By Ed Maass The Pineapple Staff Writer During a conversation with my wife this weekend we realized that we pay more in insurance premiums currently then what our combined earnings were when we first married. Could be a case of too much, but if, or when, you need it, can it really ever be too much? Like us you probably have some, if not all, of these insurance coverage’s: Homeowners, Life, Disability, Car, Motorcycle, Boat, Health, Business, Professional, Umbrella and maybe even a little AFLAC. That said this list is certainly not all inclusive, and as a matter of fact, there is one insurance coverage in particular, that was left off. However before naming this insurance I’d like to pose a question to you.
- When was the last time an insurance company gave you money back for not using the coverage, i.e. filing a claim? You’ve driven your car for the past five years accident and ticket free…did you get any money back? You’ve owned your home for ten years without a claim…get any money back?
I know my answer is NO…Never. So wouldn’t it be unique if an insurance plan existed whereby if you do not use the benefit, the insurance company gives back every cent you deposited. Wouldn’t it be different that you also:
- Have no annual premiums or potential premium increases.
- Maintain complete control over the asset.
- Can potentially leave more to your beneficiaries then you deposited, and do so tax free.
If at this point I have your attention, then you have an interest in what is known as a linked-benefit long term care solution. A plan whereby you are able to reposition a portion of your assets, and one in which will provide everything stated above and more. This coverage also provides for ongoing services and support that may be needed for those of us that develop chronic health conditions and/or require skilled care, intermediate or custodial care at some point in time. For a better understanding of how this works, let’s look at an example: Mary, a healthy recently retired 65-year- old female, repositions $100,000 dollars from her low yielding CD account into a linked-benefit long term care plan. That single premium is leveraged into a pool of $500,000 for long-term care expenses, which means that should she ever need care she will receive a benefit of $6,934 per month for six years. If Mary changes her mind and decides she wants out, she is guaranteed to get her full $100,000 premium back. If Mary dies without having used the benefit for care, and hasn’t previously withdrawn her funds then her beneficiaries would receive $166,407 income tax free. You may be thinking this sounds great, and if I really thought that I would ever use or need something like this it would make sense to do. Here is a cold hard fact from the U.S Department of Health and Human Services: “40% of people will need long term care at some point during their lifetime after reaching age 65”. It is also important to note that even younger people may need this type of care as a result of a disabling accident and/or illness. I know, I began this column by stating how much we pay for various insurance coverage’s and trust me, I’m not looking to help anyone become insurance poor, but if you can insure for a specific risk, and receive a full return of your funds if never needed, then for me, it’s a no brainer, count me in. Be advised that not everyone can have this coverage. There are underwriting requirements to determine your current health status, and of course, you must have the funds available to reposition, but for those that do this, it is certainly something to learn more about. I suggest that you do your homework and you may be pleasantly surprised to find an insurance alternative that for a change can be a win-win situation for you. Ed Maass is a Certified Financial Planner, Chartered Financial Consultant, and Chartered Life Underwriter. Located in Downtown Delray Beach, you can contact him directly at 561-272- 0663, or by email at Ed@physicianswealthcare.com