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New life insurance Term insurance has been available long enough for most consumers to product combines term understand how it works; you determine how much insurance that you and universal life. need and then buy that amount for a specific period of time --ten years, fifteen years, twenty years, or thirty years. At the end of the time period you have selected, you can convert the coverage (regardless of your health) to permanent life insurance, which is usually a "universal" life contract. (Universal life contracts build cash value and are tied to interest rates that are specified in the policy). If your health is good, you can purchase another term insurance policy for another ten, fifteen or twenty years. If you continue in this direction, the cost of re-buying will become prohibitive because of age or health or both. The new product is like a term product. Although it does build a minimum amount of cash value, it is not designed for any cash build up. Although it does You select how long you want to own the coverage and get a guaranteed build a minimum premium. If you are 40 and want the coverage until you are 80 you can amount of cash value, get a guaranteed premium to cover those years. The cash building up in it is not designed for the policy gives the insured some flexibility in premium payment, but a any cash build up. withdrawal of cash would implode the policy. The cash building up in the policy gives Many of my clients are in their 50s and 60s and are doing estate you some flexibility planning. With this product they can get a guaranteed premium that in premium payment, covers them until age 100. They are certain to have the needed benefit but a withdrawal at their death for survivor needs or estate taxes at the lowest cost. of cash would implode the policy. When considering this product, be sure to compare it side by side to a "universal" life. The comparison will illuminate the advantages to each product so you can make a well informed decision. While We are on the topic of life insurance you possibly have another option With the life insurance policy that you oWn. if you meet the criterion, you can sell your policy just the Way you Would sell your house - in other Words, sell to the investor group that Will pay the most for it. Life Settlements You may have the option of selling the life insurance policy that you own -- to the investor group that will pay the most for it. If you meet the criterion, you can sell your policy just the way you would sell your house. If this sounds revolutionary, it is!! A big word of caution...the reason that an investor group would buy your policy is because they will collect someday; they just have to keep the contract in force long enough, meaning until you die. Selling the policy means giving up that death benefit. If it is feasible, keep your policy in force for the benefit of your beneficiaries. Selling a life insurance policy should only be an option if the owner of the policy determines that the policy is no longer necessary due to changes in the circumstances or needs. At that point there are two choices; surrender the policy for the cash value (minus the "surrender" charge if there is one) or let it lapse. The Wall Street Journal put it this way in an article printed August 9, 2006: Fate continues to shower blessings on the greatest generation. Elderly Americans may soon be able to supplement their incomes by collecting fees from investors who wish to bet on their life expectancy.According to the same article, there is more than $9 trillion of life insurance in force and it is estimated that the market for "used" policies already topped $13 billion and could hit $160 billion by 2030. The prospect that you could one day sell the policy that you buy may make the purchase decision an easier one. For example, you and your partner need to purchase life insurance to support a buy/sell agreement in your business. When the need for the insurance is no longer there, due to the sale of the business or if one partner leaves, the policies can be sold on a secondary market for possibly more than was paid in premiums. Perhaps you currently own a policy you bought when the kids were younger and you anticipated them going to college. Now they are successful adults with kids of their own; the purpose of the insurance has been met. Selling the policy in the secondary market may be attractive.
According to an article in The New York Times in December of 2006, an 80-year-old Manhattan financial consultant owned a policy and was hoping to sell it and receive as much as $2 million to enjoy in his final years. The investors who took over paying his premiums will get a $7 million payout when he dies. A Life settlement company that I am working with sent me some case studies (See box, page 2). There are certain criterions that must be met.
Funds from a life settlement can generate investment dollars, be used to purchase an immediate annuity that creates an income stream for life, or for the purchase of long term care insurance to preserve one's ability to receive quality health care at home rather than be forced into a nursing home because of a lack of financial resources. If you have questions about life settlements, please don't hesitate to call our office. Long term health care insurance is probably the most important Long Term Care product developed for the baby boomer generation as they rush towards the senior-citizen shores. Legitimate concerns about A LONG-TERM APPROACH Medicare and Medicaid exist, and health care costs have never (to Protecting Your Retirement Savings) gone anywhere but up. This adds significant risk to one's financial security. Long-term health care protection allows you to transfer that risk to the insurance industry. The cost of long term health care is conservatively between $40,000 and $80,000 a year in today's dollar and will likely double or triple in the next 20 years. Fortunately, we now have options that were not available to our parents. They were often forced to choose a nursing home when they became unable to care for themselves independently. Professional services for home health care were almost non-existent. But the demographics were different then; families lived in closer proximity to each other, and the "man of the house" worked and provided the total family income while the woman stayed home to care for the family. I'm sure you get the picture...we all remember the TV show The Waltons. In our parents' day there were fewer families with both husband and wife employed outside the home. Such an arrangement facilitated care giving for the elderly within the family unit, a situation less viable in this era of two-income families. Now two income families are by far the majority, followed by single parents. Baby boomers are often supporting their college age children, parenting younger children, and at the same time anticipating or, in fact, currently caring for their parents. These family units have been dubbed the "sandwich generation" because they are responsible for school age kids and aging parents. Medical technology has extended our lives. Long term health care costs between $40,000 and $80,000 a year in today's dollar and is expected to double or triple in the next 20 years. Over the last 15 years, we have the emergence of long term care insurance; a truly affordable solution. This exceptional product can be tailored to the individual needs of the consumer. You no longer have to be concerned about spending the retirement dollars that took you a lifetime to accumulate to pay for a long term illness. (Imagine writing checks for $50, $60, $70 thousand dollars a year for 3, 4, 5 years or longer to cover a long term care need.) Do the math-that's a lot of money! More importantly is that the money provided by long term care insurance pays for care in one's own home as well as care in an assisted living facility, both of which are usually preferred to a nursing home stay; although the insurance also covers nursing home facilities. Long-term care insurance can be individually tailored to meet your specific needs, so it functions as a "safety net." With a properly designed plan you will not have to consider which stocks to sell or which of your assets to liquidate or to cover long term care expenses. There are some very good features you can include in your long term care plan. For example, one attractive feature is the "shared care benefit." Couples can share the benefit; if one person doesn't use all of the benefit purchased, the balance of it is added to the spouse's plan. Inflation is added to most plans so the benefit keeps up with the rising costs. It is important to remember that long term care affects the whole family, not just the person receiving the care. As a matter of fact, the caregiver is likely to suffer as much or more in their effort to take care of a loved one. Often care-giving responsibilities are not evenly distributed among family members, some of whom may live out of town or be without the financial resources to contribute to the need. Long term care insurance provides the financial resources and the professionals to provide day-to-day care such as bathing, dressing, feeding, therapy, etc. This frees family members to give emotional support and love. The government realized the importance of individually owned long term care insurance and approved tax incentives to encourage buyers. Business owners are allowed a tax deduction for the premiums they contribute to long term care insurance for themselves, their spouses and selected employees. Even though the premiums are deductible, the benefits are paid out tax free. Most experts believe that the reason for this tax break is to send a strong message that the government is not going to be responsible for paying for long term care for baby boomers which would break the Medicaid system
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2008