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Life Insurance – Long Term Care Protection

senior couple exercising on bikesMost people at some point in their lives will purchase some form of life insurance coverage. However, we’re always asked the questions, “where can I purchase long term care coverage?” “How does it work?” “How much will I pay?”

To answer those questions there are many variables, for example, where you live, health history, income compared to debt etc.

Everyone knows the importance of having long term care insurance to help pay for the costs of care received either in your home or in a facility, but it can be expensive, currently averaging over $87,000 annually nationwide. If you purchase a standard plan and pay premiums for years, and never need long term care, you will never recoup that money. This a big reason why less than 8% of Americans own a standard long-term care plan.

Here at BGA Insurance Group we are offering our clients another option, life insurance with a long-term care or chronic illness rider. This way the premiums you pay will never be for naught and guaranteed to pay out to either the policy holder or their beneficiary.

BGA has been aligned with numerous A rated insurance carriers for these products, Midland National Life, Allianz Life, Mutual of Omaha and Lincoln Financial. Each company carrying their own coverage with unique benefits to serve the insured.

One of the more popular plans that BGA has available is a hybrid long term care insurance policy called Money-Guard II sold through Lincoln Financial. It’s a very simple plan to explain and easy to understand. Without going into specific details and these numbers in the following example will be skewed so don’t take them for gospel, but you will get the idea.

Take for example a 62-year old female that deposits a $100,000 of non-qualified money into a Lincoln Money-Guard plan.  Let’ say that $100,000 will immediately guarantee almost $375,000 of tax-free long-term care insurance benefits, over $4800 per month for up to 6 years, if long term care is needed.  

The policy will also include an automatic 3% compound inflation protection.  At age 81 you will have over $8700 a month and over $677,000 of a long-term care benefit. If long term care is not needed, a tax-free life insurance benefit of over $110,000 is paid out to the insureds beneficiary.  If the policy owner changes his or her mind, the policy includes an 80% Return of Premium benefit.

This Money-Guard product also has a 100% Return of Premium option available. Again, these numbers are off by only a few bucks, but you get the idea of how this product is very attractive to the insured, they can’t lose.

Another A rated insurance carrier BGA works closely with is Allianz, who has a “Chronic Illness Accelerated Benefit Rider” that you can attach to one of their many Life insurance plans. With this rider attached you have the option to accelerate a portion of your death benefit if you become chronically ill. A chronic illness can quickly derail your retirement plans, and that’s why this rider is becoming very popular.

To receive these benefits, you must qualify that you have a chronic illness which usually means you are unable to perform at least two activities of daily living such as bathing, eating, dressing, toileting, transferring or continence. Or you may need supervision due to a cognitive impairment for more than 90 continuous days, basically the same qualifications for long term care.

Before you can request the benefit, your physician must write a certification of chronic illness within a 12-month calendar year. If you access the rider your death benefit and cash value will be reduced by the amount of the accelerated benefit.

Let’s look at an example of how this Life policy with the attached chronic illness rider could work, of course we are working with skewed numbers again.

Let’s say a 52-year old healthy male who is a non-smoker purchases a life policy with a death benefit of $500,000 which includes the rider. 20 years later at age 72 the policy now has an accumulation value of $250,000 and same death benefit of $500,000. At this point requests $100,000 of the Accelerated benefit, his policy now has a $200,000 accumulation value and his death benefit is now at $400,000. He was able to access the chronic illness rider and still has his policy in place for his loved one’s.

These are just a couple examples of what life insurance can provide you with regarding your retirement planning. There are many more options you can choose when working with these A rated insurance carriers.

Why do people plan their retirement properly? Ask your kids if they want to take a leave of absence from their careers to stay home with you. Do your children have loved one’s they need to provide for? Do you want your children to assist you with bathing or toileting? Do your children have the excess funds to pay for your care?

These are the questions you need to ask yourself.

Contact a licensed agent at BGA Insurance Group for assistance with your questions today.