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Insure Your Love with the Most Overlooked Asset





Bob Maruska
LTC & DI Specialist

I have a great sales idea for you. Here are the details concerning the sample case. Does your client have a large amount of qualified funds? At age 70, the client will have to start his or her RMDs. The first thing you need to do is figure out how much is due in taxes on those qualified funds. We are going to assume the clients have a $100,000 tax liability for this sample case, based on approximately $300,000 of qualified funds. I am going to use life insurance to solve two problems in later years of retirement: taxes and long term care. I will assume we have a couple both at age 60 and both in good health. I am going to look at the Nationwide SGUL and the One America - Asset Care IV Whole Life - both are second to die plans.

Plan 1 Nationwide ( Survivorship UL )

  • The annual premium for this Joint SUL plan (Male 60-Female 60) is $7,662.
  • This plan provides $250,000 of death benefit for both the husband and wife for a total of $ $500,000.
  • Each insured is provided a LTC benefit of $5,000 for 50 months with no inflation.
  • Remember, this policy is a Guaranteed Death Benefit plan with no cash value in later years.
  • The death benefit has a GUARANTEED DEATH BENEFIT to age 120.
  • The LTC benefits are paid based on the Indemnity option for $5,000 per monthly for 50 months with no inflation available.
  • Any death benefit left after the second death will be paid to the estate.


Plan 2 One America- Asset Care IV ( Joint Plan)

  • The premium for the Joint plan ( Male 60 – Female 60) is $8,853.
  • The policy has cash value (Whole Life - if needed )
  • The death benefit is only $125,000 (Base Plan )
  • The LTC benefits are based on a reimbursement option
  • The monthly benefit is $5,000 per monthly for 25 months or actual expenses for the month ( Base Plan).
  • This plan offers a Lifetime Benefit rider and a 3% inflation rider. This will result in a monthly benefit of $8,768 per month at age 80 for both individuals for life.
  Plan #1 Plan #2
Product Nationwide Survivorship UL OneAmerica/State Life Asset Care IV
Death Benefit $500,000 - Second to Die $125,000 - Second to Die
Carrier Rating A+ A+
Death Benefit Option Guaranteed Death Benefit to Age 120 Whole Life
Cash Value No Cash Value - A GDB Yes Cash Value - Whole Life
Annual Premium $7,662 $8,853
PLAN BENEFITS
Monthly Benefit $5,000 each per month $5,000 - 1st year, increasing yearly
Benefit Period 50 Months Each
1/2 of the Death Benefit Each
25 Months with a Lifetime Rider
Lifetime Benefits for Each
Inflation N/A 3% Inflation/Year
Monthly Benefit increases each year
$8,768 Monthly Benefit Age 80
How Benefits are Paid Reimbursement Indemnity


How to pay the Annual Premium for the plan
Take annual withdrawals from the Qualified Funds from age 60 to 70. You will use RMDs’ after age 70. The RMDs at age 70 on $300,000 of Qualified Funds should be approximately 3.25%, or approximately $9,000 annually (Increasing each year).

Key benefits to using these two plans and leveraging your Qualified Funds 
Plan 1 has a larger death benefit, no cash value and no inflation for the long term care. Plan 2 has a smaller death benefit, cash value and inflation of 3% for the long term care. The death benefit for both plans can pay the taxes on the Qualified Funds at death. The LTC benefit is available if needed. This will enable you to avoid invading Qualified Funds for LTC cost in later years.

What is more important to the insured: a larger death benefit, or a larger long term care benefit in later years with inflation? Does the insured like reimbursement or Indemnity plans? If you can answer these questions with your client, you will be able to confidently advise them on which plan is best for their situation. As always, please call me with your questions!
 

BOB MARUSKA  |  LTC & DI SPECIALIST   636.695.2826  BMARUSKA@FIRSTHEARTLAND.COM

 

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