood

I say the best time to buy Long-Term Care insurance is when you can reasonably afford it. There is no magical age when it comes to buying insurance. If you know you need it and you can reasonably afford it, you should buy it. Insurance is meant to provide financial protection from a risk you can’t afford happening without it.

Is It Time For You?

If you would like to have a personal discussion about your Long-Term Care needs, please reach out to me at 360-452-9200

Want more information? Please visit Matt Elwood - Allstate Insurance to get more information on the Allstate products and services I can offer in Port Angeles, Sequim or anywhere Washington State.