Long Term Care Rider

Long Term Care Rider

By Gary Tiffany, Linn County LIVING WELL Magazine

Don’t let the threat of long-term care expense get you down. Now is a perfect time to bring up this important coverage and speak candidly with your agent about long-term care planning. We would like to introduce Pekin Life Insurance Company’s Long Term Care Rider, which, when added to a Universal Life Accumulator or Universal Life Protector contract, is a perfect alternative to a standard LTC policy. This linked-benefit contract helps pay for long-term care if you need it, provides an income tax-free death benefit if you don’t, and can help protect your assets and retirement income from the risk of long-term care expenses. It’s inexpensive, and can be added for just pennies a day to any Universal Life contract. Pekin’s LTC Rider covers all types of long-term care, including confined care, adult day care, home health care, hospice care, and Alzheimer’s care.

Let’s look at a couple of examples. First we have Steve, an active 64-year-old in excellent health, who’s looking at retirement. He’s accumulated a sizable amount of assets and is concerned about the possibility that his money could be depleted if he should need long-term care. For Steve, we’d recommend repositioning $175,000 of his investments to a $500,000 Universal Life Accumulator with Long Term Care Rider on a single premium basis. This provides him with $300,000 of LTC coverage and, should he use that entire amount, he would still have $200,000 of residual death benefit that would go to his heirs at his death income tax-free. Not only have we almost doubled the amount available to pay for long-term care (from $175,000 to $300,000), but we’ve locked in another $200,000 for his heirs if he uses the full LTC benefit! If Steve doesn’t use the LTC benefit, the entire $500,000 goes to his heirs.

Now, not everyone is going to have $175,000 or so available for this type of purchase. More often, you might be more like Mary, a healthy 55-year-old. Mary has two older permanent life policies totaling $200,000, with a combined total cash value of $40,000. She’s concerned about what the future may hold if she needs long-term care. For Mary, since she’s in excellent health, we recommend a 1035 exchange of her current policies into a $400,000 Universal Life Accumulator with LTC Rider. Her $40,000 current cash value moves over income tax-free, she doubles her insurance amount, and she picks up $300,000 of coverage for long-term care. Her premium comes in at $366 per month. The Long Term Care Rider in this example costs Mary $124.05 per year. That’s just 34 cents per day for $300,000 of LTC protection!

By adding a Long Term Care Rider to a Universal Life contract, you are provided a very valuable benefit that can’t be duplicated with most other companies. A stand-alone LTC policy, according to experts, has about a 50% chance that you’ll collect some, but not necessarily all, of the benefit. Pekin’s Long Term Care Rider, on the other hand, has a 100% chance of paying in full because it’s based on life insurance. If you never use, or only partially use, the LTC benefit, the remaining death benefit goes to your beneficiary! Contact Eldon Neighbor at 319-350-9101 for more information.

*Information reprinted from The PIN.