Life & LTC Combo

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Will your ‘Golden Years’ be Golden?

In my opinion there are two major financial issues that we face in the ‘Golden Years’.

The first is having enough liquid cash to cover all the final expenses.  These may include final medical expenses, taxes, legal and accounting fees, plus associated costs and can easily reach $250,000 or more.

The second is the cost of Long Term Care.  As we continue to live longer we may need in-home care, assisted living, or nursing home care.  These type of costs can exceed $10,000 per month.

These expenses can be devastating for our families.  Until now there were really only four options to help solve these problems.  They were 1) to set aside significant cash reserves; 2) buy a life insurance policy; 3) purchase a long term care insurance policy; or 4) rely on family assistance.
The first three solutions are expensive. In addition, the long term care premiums have skyrocketed in the past few years due to the length of claims and the cost of care. The fourth option just isn’t realistic in today’s world.

Fortunately the insurance industry has developed a nice solution for many people.  It’s a hybrid policy of Life and Long Term Care commonly called a COMBO policy.

Here is how it works:

  • You buy a life insurance policy – for example $500,000
  • It will have a guaranteed premium
  • The death benefit will be guaranteed
  • The Long Term Care provision allows you to take a portion of your policy (usually 2% per month) to pay for Long Term Care expenses
  • Any amount you withdraw for long term care expenses will be deducted from the death benefit

Here is an EXAMPLE of how it works:

You have a $500,000 Combo Life & Long Term Care policy that has a 2% option.  You have a stroke, require care and start taking $10,000 per month from the policy for Long Term Care expenses.

A year later you pass away.  The $120,000 that was used for Long Term Care expenses will be deducted from the $500,000 policy.  This would leave a $380,000 death benefit to your beneficiaries.

Remember:  There is a guaranteed death benefit.  In this example, even if you used all of the $500,000 policy on Long Term Care there would be a minimum death benefit paid to your beneficiaries of $50,000.

The major advantages are:
1.    The premium is guaranteed frozen unlike traditional long term care policies and
2.    It eliminates the complaint that “if I don’t use it, I lose all the premium paid.”

The basic concept is quite easy.  It becomes complicated though as there are a multitude of options and policies to consider.

Here are some of the features to look for when considering a COMBO of Life and Long-term Care coverage:

  • What type of policy to use
    • Universal Life
    • Whole Life
    • Variable Life
  • If it is Universal Life you need to consider
    • How long do you want the policy to last?
      • To age 80, 90, 100, etc.
    • Will the policy be guaranteed?
    • Premium payment options vary and may be designed to fit your individual needs
      • A short pay for example, paid up in 10 or 15 years
      • Or pay for life
      • Are these premiums guaranteed and are they level?
  • Is your contract a Long-Term Care policy?
  • Or is it a Critical Illness policy?
  • Is the policy a reimbursement policy?
  • Or is it an Indemnity policy?
  • Does it cover Home Heal Care, Assisted Living and Nursing Home expenses?

The life insurance portion is fairly easy to design but the Long-term Care area is very complicated and requires the assistance of a professional with experience not only in the insurance industry but also who has personal experience in understanding the needs of the people in their “Golden years”.

Malachy Whalen & Co., Inc. has been the ACMS endorsed life insurance agent since 1968 and we know the needs and the markets.

We sincerely invite you to email Malachy Whalen at or call him at 412-281-4050 for a FREE personal consultation.