Insurance World

Are you 60 to 70 years old? If not you, maybe a family member? Then you’re about to discover something that could help prevent the total devastation of your personal estate.

Truth is, it’s likely the most important asset you could ever own. Here’s why.

For over 24 years, I have helped hundreds of individuals understand and implement money saving ideas. From birth to death I’ve witnessed families in every financial situation.

As my clients age (and me, too), I can tell you without hesitation the biggest fear of growing old is losing your ability to remain independent.

We might be living longer, this doesn’t mean we’re living any better.

Chronic disease is rampant… and it strikes with a vengeance when you least expect it.

How many people who have experienced a stroke knew it was going to happen to them?

How many anticipated that particular moment when they began to forget things?

The facts speak for themselves. Literally millions of Americans require long term care… either in nursing homes, day care centers, assisted living facilities or in their own homes.

And the cost of providing long term care is rising with no end in sight.

Think it won’t happen to you? Well, I’m sorry. Because this article doesn’t try to convince anyone about the likelihood of their needing care before they die.

It’s intended for those who understand and appreciate the importance of arming themselves with protection against the horrific expense of long term care.

In fact, this article is ideal for those who have already looked at traditional types of long term care policies and are trying to determine which type is best for them.

One of the biggest objections to buying a long term care policy is that if the benefit is never needed the premiums paid for the policy will be wasted.

This is somewhat like buying automobile insurance. You have to pay the premium in order to get your car repaired. But what if you never have an accident. Is that considered losing your premium?

Funny isn’t it? People hardly question paying for car insurance, but they frequently resist doing so for a long term care policy.

So… what if you could always get your premium back - guaranteed - if you never require any long term care?

And, what if you die before receiving long term care? Wouldn’t it be great if your loved ones could recover 100% of your premium expense?

How about this? You actually use up all of your long term care benefit. And then you die. What if your family could still get back 10 percent of your premium.

Now if you know anything about long term care policies you’re probably wondering why you haven’t heard of this type before.

One reason is because it is non-traditional and not included in the mainstream marketing of long term care policies.

Another is because it takes a large sum of money to buy the policy. $50,000 is typical and it’s a one-time single premium, which means you will never get stuck with a premium increase.

It is not uncommon for people between 60 and 70 to have large sums of money stashed away in bank CDs earning low interest. Kind of an emergency fund.

Transferring a portion of this fund into the policy makes sense because the money continues to earn interest. Besides, it usually pays more than the bank… plus, the policy interest is tax deferred.

It’s also common for people this age to have old life insurance policies with significant cash value.

Many times it’s possible to transfer the cash into the long term care policy and still retain a meaningful death benefit.

And the future long term care benefit could easily be worth over one million dollars.

This policy has a 90 day waiting period before benefits are paid. The length of the benefit can be as short as 4 years or as long as your lifetime. You can also get a 5% compound interest inflation protection rider to help keep up with the rising cost of care.

The name of this policy is MoneyGuard. It is a universal life insurance policy with a long term care rider. The issuing life insurance company is Lincoln Life, a subsidiary of Lincoln Financial Group.

By the way, this policy was initially developed by First Penn-Pacific Life many years ago. They have years of experience and an excellent reputation. Lincoln recently bought First Penn-Pacific.

Ask your life insurance agent to get you more information about this single premium policy. For the right situation it is absolutely the best guarantee in a long term care policy.

Selling your life insurance is an option you might consider if you’re in a difficult financial situation for which you don’t see a close end. A terminal illness or old age could cause you to think twice about paying those hefty premiums at this stage of your life. Selling your life insurance carries with it complex implications and substantial risks, so it is important that you educate yourself regarding the big picture. If you’re interested in selling your life insurance, this is a good starting point to obtain some basic information.
Basics: Vocabulary

If you’ve already done any research on selling your life insurance, chances are good that you’ve come across two main terms: viaticals and life settlements. Both refer to the selling of your life insurance to a third party. So what’s the difference? “Viatical” is typically used to refer to the transaction involving a chronically or terminally ill insured, while a “life settlement” is a transaction involving a senior (generally over the age of 65) who is not terminally ill.

