You got where you are today by working hard and working smart. This means using all your resources to their maximum. Your time, talent and resources are on the line and at risk. It is imperative that your financial and estate plan takes into consideration the risks that you, your family and your business cannot afford to take.
In a portfolio, you diversify risk, but when it comes to protecting your ability to think, earn money, plan and create, how do you react? To protect your family, business and assets, the risk to your abilities also must be diversified. The least expensive and most intelligent method is through insurance. We are experts in helping those we serve protect what they care about:
- Life insurance
- Disability insurance
- Long-term care insurance
Without the proper amount of coverage, a financial or estate plan may fail, leaving you and your family with many unmet dreams and goals and potentially causing financial devastation.
Life insurance is a unique property. It can create an estate with low premiums in comparison to the total death benefit. It also has many tax advantages and may be an ideal product for your financial plan. Uses include:
- Providing liquidity to pay death taxes and estate costs, thus avoiding the necessity of liquidating valuable assets to pay these expenses. Note that federal estate taxes are due only nine months after death.
- Providing funds to pay off a mortgage at death.
- Providing spouse insurance. In making an insurance need analysis, we often forget or underestimate the dollar value of work done in the home by both husband and wife.
- Providing funds for college education. Either at death, or, during life, policy cash values can help pay college costs.*
- Guaranteeing funds to repay loans or other debts owed by the decedent. Life insurance proceeds provide cash to pay estate obligations and help provide the survivors with a debt-free start.
- Supplementing retirement income needs. The policy cash values can be used to supplement pensions, Social Security and other retirement income.
- Providing funds for an orderly transfer of a business interest at death. Business owners may have an agreement to buy the interest owned by a decedent but lack the cash to pay for the decedent's share of the business.
- Providing funds for a business at the death of a key employee. Insurance proceeds can be used to recruit, hire and train a replacement. The proceeds also can provide working capital to help offset financial losses due to the loss of the key person's services.
- Providing funds for charitable giving. Life insurance death benefits payable to an organized charity can help provide funds for the charity's work and may provide tax benefits as well.
- Helping equalize inheritances. For example, a decedent could leave a business interest to the children who are active in the business and provide benefits of equal value to other children through insurance proceeds.
* Life insurance policy cash values are accessed through withdrawals and/or policy loans. Loans are generally not taxable. Withdrawals may be taxable under some circumstances. Unpaid loans and/or withdrawals will cause a reduction in the policy cash values and death benefits. Please consult with your tax advisor for advice regarding your particular situation.
**Note: Life insurance policies and contracts contain exclusions, limitations, reductions of benefits and terms for keeping them in force. Your licensed financial professional can provide you with the cost and complete details. Availability varies by insurance carrier and by state.
Disability - Sources of Income:
- Savings - If you save 10 percent annually, one year of disability may wipe out 10 years of savings.
- Social Security - Almost 70 percent of applicants are rejected.*
- Sell investments - Will you get the true value?
- Loan - Without an income, who will lend you money?
- Family, friends and charity - Do you want to depend on them?
What are the sources of income when someone becomes disabled and can no longer earn a living? Note the options shown above. When disability occurs, most other options, except insured income replacement, may be unsatisfactory or quickly exhausted.
Disability is bad enough -- disability without income is even worse. Disability income replacement insurance is a long-term solution to a long-term disability.
*Source: Social Security Administration
**Note: This information provides only a brief explanation of coverage. It is not a contract. Modifications of types of coverage may be applicable in some states. Coverage may not be available in all states. Exclusions and limitations may apply. A complete statement of any coverage, including applicable terms will only be found in the statement of coverage found in an individual policy. Renewal premiums may increase periodically depending on your location. Policies may or may not be renewable. Details on available coverage and cost may be obtained from your licensed insurance agent. Combinations of coverage may be subject to underwriting guidelines, benefit periods chosen and occupational classes.
Long-Term Care Insurance
Long-term care refers to the medical and/or personal care services required by a person with a chronic disability or illness. Seven in 10 Americans age 65 or older will need some type of long-term care, according to the U.S. Department of Health and Human Services.
While a nursing home is often what comes to mind when you think of long-term care, most services are provided at home, in adult day health care facilities or in assisted living facilities. According to the “2017 Genworth Cost of Care Survey,” the median annual costs for these services are:
Homemaker services: $47,934
Home health aide: $49,192
Adult day health care: $18,200
Assisted living facility: $45,000
Nursing home semi-private room: $85,775
Nursing home private room: $97,455
Who pays the cost of long-term care? The patient or family pays for nursing home care costs not paid by Medicare or Medicaid. Medicare offers limited coverage for up to 100 days in a skilled nursing facility per benefit period, and benefits may not be available for home care. For those with low income and limited resources, Medicaid may pay for some long-term care services at home or at another facility. To qualify for Medicaid, the patient must be impoverished under the state's definition. In most states, the patient must not have income greater than the cost of the nursing home facility. Other states have "income caps" to limit eligibility for Medicaid.
The need. Some people may require daily medical attention, while others may simply need help with the basic activities of daily living (ADL) such as bathing, dressing, taking medication, eating, using the toilet, getting in or out of bed, or walking. A typical nursing home stay commonly falls into two categories: short-term stays (one to three months), which involve skilled nursing care and typically follow a hospital confinement; and lengthy stays that average 2.5 years and include mostly maintenance and custodial care.
Levels of Care
Skilled care. Refers to a patient who needs daily nursing care, physical therapy, etc., provided or supervised by a professional nurse and/or therapist under physician's orders.
Intermediate care. Patient requires only intermittent or occasional rehabilitative care or nursing.
Custodial care. Patient needs help with activities of daily living (ADL). Does not require a registered nurse or therapist, but need for such care is based on physician's orders.
Long-Term Care Insurance. Policy may be issued on an individual or a group basis. Long-term care insurance policies reimburse policyholders a daily amount (up to a pre-selected limit) for services to assist them with activities of daily living (ADL). Long-term care insurance is designed to cover long-term services, including personal and custodial care in a variety of settings.