Life Insurance with Long Term Care

There are many options when it comes to paying for your long term care needs. There are traditional long term care policies, hybrid or combination long term care policies that combine long term care and life insurance, long term care annuities (recently developed thanks to the Pension Protection Act), or lastly you could self insure and pay out pocket. This post is going to focus on life insurance with long term care benefits, also known in the industry as hybrid or combo policies.
Basically, these policies are life insurance that has a long term care benefit attached with it. These polices are gaining popularity as they evolve because they are much more self completing plans. By self completing, I mean a plan that has a benefit no matter the outcome. If you need long term care, the benefit is there, if you don't use LTC and pass away the death benefit is there, or lastly if you use a combination of LTC for a short period and then pass the policy can pay out for both events.
The 2 main types of Life Insurance with Long Term Care are life insurance polices with long term care riders and hybrid long term care life insurance policies.

1. - Life Insurance with Long Term Care Rider - Accelerates the death benefit of the life policy in the case of a long term care event. For example, a $250,000 death benefit on a life policy that will accelerate and pay out up to $5,000 a month for facility or home care until $250,000 is used or the person passes away, whichever comes first. If only $100,000 was used for long term care the policy has a residual death benefit of $150,000.

2. - Hybrid long term care / life insurance -  To put it in car terms the "chassis" of the policy is life insurance and the policy has a long term care benefit attached to it. These polices are different in that most do not allow you to pay ongoing premiums on a long term basis, such as a life pay scenario. These polices work best with a lump sum dump in or annual premium payments up to 10 years (10 pay) or less. The best way to explain is with an example. A 62 year old female, can deposit $100,000 into this type of policy and immediately have a life insurance benefit of $150,000 if she passes, or a long term care benefit of $500,000. The long term care benefit would pay her up to $7,000 a month for 6 years if she needed home care or facility care. These policies allow for easy access to the money deposited and have minimal to usually no fees for withdrawing the money or surrendering the policy if you have an emergency and need your money back. These are truly self completing plans, if you die, need long term care or just your money back its all there. 


You can now fund both of these types of policies in a variety of ways: from cash value of other life insurance or annuity policies, CD rollovers, out of ordinary income, lump sum deposits from savings, IRA's or old 401K's.


Not many people are aware these policies exist, as I present them I get great reactions from clients to have these types of policies as an option. As you learn more about How to Pay for Long Term Care, keep these life insurance with long term care combo policies in mind, they offer a lot of value. No matter what State you live in, I would be happy to email you a free quote on any these polices, no sales pressure. Funding your long term care is an important need to fill as you age, the #1 cause of bankruptcy today are medical expenses. Contact Me for a Free Quote or Any Questions. My name is Ryan Thomas.

See our full website at www.aarowfinancial.com

How do I get the Best Results on My Insurance Physical Exam?

If you are considering the purchase of a fully underwritten life insurance policy, there are a few things you should know before taking your insurance physical exam. You want to get the best results possible because it can save you thousands of dollars over the life of your policy.
I should start from the beginning...There are both fully underwritten life insurance and non-med exam life insurance policies. A fully underwritten policy requires you to go through a medical exam that is paid for by the insurance company that you are applying with. Fully underwritten policies will have much lower premiums and better provisions in the contract. The requirements of the exam will depend on the amount of life insurance that you are applying for and your age. Most commonly a physical exam consists of a height, weight, chest and waist measurements, blood pressure check, blood draw and urinalysis. The exam will also require the examiner to ask you medical questions, as well as, collect your doctor's and medication information. The insurance company reserves the right to order your doctor's records and most times they do  this to have an idea of your medical background. There are insurance exam companies located all over the country. These companies will send an examiner to your home or office and usually give you the option to come to them at a local office if that is what you choose. Again, these exams are free to applicants and paid for by insurance companies. It usually takes 4-8 weeks after your physical exam to have a medical decision be made on your fully underwritten life policy.

A non-med life insurance policy just checks your MIB (Medical Information Bureau of Records), scripts (open prescriptions) and reserve the right to order your credit file and driving records as well. (Same with fully underwritten insurance. However, companies do not usually order credit files unless you disclose something like a recent bankruptcy on the application. Driving records are ordered very regularly.) This MIB is just an information sharing service fro Insurance Companies, you are entitled to have a copy of your file. A non-med policy will have higher premiums (because the life companies don't know as much about you, so it's higher risk)  and less flexibility with things like term conversions.

