paS2K

Kathy and I have gotten a "sales job" and quote for a new "insurance" spin:

The "insurance" vehicle is a Whole Life policy, but with a Long Term Care Ride attached. In a nutshell, you buy (for example) a $300k whole life policy, but the RIDER (costs extra) provides up $9k per month if the insured needs Long Term Care. If this occurs during your life, you have this fixed benefit (NOT intended to pay full Nsg Home coverage...but to HELP) for about 33 months...before the policy value is used up. If you never NEED the LTC benefits, the life insurance remains in force and pays your heirs a tax-free benefit when you leave this earth.

Annual premium is not inexpensive, but it does seem to have some of those mysterious "insurance/ tax shelter" benefits.

In comparison, the typical LTC policy costs a lot less; premiums continue until you die; and there is NO benefit unless you require Long Term Care later in life. All the premiums go down a rat hole.

Anybody else come across this fairly new breed of combination coverage? Or have thoughts on LTC needs at all?

Zippy

Jerry, this sounds like a "whole life" policy with an inventive way of distributing the investment. We have LTC, and it is a bit pricey. To me it is truly insurance, meaning it is a protection that I might never need, but if I do, it will help preserve what I have.

As far as tax benefits, I would be a little leary of using future tax benefits as a deciding factor. (Stopping here to keep this out of politics).

I am not a fan of life insurance unless you are protecting the income ability of the insured.

paS2K

Actually, neither am I a fan of life insurance when there is no income to protect. The argument here, if any, is that it protects a chunk of $$$ (the eventual $300k benefit) to get passed on (w/o estate tax) to our two children....neither of whom will likely be earning big bucks in their work careers. THIS is what caught my attention when the agents mentioned it to us at the first meeting. In a way, the LTC plus inheritance factor could actually let us be LESS concerned about the old "spending down our assets" dilemma (3%? 4%? 5%? each year).

As I'm sure you know, the straight LTC insurance has seen some hefty rate increases in the past year or two...due to bad actuarial projections about losses, drop-outs, etc. Having said that, I think the premium for similar coverage may be only half of what this "combination" policy would cost us each year.

We're going to cogitate on this a while, but I thought some of the might have opinions and/or experience on these issues.

jukngene

Jerry, since I know little about the insurance industry, I have to rely on the experts, and once again, Clark Howard can provide some good advice. (I also stayed at a Holiday Inn Express once, in Beatrice, Nebraska)

dlq04

At this stage, I think about what I'd like to pass along - if possible - to my grandkids for their education. But I don't give a seconds thought about leaving anything to my kids. The way I look at it, we raised them as best we knew how and gave them an opportunity for a good education and life. From there on, it's their choice unless life gives them a bitter blow. I cashed out all my whole life insurance when I retired. I think insurance is essential when your family is the most vulnerable with young children. I like the Indians way of dealing with LTC..... if you can't keep up, you get left on the side of road and the family moves on.

valentine

I pretty much agree with you. We educated all our children and equipped them with the tools to do as well as or better than we did. At this point, we are not overly concerned about what we leave behind and protecting their inheritance takes a back seat to taking care of ourselves medically and financially. Sounds a little cold maybe, but facts are facts. Many children are faced with having to take care of aging parents and our kids have lucked out in that arena so far.

Zippy

There is a threshold for estate tax, I am not sure if this will change going forward, but at this time it is fixed at $5.25M, below that thetre is no tax. As to the spend down, are you talking about Medicaid qualification?

paS2K

Thanks for the link, Gene, but Clark does not talk about this "whole life/ LTC" hybrid.

paS2K

No, I was referring to the idea that, in retirement, the advice that you SPEND no more than X % of your asset balance each year to supplement your other income (SS, pension)...and expect that it will LAST as long as you do That number used to be 5%....more recently 4%...and now some $$ pundits are suggesting only 3% to be Super Safe. This makes a big difference for someone with a $1MM: 50k year vs. 40k/yr vs. now only 30k/yr.

MsPerky

Here's a discussion of LTC from last year.

https://www.s2ki.com/s2000/topic/934...#entry21479374

I don't know anything about this policy, but I would think at your age it would be very expensive. The LTC policies certainly are for anyone who doesn't get in early (say by 50 or so). And some people have complained about the terms changing after the fact. I'd say buyer beware.