Writing LTCI for a Subordinate

[ltcadviser]

Accepting a 1035 exchange does not mean that the CareMatters UL policy is funded with pre-tax dollars. It is not. And it can not be. Care Matters is a universal life insurance policy that must be funded with after tax dollars. All funding will create a taxable event for your co-worker. A direct rollover of her IRA into a Nationwide individual retirement annuity which then funds the CareMatters policy over 1,5 or 10 years will not escape this fact. Your client will receive a 1099, just a question as to whether it is over 1, 5 or 10 years.

 

[krismi78]

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?

 

[Arthur Rudnick]

2 points............

1) A Partnership policy protects assets, it does not protect income. When one is on Medicaid they are subject to Medicaid's rules & regulations as it pertains to assets & income.

2) A 1035 exchange is only for non-qualified funds. There is no 1035 exchange for an IRA or other qualified funds.

 

[Mr_Ed]

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

No you cannot.
The policy only accepts non-qualified money.
That means the funds would have to be removed from the IRA first and then deposited into the policy. She would have to pay income tax on the funds that are withdrawn AND a 10% penalty since she is under 59.5.

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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.

A 1035 exchange has NOTHING to do with IRA's.

A 1035 exchange is a tax-free transfer of the cash value of a LIFE INSURANCE POLICY into another life insurance policy or into an annuity.

You canNOT do 1035 exchanges with IRA's.

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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?

The CareMatters policy will not protect any of her assets from Medicaid.
The CareMatters policy will not protect any of her income from Medicaid.

 

[krismi78]

Ok so am I missing understanding this or am I reading it write but conveying the information incorrectly: [Let's take a detailed look at a new and attractive life insurance/LTC combo policy, the Nationwide CareMatters. My insurance expert, David T. Phillips, says the policy is one of the most attractive new entries in the market. As he puts it, "It scorches the competition for non-medical exam plans." The policy is approved in most states.

You buy the policy with either a lump sum deposit or a series of deposits over five years or 10 years. It is set up to allow for transfers from IRAs to fund the policy.]

 

[krismi78]

Am I misunderstanding this paragraph:

Let's take a detailed look at a new and attractive life insurance/LTC combo policy, the Nationwide CareMatters. My insurance expert, David T. Phillips, says the policy is one of the most attractive new entries in the market. As he puts it, "It scorches the competition for non-medical exam plans." The policy is approved in most states.

You buy the policy with either a lump sum deposit or a series of deposits over five years or 10 years. It is set up to allow for transfers from IRAs to fund the policy.

 

[CALTCAgent]

No offense taken, I simply want to learn. I would definitely not try and write this policy without assistance. I am an associate agent

You mentioned you work at NW. What products do you have available to you there ?

I think this is captive position with a few additional carriers you can write ?

I have the principal agent and a network of people to contact before anything is done.

Really being sincere here, why are you asking here then ?

This NW system seems to be bad for the client. A person that is not experienced in LTC suggests an LTC plan that is not possible, then asks superiors later for help.

Shouldn't the Principal agents be doing the plan ? ( not sure what a principal agent is)

Another thing to consider, with her health history underwriting knowledge and pre-qualification will be very important. Not all carriers and ratings will be the same.

 

[krismi78]

You mentioned you work at NW. What products do you have available to you there ?

I think this is captive position with a few additional carriers you can write ?



Really being sincere here, why are you asking here then ?

This NW system seems to be bad for the client. A person that is not experienced in LTC suggests an LTC plan that is not possible, then asks superiors later for help.

Shouldn't the Principal agents be doing the plan ? ( not sure what a principal agent is)

Another thing to consider, with her health history underwriting knowledge and pre-qualification will be very important. Not all carriers and ratings will be the same.

My coworker and I had just discussed this on Wednesday, so I was using my holiday to fact find. The principal agent is the owner of the agency, that's just the title, I am a sales agent within his agency. I will find out tomorrow whether we broker out LTC, but yes it is a captive agency. We do not have a standalone LTC product.

I actually spoke with LTCadvisor and he straightened me right on out. He gave me some things to follow up on.

 

[ltcadviser]

This NW system seems to be bad for the client.

How so? Is it any different than systems at State Farm, Allstate, Farm Bureau, Prudential, John Hancock, Northwestern Mutual, Mass Mutual, NY Life, Met Life, Cincinnati Life, UNUM, Guardian, Principal, Mutual of Omaha, OneAmerica, Lincoln, Pacific Life, Transamerica, Liberty Mutual, American General, Merrill Lynch, Morgan Stanley, Edward Jones, Raymond James, Ameriprise, TIAA Cref, LTCFP, ACSIA et al?

 

[CALTCAgent]

How so? Is it any different than systems at State Farm, Allstate, Farm Bureau, Prudential, John Hancock, Northwestern Mutual, Mass Mutual, NY Life, Met Life, Cincinnati Life, UNUM, Guardian, Principal, Mutual of Omaha, OneAmerica, Lincoln, Pacific Life, Transamerica, Liberty Mutual, American General, Merrill Lynch, Morgan Stanley, Edward Jones, Raymond James, Ameriprise, TIAA Cref, LTCFP, ACSIA et al?

Not a fan of those either for LTC.

It was just said they even have a standalone LTC plan. Then they will take a qualified plan and put it into a non qualified product.

I know he is just doing the best he can under the circumstance and talking to a guy like you is the best thing for him.

I don't run into NW much, they sound similar to some of those others mentioned above.