Now that you know the general differences between both fully underwritten and non med life insurance, See below for ideas on ways to get the best results on your insurance physical for a fully underwritten policy. If you have any additional questions on how to get the best results on your insurance physical exam, please contact me, I would be happy to help with no sales pressure.

1.     No alcohol 24-48 hours before

2.     At least 8 hour fast, best to take exam in morning before you eat breakfast, your blood pressure and blood work will be better then

3.     No strenuous exercise 24 hours before

4.     Take the weight part with light to minimal clothing and no shoes (if your shoes weigh 2 lbs and that two pounds puts you in another underwriting class, it could cost hundreds over the life of policy.)

5.     Avoid salt 24 hours before, it can raise BP

6.     If you are taking a normal regimen of medication, keep taking it, which will actually look better to the company that your condition is controlled with regular medication


7. If you are a tobacco user try and use those products as lightly as you can 24-48 hours before

What do I Need to Know about Disability Insurance???

I have been getting more and more questions lately about disability insurance (DI), so I thought I would put this post together to help you understand the most general things that you will need to before purchasing a disability policy.

1. There are 2 main types of disability policies. These policies are classified as occupational disability (own occupation) and non-occupational disability (any occupation). An occupational  DI policy pays out an income stream if you can not perform the duties of YOUR occupation. These policies are much more comprehensive, they require more underwriting and the premiums are higher. Non-occupational disability coverage states that you must not be able to perform the duties of ANY occupation before it will pay out an income stream. (These two types of policies are also known as total disability (non-occupational) vs partial disability (occupational) coverage.) A non-occupational disability policy is usually less premium and easier to apply for. Many non-occupational disability policies are also accident only, meaning that if you need to miss work due to a disease or sickness that it is not covered. Check with your writing agent to make sure of the coverage you are considering.

2. The amount of coverage that you purchase cannot be 100% of your salary. This may sound crazy, but its true. There is a little thing called "moral hazard" that is designed to prevent people from carrying too much DI coverage. This is done in order to prevent policy holders from injuring themselves or faking a disability. The premise is that you are less likely do this if you cannot carry your full salary in DI income. So, insurance companies have worked with the Federal Government to set guidelines on the amount of DI coverage that you can purchase. The standard for most work place disability policies that I have seen, (group policies carried by employers), is to cover 60% of their employee's salaries. Most insurance companies will allow an individual to cover up to 80% of their income however, as long as your income is not too high. It is very common for someone to purchase an individual disability policy to cover the gap between a 60% employer plan and the remaining 20% that an insurance company will allow you to carry. (80% allowed minus the 60% employer coverage = 20%)

3. Long term vs short term disability - A long term disability policy is designed to pay for a period longer than six months. These policies have waiting periods of at least 30 days before they begin to pay out. Most group employer plans are long term disability plans. The most common employer plan that I have seen are a standard of a 90 day waiting period, then a 24 month pay out of 60% of the employee's salary.
Short term disability is a plan that can begin payout immediately or with a small waiting period, and usually pays out for a period of 6 months or less to 1 year at the most. These short term plans tend to have smaller premiums and less underwriting requirements. If you have a long term disability plan then you might want to consider a short term disability plan to supplement that policy. This all should depend on how much savings you have in your emergency fund.

4. What effects costs in DI? Your age, sex, amount of coverage, lifestyle and type of occupation can all effect the premiums of a DI policy. A higher risk job will have higher premiums. Lastly, the longer that you can extend your waiting period, the lower your premiums will be. If you have a nice emergency fund and have 6 months of living expenses, then go a 6 month waiting period and keep your DI premiums lower. Insure yourself against a catastrophe not a paper cut!

5. Tax treatment - if you pay into your DI policy with after tax dollars then your disability pay out will be tax free. If you choose to try and write off your DI premiums, then the payout will be taxed, and taxed at a time when you need the highest income you can get. If you are an employer and have found this post searching for a group disability plan for your employees please keep this in mind. You might want to pay the premiums of your employees plan, but include those premiums in the employees taxable income, this way the pay outs will be non-taxable. If you are self employed you can include DI as a business expense, but make sure you include the premiums in your taxable employee income or the benefits or taxable. Please consult your tax or insurance professional on this I would be happy to answer any questions free of charge here. Contact Me

We hope this information helps you in your disability insurance search. If you have any questions or would like a free no hassle quote please contact us. No matter what state you live in we can email you some information.




