Life Insurance Long Term Care PC1368-Print

Continuing from the previous example, if the policy’s extension of benefits rider increases the long-term care benefit (the death benefit – $87,000 – remains the same) to three times the death benefit ($261,000), the monthly amount available for long-term care increases to $7,830. On the other hand, if the extension of benefits rider extends the length of time the monthly long-term care benefit is available, then the monthly payments ($2,610) are extended for an additional 24 to 36 months beyond the initial number of months (33.3) available. OTHER PROVISIONS

COMBINATION LIFE/LTC

CASH ACCUMULATION ACCOUNT

LIFE INSURANCE DEATH BENEFIT

LONG-TERM CARE BENEFIT

Typically, qualifying for payments under a long-term care rider is similar to the requirements for most stand-alone long-term care policies. You must be unable to perform some of the activities of daily living (bathing, dressing, eating, getting in or out of a bed or chair, toilet use, or maintaining continence) or suffer from a severe cognitive impairment. An elimination period may also apply: you pay for the initial cost of long-term care out-of-pocket for a specific number of days (usually 30 to 90) before you can apply for payments under the policy. As with all life and long-term care insurance, the insurance company will require you to answer some health-related questions and submit to a physical examination before issuing a combination policy to you. IS A COMBINATION POLICY RIGHT FOR YOU? Deciding whether a combination policy is right for you depends on a number of factors. Do you need life insurance and long- term care insurance? How much life and long-term care insurance will you need? How long will you need it? Will the long- term care part of a combination policy provide sufficient coverage? A long-term care rider may not provide as many features as a stand-alone long-term care policy. For example, the combination policy may not cover assisted living or home health aides. It also may not provide an inflation adjustment, an important feature considering the rising cost of long-term care. The tax benefits offered by a qualified long-term care policy may not apply to the long-term care portion of combination policies, which could result in taxation of long-term care benefits received from the policy. What if your life insurance needs change as you get older and you find that you no longer want life insurance protection? It’s not uncommon for people to drop their life insurance in their later years if there’s no compelling need for it, but if you surrender the combination policy, you’re also forfeiting the long-term care benefit it provides, usually at a time when you are most likely to need it. And keep in mind that as you use your long-term care benefits, you’re depleting the death benefit—a death benefit you presumably wanted to pass on to your heirs or perhaps use to pay for estate taxes. Finally, compare costs of combination policies to other forms of life insurance, such as term insurance, and stand-alone long-term care policies. Depending on your age and health, the cost for the combination life policy may actually be higher than the total premiums paid for separate life insurance and long-term care policies, especially if your life insurance need is temporary (such as income replacement during your working years) rather than permanent. Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016. Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax profes- sional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable – we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. To explore how the preceding article could potentially impact your investments, please contact a Commerce Trust advisor. 1-855-295-7821 | commercetrustcompany.com

Wealth | Investments | Planning Commerce Trust Company

Commerce Trust Company is a division of Commerce Bank. PC1368

NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE

Made with FlippingBook Online newsletter