Unlock the Hidden Potential of Your Life Insurance: Convert to Long-Term Care Benefits

Situations evolve. Goals change. Time marches on. What was a goal or necessity is no longer needed or has become an afterthought and forgotten. During financial planning reviews this is often the case with old permanent life insurance policies that have a cash value, such as, whole life, universal life, and even variable life policies. As your financial life evolves, the original reason for purchasing permanent life insurance is no longer a financial priority. Many times, people just don’t know what to do with these old policies, and the utility of permanent life insurance declines. Frequently, the cash value of these policies declines due to poor performance, lack of continued funding, or rising costs of insurance. The following is a scenario that might sound familiar.

A married couple purchased whole life policies decades ago, when they were first married and starting a family. In today’s terms, the death benefit for the survivor is relatively small, but at the time of purchase, it was necessary and prudent to cover the family’s debts and loss of income should the worst happen. Since the time of purchase, the couple’s finances have improved. They have no substantial debt, they have a solid nest-egg for retirement, a healthy pension from their long-time employer, and their kids are grown and on their own. They are what many would describe as “self-insured” due to their disciplined financial actions over the course of their careers. They are comfortable that their assets are sufficient to last over the course of their retirement. The risk is no longer the ability to pay off debts and replace lost income if one spouse passed away. Now the risk is an unforeseen health event resulting in expensive professional medical care for an extended period. The old policies can now be converted into a tool that mitigates this risk.

The couple has continued to pay premiums on the life insurance policies over the years and have built cash value within the policies. The death benefits no longer have the significant financial impact they once did. This cash value can be used more efficiently to address the one remaining concern for the couple…an unexpected, expensive, and extended health care event.

Life insurance policies come in all shapes and sizes and address a variety of risks. Policies can be exchanged, converted, or possibly amended to address a client’s changing risks. In the situation above, the couple may be able to exchange and convert the cash value of the old permanent life insurance policies to a policy that is designed to meet long-term care benefits. Asset based long-term policies are life insurance policies that provide a defined amount of long-term care benefit, based on the size of the premium, with the chance for that benefit amount to grow. The policies also have a small death benefit if the owner passed without the need for any long-term care. The exchange from permanent life to an asset based long term care policy brings new value to an asset that would have otherwise dwindled and declined in its utility.

If you have a long-term care concern, or a life insurance policy that could be better utilized for your overall financial needs, feel free to give us a call. We strive to ensure our client’s assets evolve with their life.

These policies have exclusions and/or limitations. The cost and availability of Long-Term Care insurance depend on factors such as age, health, and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of Long-Term Care insurance. Guarantees are based on the claims paying ability of the insurance company.

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