50+ Lifestyles

“I Still Have this Life Insurance Bill…”

By Richard J. Schillig, CLU, ChFC, LUTCF
Independent Insurance and Financial Advisor

Over the years I’ve often heard comments or questions from retirees about life insurance. Do we need to continue paying premiums for life insurance? During our working lifetime we carried life insurance to protect our families….spouses, children and those dependent on our income. We carried life insurance through our employers. Sometimes the most convenient way to acquire life insurance was through an employer. Premiums were then paid through payroll deduction. In addition we may have acquired other life insurance coverage because of loans or mortgages. Over the years sometime it seems we acquired considerable life insurance.

Now at this stage in our lives, we look at our monthly expenses and decide where we can make some cuts. Life insurance premiums are often times one of these expenses that could be on the chopping block. We are retired or soon to be retired and think about NOT needing to have those life
insurance payments anymore, simply because we no longer have the obligations we once had with raising and educating children – getting them through college – and now perhaps mortgages are substantially reduced and we may think I just don’t need this life insurance anymore.
Instead of simply cashing in that life insurance……let me give you an alternate to consider. The alternate is the Life Care Fund……the Life Care Fund.

Do you have a life insurance policy with minimum of $50,000 benefit? Instead of lapsing or surrendering the policy, convert the insurance to a benefit account creating monthly, tax free payments on behalf of an individual that may need senior care. There are no wait periods; no care
restrictions, no costs or obligations to apply. The Life Care Benefit is not a loan and even more good news – there are no premium payments.

Let’s give a few examples. A male age 77 has $100,000 of whole life insurance. Since retirement, the monthly premium payment on this policy is becoming burdensome. Converting this to a Life Care Fund will provide $4,500 of monthly benefit for long-term care costs for up to 9 months leaving a residual $5,000 funeral benefit. In addition, no more premium is due.

Another example – a female age 74 with a $50,000 life insurance policy converts to a Life Care Benefit providing $800 monthly income for 2 years. Funeral benefit remaining is $2,500. No additional premium due.

With every financial product, there are advantages and disadvantages. Life Care Fund is no different. In both of these examples, costs can be considerably more than the benefit
provided. But in both cases, there is some help with costs of long-term care with additional income and elimination of a premium payment. Remember also the benefit payment is income tax free.

A recent survey by Genworth resulted in finding median costs across the nation for nursing home services at $7,000 per month. In planning for long-term care costs with clients, we often hear of
the home healthcare options in place of full nursing care. Home health costs are typically $20 hourly and require a minimum of 4 hours per day resulting in $2,400 monthly. Assisted living facilities costs are in-between these two numbers – medial monthly costs $3,400. Regardless of the level of care long-term care costs are a risk to our resources. Statistics – with the aging of the baby-boomers along with today’s greater life expectancy – one out of every two seniors will require some level of long term care.

There are options today that we previously did not have. The Life Care Fund is one of those options…is it appropriate for you? Two requirements exist to qualify for conversion of life insurance to Life Care Fund. First requirement is having a life insurance policy with a minimum of $50,000 insurance and secondly having a need for care. There are no underwriting requirements. Remember, long-term care costs are not covered by Medicare or Medicare Supplements. The health care risk of long term care costs is real. Life Care Fund could be a partial solution. Call us for additional details.

Richard J. Schillig, CLU, ChFC, LUTCF is an Independent Insurance and Financial Advisor with RJS and Associates, Inc. He can be reached at (563) 332-2200.