Click here for the 5 questions that every worker should ask about disability insurance.

Second to Die, Survivor Insurance, Survivorship Life - A Great Way to Leverage Lower Premium Payments

More and more people are asking about what is called second to die, survivorship insurance or survivorship life. This is a life insurance contract or policy on two lives, that pays the death benefit after the death of the second insured. The two insured parties must have reasonable financial ties (most commonly husband and wife).

These policies are excellent estate planning, preservation and creation tools because the cost of insurance is much lower than a policy on just one life.  Also, if one spouse has had some health concerns they can still usually be one the insureds on the second to die policy. Many families that take out second to die policies are trying to leverage the smaller life insurance payments into larger payouts. This is a great way for parents to leave children an inheritance, cover lawyer & estate fees, and pay estate taxes. I have also seen second to die for charitable contributions with life insurance. Husbands and wives that have a strong tie with a charitable cause can again leverage their smaller payments into a much larger death benefit, and even be able to deduct premium payments from their taxes. (If set up correctly. See our page on Charitable Contributions with Life Insurance.)

To sum up and give you an idea of the power of a second to die strategy, please see below:

A 55 year old non smoking man at standard non tobacco rates can purchase a $250,000 Guaranteed to Age 100 Universal Life Insurance policy for $3,800 annually.

A 55 year old man and  55 year old woman (married couple) at standard non tobacco rates can purchase a Guaranteed to age 100 Universal Life policy with a death benefit of $453,000 payable at the death of the second to die for the same $3,800 annually. (As you can see almost double the death benefit for the same premium!)

Please see our website for more information on Universal Life Insurance. I will be happy to email anyone a free quote on Second to Die, Survivorship Insurance, Survivorship life or any other form of life insurance free of charge and with no sales pressure. If you wish Contact Us here.

North Carolina Life Insurance

The North Carolina Department of Insurance (NCDOI) governs North Carolina Life Insurance and its industry. In NC we have available to us most life insurance products, the only exception is that the NCDOI is tough on guaranteed issue life insurance products. A guaranteed issue life insurance product is a policy that basically accepts everyone no matter their health conditions. These policies of course have very high premiums and also usually have a waiting period of at least 2-3 years before they pay out a full claim. We do have some final expense products available in NC, but not as many as I have found in neighboring states for example.
NC's current Insurance Commissioner, Wayne Goodwin, has done an excellent job in office and I have been fortunate enough to meet him and see him speak to a group I was in. I could tell that he truly cared about his constituents and doing what was best for them was his top priority. The NCDOI oversees everything from Property Insurance, the Senior Health Insurance Information Plan or (SHIIP at www.ncshiip.com), all forms of life, health and accident insurances, to even bail bondsmen licenses. We are well protected in North Carolina.

As for North Carolina Life Insurance, the products available to us are put into 3 major categories.

1. Term Life Insurance
2. Universal Life Insurance
3. Whole Life Insurance

The first category is term life insurance. A Term life insurance policy is designed to last for a specific duration or term period. The most common term periods are 10 - 30 years. Term is the least expensive of all life insurance products and is the most common insurance sold online today. A person could purchase much more coverage through a term policy for a much lower premium to cover the risk of death for a time period important to them. The most common situations that I see are the 20 - 30 years that children are young and still very much dependent on their parents and when someone has a mortgage. Lastly, there is also a return of premium term life insurance product that will return 100% of the premiums that you pay into the term policy at the end of the term period.

The next major category is universal life insurance, this category can include current assumption universal life, indexed universal life, and guaranteed universal life.  A universal life policy or UL for short is designed to be a flexible premium contract and can build cash value. A UL is a form of permanent insurance and differs from whole life insurance in the flexibility of the policy. If your UL has built up sufficient cash value, then you may choose to let it pay its own premium's from its accumulated cash value, or you may choose to withdraw the premiums that you have paid into the policy. When a UL pays for itself, it does not loan against itself and a withdrawal is not a policy loan so neither option charges you an interest rate. You do have the option to take policy loans with a UL.

