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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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. 

How to Get Insurance When Moving to Port Angeles, Washington

Matt Elwood, Agency Owner

Matt Elwood, Agency Owner

You have finally decided to leave the rat race and move to the beautiful Olympic Peninsula. One of the many things on your to-do list may be to get new home and auto insurance, especially if you are coming from out of state. How do you go about doing that?

When changing insurance agents, there are some important things to remember. These apply if you are moving from a different state, a different insurance company, or you just want to go through a different agent in the company you are currently with. If you follow these tips, it will make the process of changing agents much easier.

First of all, contact your new agent before your current policy expires. A lapse of even one day can drastically impact your new rates and might even prevent you from being able to have a new policy. This is especially true for car insurance.

It is also helpful to have your current insurance in front of you so you know what coverages you have. It makes it easier to get an accurate quote if you know what you want.

Keep in mind that if you’re moving from one state to another, your insurance will probably be different. Even if you stay with the same company. Every state is different regarding premiums and discounts. There are also certain coverages that differ from state to state. And required state minimums also vary.

If you are relocating to the Olympic Peninsula area and need a new insurance agent, please contact Matt Elwood of Elwood Benefits at 360-452-9200.

Knowledge is power

Sign up for Matt's monthly insurance newsletter and he will share with you how to better protect your family, save more money and achieve financial security.