Writing LTCI for a Subordinate

[krismi78]

Hi everyone! I work for NW and this would possibly be my first LTC policy written, and it would be for my employee in my office so I definitely don't want to get it wrong. Her mother recently passed and left her with about $251,000 in inherited IRA's and she has a 100,000 in her own IRA. She is trying to figure out the best way to handle this money, since the inherited IRA's are going into RMD status soon.

She is 57 and has type 2 diabetes, and had a heart attack several years ago. She doesn't qualify for a LTC rider with Nationwide, but it looks like she might be ok to get the Carematters LTC which is considered a hybrid policy? I brought up the idea of using the 100,000 in the IRA from her prior job as the single premium for the LTC and after doing more research to make sure I understood LTC, it looks like it would actually save her assets in the future (RMD, social security, possibly military retirements and social security from 2 ex husbands), if she ended up needing long term care, since she would have to drain her income before medicaid stepped in. Am I looking at that right? It also looks like I would need to set her up with 5% compounding inflation protection, if she wants to still be able to use medicaid in VA, and the calculator says she would need to actually put down $129000, to make it work.

I know this reads convulated, but wasn't sure were to parse content. And just so you know this is all stuff I picked up in some online studying and reading of the product in the last 2 days, so let me know what I have right and wrong. Thanks for your help.

 

[Mr_Ed]

Hi everyone! I work for NW and this would possibly be my first LTC policy written, and it would be for my employee in my office so I definitely don't want to get it wrong. Her mother recently passed and left her with about $251,000 in inherited IRA's and she has a 100,000 in her own IRA. She is trying to figure out the best way to handle this money, since the inherited IRA's are going into RMD status soon.

She is 57 and has type 2 diabetes, and had a heart attack several years ago. She doesn't qualify for a LTC rider with Nationwide, but it looks like she might be ok to get the Carematters LTC which is considered a hybrid policy? I brought up the idea of using the 100,000 in the IRA from her prior job as the single premium for the LTC and after doing more research to make sure I understood LTC, it looks like it would actually save her assets in the future (RMD, social security, possibly military retirements and social security from 2 ex husbands), if she ended up needing long term care, since she would have to drain her income before medicaid stepped in. Am I looking at that right? It also looks like I would need to set her up with 5% compounding inflation protection, if she wants to still be able to use medicaid in VA, and the calculator says she would need to actually put down $129000, to make it work.

I know this reads convulated, but wasn't sure were to parse content. And just so you know this is all stuff I picked up in some online studying and reading of the product in the last 2 days, so let me know what I have right and wrong. Thanks for your help.

You need to find a mentor to help you with this.
You are in way over your head.


#1) The CareMatters policy does NOT qualify for Medicaid asset protection in Virginia. Hybrid policies do NOT qualify for Medicaid asset protection in any state. Only traditional LTCi policies can qualify for Medicaid asset protection and, based upon her health history, she probably won't qualify for a traditional policy (OR the traditional policy would be rated and not worth the premium).

#2) It would be a horrific disservice to her if you were to transfer her IRA into any cash value life insurance policy. Fortunately, you can't do it anyway. Qualified money cannot be transferred into a hybrid policy.


Why not just use the RMD's from her mother's IRA's to make an annual premium payment into the CareMatters policy. You could probably set her up on a 10-pay?

 

[Arthur Rudnick]

krismi78,
No offense intended, but you are WAY over your head in thinking that you have the knowledge & expertise to recommend any kind of LTCi to anyone, especially someone who works for you and "you don't want to get it wrong"

You seem to know just enough to suggest an incorrect policy, with improper benefits, with an incorrect carrier.

You need substantial training in the subject and product before you're ready to suggest a product or carrier and getting your knowledge online just won't do it.

You need to network with an agent who is experienced and split the case with him/her. What state do you live in?

 

[krismi78]

No offense taken, I simply want to learn. I would definitely not try and write this policy without assistance. I am an associate agent, I have the principal agent and a network of people to contact before anything is done. I have been using my holiday to learn what I can before it gets to any realistic point.

I will say that you can indeed transfer an IRA into this policy.

