athena53
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- May 11, 2014
- Messages
- 7,384
A friend recently e-mailed me with questions about a product offered by his financial advisor. (Insert sound of alarm bells ringing here.)
He's 60, so LTC would be prohibitively expensive now. The advisor said there's a single-payment life insurance policy that also offers partial payouts if you enter LTC- 2% of the face amount of the policy per month. If he pays it by transferring assets from his IRA it's a tax-free rollover. He's overweight and may have other health issues I don't know about so he won't get preferred health insurance rates. I looked up some single-premium rates and estimated that he might be paying about $200K for $1 million coverage. It was an interesting exercise. Here's what I told him:
1. Don't buy more life insurance than you need just to get the LTC rider. He has one daughter who just started college; his wife is also employed, so I think his life insurance needs will decrease with age.
2. Accumulated at 6% over 20 years, that $200K would grow to $642K and it would be available for other things besides LTC.
3. He needs to ask who gets to decide if he needs LTC. I mentioned the unhappy example of financial guru Jim Cramer's legal battle after an unnamed LTC insurer declared that his 90-year old father who'd suffered a debilitating stroke wasn't disabled enough for LTC. Cramer fought them and won but legal bills ate up most of the award.
4. He needs to ask how much his "advisor" is making from this transaction.
Anything I missed? He's meeting with the advisor next week and I suspect it will be a no go. My friend was already uneasy about handing over a big chunk of his invested assets.
He's 60, so LTC would be prohibitively expensive now. The advisor said there's a single-payment life insurance policy that also offers partial payouts if you enter LTC- 2% of the face amount of the policy per month. If he pays it by transferring assets from his IRA it's a tax-free rollover. He's overweight and may have other health issues I don't know about so he won't get preferred health insurance rates. I looked up some single-premium rates and estimated that he might be paying about $200K for $1 million coverage. It was an interesting exercise. Here's what I told him:
1. Don't buy more life insurance than you need just to get the LTC rider. He has one daughter who just started college; his wife is also employed, so I think his life insurance needs will decrease with age.
2. Accumulated at 6% over 20 years, that $200K would grow to $642K and it would be available for other things besides LTC.
3. He needs to ask who gets to decide if he needs LTC. I mentioned the unhappy example of financial guru Jim Cramer's legal battle after an unnamed LTC insurer declared that his 90-year old father who'd suffered a debilitating stroke wasn't disabled enough for LTC. Cramer fought them and won but legal bills ate up most of the award.
4. He needs to ask how much his "advisor" is making from this transaction.
Anything I missed? He's meeting with the advisor next week and I suspect it will be a no go. My friend was already uneasy about handing over a big chunk of his invested assets.