Dear Valued Client,

Long Term Care Insurance for Free?

 

The fourth of July, 1776 - that's when we declared our freedom from unfair British taxation. Then, in 1777, we started our own system of unfair taxation.

 

To our valued clients, we are looking for your testimonials about our services.  If you’ve had a good (or hopefully not, bad experience), please let us know.  Give us your feed back in the comment box at http://www.allentaxes.com/id2.html.   The first 10 testimonials will receive a $10 gift certificate card to Starbucks.  Be forewarned, we might use your testimonial on our web pages (your first name only, though!). 

 

This month’s Spotlight on Service talks about long term care insurance as a rider to a life insurance policy...which can result in providing long term care insurance for free (in some circumstances).      


Spotlight on Service


Okay, so you can’t really get long term care insurance for free.  But in this situation we basically did by off setting the cost with found savings. 

 

First, the basics about Long-Term Care Insurance.  Long term care is required when you can no longer perform two or more out of seven activities of daily living.  These activities can include bathing, eating, getting out of bed, going to the bathroom, mental incapacity (Alzheimer’s), etc.  Care can be provided at your home, in an assisted living facility, or nursing home.  Your health insurance policy will not cover this care.  Medicare under VERY limited conditions will provide this care, and if they do, only for 20 days.  Medical (welfare) will provide this care if you have no assets (and this benefit is in question based on the state budget crisis).   

 

The average cost of this care is $74,000 per year.   The average long term care policy cost is $3,000 to $6,000 per year.  In essence, a long term care policy is CHEAP in comparison to the cost of long term care.  Considering that 50% of us will require some form of long term care in our lives, it can make financial sense to have this type of coverage.


So here’s how we helped our client get long term care insurance for free.  Our client had an old permanent life insurance policy from 2001.  It was a good policy, but was only for life insurance.  He contacted us wanting long term care insurance.  Instead of offering a stand alone long term care insurance policy we re-quoted the life insurance policy with the same life insurance benefit as before and added a long term care insurance rider.  The annual premiums were basically the same as before, but now he had long term care insurance coverage.  

 

Long term care insurance is a “use it or lose it” type of policy.  Basically, if you do not use the benefit your premiums are wasted.  Yes, you can add a rider to a long term care insurance policy that will return the premiums to your beneficiaries if you do not use the policy, but that can be a very costly option. 

 

Life insurance with a long term care rider is becoming a more attractive option.  Basically either you use the long term care benefit provided (which will reduce the life insurance benefit) or your beneficiaries receive the life insurance benefit.  Your premiums are not wasted.

 

There are other considerations when making the decision to add a long term care insurance rider to a life insurance policy.  So it is highly recommended to speak to an insurance professional like Mark.  The point is that it might make sense to review your life insurance policies to see if they can be enhanced.          


Did You Know?
  • Stop!  Don’t claim that social security benefit just yet…you could be wasting thousands of dollars.  There special tax strategies we can employ to maximize your benefit.  Give us a call to discuss. 
  • We thought you would like to know what the top 5 (okay, top 6) questions are…so we’ve put the topic 6 questions asked on our website at www.allentaxes.com/id26.html.
  • Life insurance rates have dropped dramatically over the last 10 years.  If you have an old policy Mark will be happy to review it for FREE!  Your old policy could be replaced with higher coverage and better features (like Long-Term Care riders) for the same or lower price. 

 

The Newsletter


This month's edition looks at more of the latest changes in legislation. Discussed here are special tax breaks that can be found with new car purchases and the “cash for clunkers" program passed in late June.

If you have not yet made an appointment for a mid-year consultation, now is the best time to do so.  Keep in mind that we can help you with your needs all year-round.


Sincerely,
 
Noelle, Mark, Callie, & May
Allen & Allen, LLP

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