Tuesday, November 11, 2014

How to Leverage Linked Benefit Coverage - Long Term Care

Born from client request of a promised benefit when ltc planning. Covers the twin risk of living too long or dying too soon. Many of these policies are established on Universal or Whole life chassis. A 60 female who invests $100,000 can create a death benefit pool of $450,000. That provides a life insurance benefit of $150,000. It’s quite a ‘cost share’ approach. $The first monies that are spent for LTC is the death benefit. $100,000 of which is the clients own premium. The benefits are paid income tax free since it’s for LTC. Once the life insurance benefit is exhausted there is a second bucket of money that is available. It’s a right pocket/left pocket approach to solving the ltc need. The internal rate of return on these solutions is often in the double digits. Premiums can also be paid for with flexible payments. This same client can use $10,000 a year for 10 years and create almost identical benefits!

Annuities provide another chassis for linked benefit leverage. According to a 2009 Gallop survey of non-qualified annuity owners:

a. 83 % intend to use annuity as a financial resource to avoid being a financial burden on their children

b. 73% intend to use annuity as an emergency fund in the case of a catastrophic illness or for nursing home care

These numbers prove the opportunity that abounds for leveraging an existing annuity for LTC. We can show clients how they can use existing non-qualified annuities to purchase 3, 6, or 9 years of LTC coverage. Benefits are paid income tax free on both the spend down of the annuity or the continuation of benefits rider. Example: 70 year old male with a $100,000 non-qual annuity can purchase an LTC benefit of over $250k.

Syndicated financial columnist and talk show host Steve Savant interviews nationally recognized long term care author and expert Maria Sarci.

About Steve Savant

Steve Savant

As the National Marketing Spokesperson for Ash Brokerage, Steve Savant looks forward to meeting financial professionals in every way possible - in person or by video through conferences and social media.

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