Even though you now know the difference, it does not mean that your state does. These terms might be used interchangeably, or your state might use one of them to refer to both transactions. For example, your state could use “Viatical Settlement” to refer to any type of transaction regarding selling your insurance. Be aware that this kind of ambiguity may exist in relation to the vocabulary used in the sale of your life insurance.

How it Works
The owner of the life insurance policy will sell it for a percentage of the death benefit a lump sum to a third party and, in exchange, receives an often substantial lump sum payment. The third party then becomes the new owner and/or beneficiary of the policy and pays all of the future premiums and eventually collects the death benefit when the insured passes away.

Those considering selling their life insurance may either directly approach a viatical company or settlement firm, or they may choose to work with a broker. The broker will act as an intermediary and present the information to several different companies/firms in an effort to find the highest price for the sale.

The settlement firms buy the insurance on behalf of investors. In this situation, the investors become the owners and beneficiaries, and the settlement firm pays the premium until the insured dies. The firm then collects the death benefit and either pays its investors a percentage of the annual return or repackages the policy for sale to another party.

Take comfort in know that the process of selling one’s life insurance is typically very confidential. Most viatical companies and settlement firms understand the discretion necessary to make the process run smoothly and easily. However, a company may act disrespectfully and become borderline intrusive by trying to keep track of the insured’s condition. For this reason, it is important to work with a respectful, experienced organization.
Who Considers Selling
Those with serious, life-threatening illnesses are most likely to consider selling their life insurance to provide cash for various expenses, such as mounting medical bills. For those who are not terminally ill, selling the life insurance might be a good idea for a number of reasons. If the owner’s beneficiary has died or if the owner can’t afford to keep paying the premiums, it would appear that they no longer have sufficient use for the life insurance. Seniors around retirement age may also consider selling their life insurance, even if they are free of debt, in order to receive a lump sum of money with which they may do whatever they please.
Keep in mind that different companies may have different eligibility requirements to be able to sell your life insurance policy.
Advantages to Selling Your Life Insurance

It might be easy to see some of these benefits, but others are a little less obvious.

You’ll receive a lump sum cash payment right now. As mentioned above, this is especially useful to the terminally ill who have mounting medical bills.
You will receive more by selling your life insurance than you would if you simply surrendered it to the insurance company. It is possible for an insured person who is 65 or older or who is terminally ill to sell a policy with little or no cash value for a $100,000.00 or much more.
You won’t have to pay any more insurance premiums. If your financial situation is becoming strained with no end in sight, eliminating premiums is a way to alleviate the burden.
You don’t have to repay the money, like you do when you borrow against your insurance policy.
Even though your life insurance benefits won’t be available once you die, you can still leave money to a certain person or organization – it will just come from the money that is leftover after using the funds from selling your policy. So, selling your life insurance does not
mean that you’re definitely robbing your beneficiaries of their gift.
In some cases, the money you receive is tax-free.
There are no regulations or restrictions on how you make use of the money you receive. You may spend as much of it or as little of it as you wish, however you please.
Risks of Selling Your Life Insurance
Understanding the risks associated with selling your life insurance will help you make an informed decision. Be sure to consult a financial advisor or tax attorney to make sure you understand the implications of the sale.
You might lose your eligibility for some public assistance benefits, especially those based on your income and assets (such as food stamps, welfare, Medicaid and some Social Security benefits).
There could be tax issues. Selling the policy will
result in a tax bill if the settlement amount exceeds your cost basis.
With improved medical care, the ill person may live longer than expected.
You might face unhappy heirs. This might not be a problem for you, but it could lead to a long road of (possibly legal) complications and battles. Some settlement actually companies require the beneficiaries to also sign off on any sale, which could be good or bad, depending on whether or not you’re dealing with a cooperative beneficiary.

Other Options
If you come to the conclusion that selling your life insurance policy is not for you, there are other options (though none that would provide you with such a large lump sum). An insurance agent should be able to help give you more information on some of these ideas.
Borrow against your insurance policy
Cash out the policy if it has surrender value
Look into accelerated benefits or living benefits
Borrow money (from family or friends perhaps) and use the life insurance policy as collateral

If you believe that selling your life insurance policy is the right decision for you, make sure you deal with a dependable, experienced broker or settlement company to ensure that you get the best service and results from your transaction.