Funding Long Term Care with your EXISTING term life policy

Last month we attended the Long Term Care Insurance (“LTCI”) conference in Colorado Springs.  The mood was somber, following last year’s 20% decline in overall LTCI sales.

In multiple breakout sessions we heard pleas for the industry to “do better” in creating long-term care solutions.
  
PolicyFlex does have a new long-term care solution.  We summarize it for you below.  First some background:

Baby boomers have increasingly resisted the idea of LTCI for various reasons.

• It’s often hard to qualify, given health issues.
• It’s expensive; and there’s a substantial risk of further premium increases even after they buy a policy.
• It can be tough to make claims when they need help, requiring a high—some think unreasonably high—level of infirmity (inability to wash, dress, eat, etc.).
• There’s usually a waiting period (e.g. a 60 or 90 day “elimination period”) before the carrier will begin reimbursing expenses.
• There's the “use it or lose it” issue.  People are concerned that they will die before ever needing long-term care; or will only use only a part of their benefits. 

The insurance industry has sought to address some of these issues by creating “hybrid” or “combination” LTCI policies.  They provide both a long-term care benefit AND a death benefit.  They also offer riders that will return part of your money if, say, you die during the dreaded “elimination” period; or if you slip on a banana peel and die before ever needing long term care at all.  

Seniors should certainly investigate these “combo” policies.  Our impression is that qualifying is even harder than before (exams may be required for both the health and life aspects of the policy) and even more expensive.  But definitely shop around.

Against this somber back drop, PolicyFlex does have a new solution for one group of seniors:  those with assets to protect … who happen to already have a term life policy.

If you fall into this group you could, if need be, pay directly for long-term care and other health expenses during old age.  The idea probably doesn't make you happy, but you are probably even less happy at the thought of paying for LTCI with a high probability of never getting your money back—or of depleting your assets.

PolicyFlex’s program is based on your existing term life insurance policy (so don’t let it expire before checking with us!).

Your term policy is converted in to a permanent policy, and the permanent policy becomes the basis for providing you and your beneficiaries with a new, combination living benefit / death benefit.  We call this Living Care Extension.  In some ways it’s similar to those “combo” policies described earlier, but it’s really an alternative to long term care insurance.

Under this new program, the living benefit can be used for long-term care (and, by the way, a variety of other medical expenses—see our fine print). 

But whatever portion of the total benefit you don’t use during your lifetime ….will go to your beneficiaries in the form or a death benefit. 

All of the program’s economics ultimately come from the underlying life insurance policy’s death benefit.  

In other words, your existing life insurance company continues to provide all coverage underlying Living Care’s benefits for you and your beneficiaries.  

A number of advantages are made possible with this approach, compared to traditional long-term care insurance or even hybrid policies:    

• There is no health exam to apply.  Health impairment is not an obstacle, since you already own your term policy. (There is a short health questionnaire)
• To make claims, there is no need to fail certain “activities of daily living,” such as the inability to dress, wash, feed yourself, etc.
• There is no delay in receiving payment for your claims, i.e. no “elimination period” before PolicyFlex begins making reimbursements. 
• Eligible claims are more broadly defined than with a typical LTCI policy.  
• There is no risk of premium increases over time.   Your payments are contractually level and fixed from the start. 
• Clients who stay in the program will receive a multiple of the payments they make.
• If you stay in the program for at least 3 years, you are certain to at least get back your money, either in living benefits or in death benefits.

NOTE:  In order to fit the Living Care program you must be over 60 and have an existing term life insurance policy over $500,000. Other factors also go into our evaluation, but the evaluation is free to you and there is of course no obligation.
If you would like to inquire about your own term policy, you can submit it through this website.  (“Consumers” tab)

SENIORS: How to extract substantial value from a TERM life policy before it expires.

If you’re over 60 and have a term life policy, you might assume that it will be worthless at the end of its “term.”  Well, it most certainly will be worthless… if you do nothing to prepare.  

Many people don’t think about this until it’s too late.  Fact: 98% of term policies are simply abandoned by the end of their term.  When this happens, people are often—unknowingly—walking away from tens of thousands, even hundreds of thousands, of dollars per million dollars of death benefit.  

I’m not talking here about “cash value.”  Term policies don’t have any, so you can’t trade the policy back to your insurance company for some amount of money. 

Of course, if you’re still in your 60s and very healthy, you might be able to obtain a new term policy inexpensively.  If so, that may be your best bet.  

But if your current age and/or health status make getting a new policy difficult, here are some key alternatives to investigate before you simply walk away from the old policy:

1. Converting your term policy into a new “permanent” policy. 

Unlike a term policy, a permanent one (“Whole Life,” “Universal Life”) is certain not to expire before you do!   And, no health exam is required in order to convert—useful if you’ve suffered a health decline.  Note: you must act before the policy’s conversion deadline, which might occur earlier than the end of the policy’s term. Check your dates.

Issue:  Expect sticker shock. Even if you’re healthy, the new policy’s premium can be 4 or 5 times the old one.  To lower expenses you can convert, say, just half the term policy and pay only half the new premium; but make sure this leaves your beneficiaries with enough death benefit.

2. Converting your term policy into a long-term-care benefit plan.

This can help make long-term care more affordable if you have limited financial resources but aren’t eligible for Medicaid.

Issue:  To qualify, you must have an immediate need for long-term care.

3.  Selling your term policy (“Life Settlement”).    

A third-party investor buys your policy, gives you substantial cash today, continues to pay the premiums, and collects all or most of the death benefit when you die.  Life settlements are particularly effective if you want cash now for medical or other expenses.

