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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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. 

Why Purchase Life Insurance Now Instead of Waiting?

Child looking back at her parent

You are finally at that point in life when life insurance is starting to be a consideration. You have a young family and a new mortgage.

Given your situation, it is reasonable to think that now is the time to buy. However, it is too easy to convince yourself to put it off.

Here are 5 reasons why you should not delay buying life insurance:

1. Life Insurance Gets More Expensive with Age

Life insurance gets more expensive with each passing year. Why not lock in a great rate now?

2. Your Health in the Future is Unknown

Health tends to decline with age and you may even become uninsurable later in life.

3. People Tend Not to Quit Smoking

Tobacco use can more than double life insurance premiums, but a lot of people make the mistake of not buying now so they can quit and get the non-smoker rates. The problem with that is people tend not to quit and you must remain nicotine free for several years.

4. Permanent Life Insurance Cash Value Compounds

Permanent life insurance policies purchased early in life can grow large cash values which can supplement your retirement income or additional savings

5. It Could Happen

The odds are against it, but what would happen if you actually did die prematurely? What would happen to your family and the house they live in? Term insurance is so inexpensive that it makes sense just to get it done.

If you would like to discuss your life insurance options please get in touch with me at 360-452-9200.

Want more information? Please visit my official Allstate Agency Website to get more information on the Allstate products and services I can offer in Port Angeles, Sequim or anywhere Washington State.

Does My Life Insurance Policy Still Fit My Needs?

Couple reviewing their life insurance policy
Couple reviewing their life insurance policy

I have been selling life insurance for 10 years and over that time I have worked with hundreds of families. Everyone’s situation is unique, but the common thread is that life is all about change. Change is the one constant that keeps our lives interesting. Friends come and go, families grow and sometimes shrink. We move to different cities or even return back home. We get married and divorced. Our kids grow up and start families of their own.

With this constant change in our lives, it is important to review your life insurance once a year to make sure your policy still fits your needs. Here are a few areas of consideration.

Do I Still Have The Right Amount Of Insurance?

When you initially purchased your life insurance policy, you probably went through exercise with your agent to determine what the right amount of insurance for you and your family at that time. Some factors may have been the age of your children, planning for a possible college fund and also the amount owed on your mortgage or other debt.

So when was the last time your reviewed this amount? Was it 5 years, 10 years ago or even longer? Have your kids now grown up leaving you with less of a need for life insurance? Have you paid off that mortgage and no longer need so much death benefit? It may be that times are now tougher and you have had to take out a 2nd mortgage and need more insurance? Without doing a review with an experienced agent, your policy may not match your current needs

Do My Beneficiaries Need Updating?

This is a huge area of life insurance planning that often gets neglected. First of all, you should never leave life insurance proceeds to a minor child. The primary beneficiary should be your spouse or a responsible adult that will take care of your children and the money on their behalf should something happen to you. You should also meet with a local estate planning attorney to draw up a will and living trust agreement to ensure that things get handled properly and your financial affairs are in order.

Another area where I see beneficiary errors is after a divorce. It may be that you still want your ex as your beneficiary, but I can tell you that not everyone does. Maybe you are remarried and want to update your policy to your new spouse? There are countless scenarios, but you get the point. Just keep in mind, only the owner of a policy can make these changes.

Life Insurance policy
Life Insurance policy

Do I Still Have The Right Type Of Policy?

When you first bought your policy, it may have been that all you could afford was term insurance. Nothing is wrong with that, but most term policies have a provision that within a stated amount of time, you can convert your policy to a permanent type like Universal Life. The great thing is that you can do this usually with no exam if you are within the given time frame stated in the policy.

On the other hand, maybe you bought Universal Life from the beginning, but now you are having a hard time affording it. I have seen a lot of cases where people are stretched too thin and having to borrow against their policy too soon. There is danger in doing this because it will shorten the life of your policy and ultimately you may be just paying for really expensive term insurance. If this sounds like you, you probably do need term insurance without the costs of Universal Life.

September Is Life Insurance Awareness Month - LIAM

September is the perfect time to review your life insurance policy given the national campaign of LIAM. If you would like to set a time to review your policy with me please contact me at 360-452-9200

Want more information? Please visit my official Allstate Agency Website to get more information on the Allstate products and services I can offer in Port Angeles, Sequim or anywhere Washington State.