The last major category is whole life insurance. A whole life insurance policy is also designed to be permanent coverage and is the first form of life insurance to come into existence. A whole life policy has guaranteed premiums and a base interest rate. You can choose different payment schedules, single pay, 7 pay, 10 pay, 20 pay, pay to 65 and pay to maturity are all examples. If you have what is called a participating whole life policy, then the policy will usually pay what is called a dividend. A dividend is basically an annual return that you receive from the life insurance company based on the profitability of the company for that year. A dividend can be allocated in several ways. A dividend can accumulate in a dividend account for withdrawal or future payment of premiums, a dividend can lower your current premium or a dividend can purchase additional life insurance regardless of insurability. Generally, we recommend a Mutual Life Insurance Company for your whole life needs. A Mutual Life Insurance Company is owned by the policy holders and usually offers a better dividend scale.

There are many great North Carolina Life Insurance products available to us here in the Tar Heel State. For a free evaluation of your situation and free quotes for your North Carolina Life Insurance feel free to contact me.  We represent all major life insurance carriers and our team has over 60 years of combined experience. We have the ability to show a multi-quote of top life insurance companies and we can shop your NC Life Insurance to find you the best rates and policy for you, no matter where you are in NC. If you wish we can even mail you all the necessary paperwork.

How Much Life Insurance do I need?

This is a great question, and I have heard several different versions of the amount one should own. The truth is that life insurance ownership is down, and less people buy it or continue to pay for it during tough economic times. I do believe that if you fail to plan you plan to fail, but at this point if you do not spend much time in this area it fine. You should just buy $500,000 to $1,000,000 in term coverage. (If you have children go $1 mil.) This can vary from person to person, please do not read this and think that I am not doing my due diligence, but the truth is some people are just scanning this information and they like to make quick decisions. If that is you, buy $500k to $1mil in coverage. Please keep in mind that life insurance companies have different requirements on how much life insurance that you can have in force based on your income. (Most carriers cap you out at your annual income.) The federal Government recommends 20x your annual income. (So, if you make $50,000 a year, they recommend that you buy $1 million. $50,000 x 20 = $1,000,000.)
If you would like to plan, I recommend using the online life insurance calculator at www.lifehappens.org. They are a non-profit organization dedicated to help insurance consumers make smart insurance decisions. I really enjoy their website and as an insurance professional, I recommend them to many of my clients. I hope this information helps you decide when you ask yourself, How much life insurance do I need?...

What the heck is Cash First Long Term Care and why should I care?

Cash first Long Term Care Insurance pays just like traditional long term care coverage, as a reimbursement for facility care, home care, and/or adult care services, but with a big twist...This type of LTC policy will also give the policy holder a choice to take a cash first benefit, usually equal to 30-40% of the daily or monthly benefit at the time the cash benefit is turned on. Additionally, a good cash benefit policy will allow you to switch back and forth from facility care to cash payout from month to month as your needs change.

That was a lot of insurance jargon I just threw at you, let my simplify it. Long term care is usually paid out based on a monthly amount that will pay out for covered home care and/or facility care. (Sometimes this monthly pay out amount can be set to grow at 3 - 5% compound or simple interest, and the cash benefit will also be set to do the same.)  So, at the time that you need your payout to cover LTC, you can choose to take your cash benefit instead of the monthly reimbursement amount. For easy math's sake, lets assume that your LTC policy was paying out $5,000 a month at the time you need the coverage, then 40% of $5,000 a month = $2,000 a month in cash direct deposited to your bank account instead of $5,000 reimbursed after you have paid for the care. This is a great benefit to have, especially if your LTC event starts out slowly, IE. 3 hours a day of home care at $20 an hour. You can take your cash and spend it any way that you like.

Also, your lifetime pool of money can last longer than planned if you are taking less money. If your LTC policy was set to payout $5,000 a month for 3 years then your policy would pay out a lifetime benefit of $180,000 or $5,000/month x 36 months). However, you could take $2,000 a month in cash for 7.5 years!

I like to think of the cash first benefit as a disability insurance / LTC care policy, it has the same premise, a cash payout due to accident or sickness that leaves you with incapacity. These new policies add a lot of value and as a LTC producer, I show these policies at EVERY long term care presentation. As a matter of fact, I have not sold a non cash benefit policy in over a year now. People see a lot of value in them. If you have any questions on cash first benefit Long Term Care coverage, please let me know. You can email me at ryanaarow@gmail.com. There are no strings attached and chances are I am not licensed in your state anyway. If you are in NC, SC, VA or GA, I can help write you policy, I will be glad to quote you and work with you pressure free through the mail on your own time. All advice and quotes are free.