 

[ltcadviser]

No offense taken, I simply want to learn. I would definitely not try and write this policy without assistance. I am an associate agent, I have the principal agent and a network of people to contact before anything is done. I have been using my holiday to learn what I can before it gets to any realistic point.

I will say that you can indeed transfer an IRA into this policy.

Nationwide CareMatters must be funded with non-qualified money over 1 year, 5 years or 10 years.

Sure, you can take IRA distributions over 10 years and fund the contract but most likely a traditional LTC policy with a small annual premium payment that will qualify your co-worker for State of VA LTC Partnership benefits will be more efficient and she can continue to let her IRAs grow tax deferred.

Mutual of Omaha will underwrite her health history of diabetes and myocardoal infarction if you wish to consider an underwriter outside of Nationwide.

Call me at (800) 891-5824 if I can assist you.

 

[CALTCAgent]

it looks like it would actually save her assets in the future (RMD, social security, possibly military retirements and social security from 2 ex husbands)

You are referring to income as assets here. But LTC in general will protect income and assets. Partnership plans are different in regards to asset protection features. Not sure how Virginia works.

if she ended up needing long term care, since she would have to drain her income before medicaid stepped in. Am I looking at that right?

No, she will have to drain her assets for medicaid. Income will be considered differently.

It also looks like I would need to set her up with 5% compounding inflation protection, if she wants to still be able to use medicaid in VA, and the calculator says she would need to actually put down $129000, to make it work.

I'm confused. Are you considering a partnership policy ? I thought nyou were talking about a Hybrid policy with Nationwide ?

What calculator ?

I know this reads convulated, but wasn't sure were to parse content. And just so you know this is all stuff I picked up in some online studying and reading of the product in the last 2 days, so let me know what I have right and wrong. Thanks for your help.

It really takes more than 2 days of study before you should advise somebody on protecting their life savings from the biggest risk they face.

 

[krismi78]

Nationwide CareMatters must be funded with non-qualified money over 1 year, 5 years or 10 years.

Sure, you can take IRA distributions over 10 years and fund the contract but most likely a traditional LTC policy with a small annual premium payment that will qualify your co-worker for State of VA LTC Partnership benefits will be more efficient and she can continue to let her IRAs grow tax deferred.

Mutual of Omaha will underwrite her health history of diabetes and myocardoal infarction if you wish to consider an underwriter outside of Nationwide.

Call me at (800) 891-5824 if I can assist you.

The one thing I have right is that you can do a 1035 exchange for this policy. I have the application. But I think as a whole, you guys are right, I will sit back on this one. Figure out what to do with the RMD funds and see who I can refer her to for an LTC.

 

[billberry12]

"The one thing I have right is that you can do a 1035 exchange for this policy."

I sure would like to see where it says that it allows that.

 

[krismi78]

"The one thing I have right is that you can do a 1035 exchange for this policy."

I sure would like to see where it says that it allows that.

I found information about this online, but I am to knew to attach any Urls, but there is an article on Investdaily that discusses Carematters and rolling over an IRA into it.

But like I said I have the Carematters application in front of me, and part of it is a 1035 exchange packet.

Not to start any debates, I am only here to learn, I just wanted to pass on the correct information, in case someone else has the same questions I have.

The question that I still have is, what about the income she will receive for the rest of her life, I thought that has to go to paying for LTC before medicaid steps in?

 

[wc2624]

I found information about this online, but I am to knew to attach any Urls, but there is an article on Investdaily that discusses Carematters and rolling over an IRA into it.

But like I said I have the Carematters application in front of me, and part of it is a 1035 exchange packet.

Not to start any debates, I am only here to learn, I just wanted to pass on the correct information, in case someone else has the same questions I have.

The question that I still have is, what about the income she will receive for the rest of her life, I thought that has to go to paying for LTC before medicaid steps in?

Just because the form or packet is included doesn't mean it's applicable to the situation. Based on what you've posted, I don't think it's applicable.

I request illustrations from Nationwide fairly often. The sales force can help you with questions such as the 1035 exchange and underwriting concerns. If I have a question I call 'em up and get an answer within a few minutes.

Try Mutual of Omaha as is posted. They may underwrite the case.