Issue:  You typically need to be over 70 and in poor health.  And as with option #1, you must act before the deadline for converting your term policy into a permanent one.

4. Obtaining a Term Extension.     

This program can extend your current coverage anywhere from 10 years to lifetime depending on the particulars; and can often do so highly cost-effectively.  The basic idea: you use a relatively small amount of the future death benefit in order to subsidize current premiums.

Term Extension can work well when other options don’t, e.g. when you get sticker shock at the idea of converting from “term to perm” (#1 above); when you don’t need immediate long-term care (#2); or when you’re too young and healthy to sell your policy (#3). 

Issue:  As with #1, with Term Extension you must act before the deadline for converting your term policy into a permanent one.  

In short: Your term policy may have great value even though it has no “cash value” and is close to expiring.  Don’t abandon it before you explore all your options.  The key is to plan ahead and be aware of key aspects of the policy …like the conversion deadline.  

Georges Holzberger is Head of Marketing for PolicyFlex LLC, a firm focused on innovative insurance solutions for retiring baby boomers. Georges has over 30 years of experience in financial services, including marketing, investor relations, and executive recruiting for Wall Street firms and investment managers. He was formerly a founding partner and Head of Marketing / Investor Relations at Plainfield Asset Management from 2005 to 2010. Based in Greenwich CT, Plainfield grew to $5 billion in assets under management. Georges previously spent 20 years in the search industry with Russell Reynolds Associates, Highland Search Group, and Sextant Search Partners.

The PolicyFlex Term Extension℠ program is managed in partnership with National Advisors Trust Company. For more information, visit www.policyflex.com.  

SENIORS: Is your expiring TERM life policy worthless…or…extremely valuable?

Find out!  It could mean hundreds of thousands of dollars of your net worth. 

Is this you?  Over 60 years old and have a term life insurance policy of $500,000+?

Are you wondering:

“After paying premiums for 10 – 20+ years, will I ever get anything out of the policy…or will it be worthless at the end of the term?”

Are you concerned because your policy:

• Is set to expire, unused, in the next couple of months or years. 
• Has zero “cash value” so can’t be traded in to your life insurance company.
• Can’t be sold in the life settlement market—you’re not old or sick enough.
• Can’t be converted into a long-term-care benefit plan—you don’t need immediate care.

Did you explore these traditional insurance options… and end up “underwhelmed”:

A full conversion of your term policy into a permanent policy:  Maybe the idea gives you heart burn because the new premium would be 4-5 times the old one. 
A partial conversion:  For example, you could cut the new premium in half by converting just half the term policy, but then of course you’d have only half the death benefit. 
A new term policy to replace the current one:  Maybe it’s as expensive as a conversion?

If you’re like most people, you’re thinking of just letting your current policy lapse.

That could be a big financial mistake.   

Check first to see if a TERM EXTENSION works for you.  If so…

• You could end up rescuing $200-300,000+ of your net worth… per million dollars of your policy’s death benefit.
• You would avoid walking away from very significant value that has been building as you age.   
• You will see your policy as a FINANCIAL ASSET, not just something you “pay for in case you get hit by a bus.”  It may not have “cash value,” and you might not yet be able to sell it to a third party, but it’s far from worthless.

With Term Extension you use a portion of the future death benefit to subsidize today’s premiums.  Your beneficiaries’ share of the death benefit starts at 97% and declines slowly over time.

Term Extension advantages:
It transforms your policy into a highly valuable ASSET.

• Your expected return is better than investing in financial markets.
• It’s also safer: it relies on the regulated claims-paying ability of your insurance company.
• The asset is valuable even if you no longer “need” traditional insurance coverage.
• It can preserve $200-300,000+ of your net worth… per million dollars of death benefit.

It's cost-effective:  You pay about half the premium you would pay in a direct conversion with your life insurance company… yet you keep much more than half the death benefit for years to come—Term Extensions are for 10 years up to lifetime.

It’s flexible:

• You can change your mind at any time, surrender the policy, and owe nothing.
• If the policy qualifies, after 15 years you can surrender it and get your payments back.
• You preserve your ability to sell the policy in the future, which clearly won’t be the case if you abandon the policy today. 

It’s safe:

• Your carrier continues to provide your coverage, and yet...
• Your payments are level and fixed, even if the carrier raises premiums over time.
• National Advisors Trust Company safeguards your asset.

Bottom line:  Instead of being worthless as it approaches the end of its term, your policy may in fact be your single most valuable financial asset…hiding in plain sight.  Check before you let it lapse.

PolicyFlex’s analysis is free, yet the benefits could be highly significant to your family.

Visit www.policyflex.com or email at contact@policyflex.com 

Term Extension is for policies of $500,000 up to $3,000,000 whose conversion option is still available.  


Georges Holzberger is Head of Marketing for PolicyFlex LLC, a firm focused on innovative insurance solutions for retiring baby boomers. Georges has over 30 years of experience in financial services, including marketing, investor relations, and executive recruiting for Wall Street firms and investment managers. He was formerly a founding partner and Head of Marketing / Investor Relations at Plainfield Asset Management from 2005 to 2010. Based in Greenwich CT, Plainfield grew to $5 billion in assets under management. Georges previously spent 20 years in the search industry with Russell Reynolds Associates, Highland Search Group, and Sextant Search Partners.

The PolicyFlex Term Extension℠ program is managed in partnership with National Advisors Trust Company. For more information, visit www.policyflex.com.