Private LTCi Combined W/Life Insurance

[csalter]

I see that there are combination life insurance policies allow people to use accelerated benefits for LTC. Am I to assume that if I already have private LTCi and I have a 90 day elimination period, that I could possibly use my life insurance accelerated benefits to pay for the LTC services during the first 90 days of needed LTC?

This could potentially save one from exhausting accounts in 401k's, IRA's and other investment accounts. It would save money on taxes that one would pay upon withdrawal.

 

[rousemark]

If the life policy has an accelerated benefit and you qualify for it, you can use the money for any purpose you want. Most of the life ABRs are triggered by restrictions of daily activity and do not require confinement.

 

[Arthur Rudnick]

previously posted by csalter

I see that there are combination life insurance policies allow people to use accelerated benefits for LTC. Am I to assume that if I already have private LTCi and I have a 90 day elimination period, that I could possibly use my life
insurance accelerated benefits to pay for the LTC services during the first 90 days of needed LTC?

This could potentially save one from exhausting
accounts in 401k's, IRA's and other investment accounts. It would save money on taxes that one would pay upon withdrawal.

You already have a stand-alone LTCi policy. Life insurance and LTCi are 2 different products, serving 2 different needs. Does your Genworth policy offer a zero-day elimination period for home care? If so, your point is moot.

If there's a 90-day elimimination period for home care, you obviously felt comfortable with that when you purchased your policy. I doubt that 90 days of home care would totally exhaust your 401k, IRA or other investments.

If you see a need for life insurance, purchase a separate life policy. A hybrid policy will cost you substantially more than a separate LTC & Life policy.

 

[csalter]

I need a life insurance policy. Got a new baby on the way. (Total Shock)

As I am reviewing policies, I notice that many of them have these accelerated benefits, even the term policies have them. I do have the home care with no elimination period, but I was just wondering if I were in a facility and had to pay the first 90 days, could I use the benefit from the life insurance to pay for that cost. I know some insurances don't pay if another one is able to cover it. So I was just asking. I see the life insurance as another way to protect your assets. Yes, I want the income for my family from the insurance but it's just another source to pay a bill and with insurance it would be tax free as opposed to triggering money from an investment or retirement account.

 

[rousemark]

I need a life insurance policy. Got a new baby on the way. (Total Shock)

As I am reviewing policies, I notice that many of them have these accelerated benefits, even the term policies have them. I do have the home care with no elimination period, but I was just wondering if I were in a facility and had to pay the first 90 days, could I use the benefit from the life insurance to pay for that cost. I know some insurances don't pay if another one is able to cover it. So I was just asking. I see the life insurance as another way to protect your assets. Yes, I want the income for my family from the insurance but it's just another source to pay a bill and with insurance it would be tax free as opposed to triggering money from an investment or retirement account.

There would be no coordination of benefits between the two plans. In the case of the Life Policy ABR, you decide if you want to exercise it or not at the time of need. You may not want to reduce your life benefit at that time. As for taxes, I am not sure how the ABR is taxed. At one time, it was claimed to be a life settlement benefit and not a health benefit. If that be the case, the money would be taxable to the extent it exceeded the basis of the policy.. Something you definitely need to consult a tax expert about.

 

[csalter]

If you see a need for life insurance, purchase a separate life policy. A hybrid policy will cost you substantially more than a separate LTC & Life policy.

I wasn't looking for a LTC policy, but it seems that the life insurance policies automatically come with it. There are even term policies that have "living benfits" with them. I will ask if they are separate riders, but amost every policy I have seen offers this extra benefits to accelerate the insurance to you while you're alive.

I don't want to pay extra if I don't have to so I will ask.

 

[Arthur Rudnick]

previously posted by csalter

I need a life insurance policy. Got a new baby on the way. (Total Shock)

OOOPS.................

Congratulations!

Keep us informed on what you find out. Keep in mind that a life policy with accelerated death benefits is not the same as a hybrid life/ltc policy.

Be sure to look at Genworth's Total Living Coverage hybrid plan. IMO, their LTC policy is better than the ones that are offered by Money Guard and others. Your Genworth agent should be able to provide you with information and quotes.

 

[timcomp]

previously posted by csalter



OOOPS.................

Congratulations!

Keep us informed on what you find out. Keep in mind that a life policy with accelerated death benefits is not the same as a hybrid life/ltc policy.

Be sure to look at Genworth's Total Living Coverage hybrid plan. IMO, their LTC policy is better than the ones that are offered by Money Guard and others. Your Genworth agent should be able to provide you with information and quotes.

Chronic illness benefit riders (CIBR)include a 90 day waiting\elimination period (IRS requirement), so you most likely could not use this benefit to pay for the expenses incurred during the first 90 days until that time elapsed. The CIBR would cover that time retroactively.
Some life insurance policies include a chronic illness benefit rider that only incurs a cost when\if you use it. The fees vary from $100 to $1000. Benefits use either the lien (like a loan) or discount (proportional reduction) approach. Either approach will decrease (accelerate) death benefit and policy values.
Other CIBR riders charge a premium to provide funds to cover expenses associated with chronic care or to create a long term care insurance pool.
Given the recent premium increases in long term care insurance, not sure one can unilaterally determine that purchasing separate life insurance and LTCi presents a less expensive option (it might).

 

[rousemark]

If you see a need for life insurance, purchase a separate life policy. A hybrid policy will cost you substantially more than a separate LTC & Life policy.

You need to do a little research on what is available in the line of polices with no cost ABRs. There is not a "substantial" difference in the premium with a lot of companies.

 

[yankee466]

Be careful of comparisons if you look at someone like ANICO or AGLA...where you have all these built in "living benefit" features, but no one will tell you what they are until the condition hits,and it is more like a lesser offer when you need help early. As opposed to someone like a Protective Centennial plan with the Extend Care rider that is a true early indemnity payout of benefits at a schedule you choose when you buy the plan.

The ANICO/AGLA plans don;t charge much more becuase they don't do much more....whereas the Protective type option makes you pay for the rider.......but you get LOTS more life insurance for your money than you ever would with a TLC or MG. You just only get the face amount of the policy for LTC usage.

Obviously you would be looking at UL/WL policies, unless you expect to need LTC early.

You have to watch for simple "accelerated death benefit".....which almost all policies come with, versus "chronic Illness" or "LTC" riders. There are lots of options out there. Then with AG38, all those options will likely get more expensive very soon.