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April 25, 2012 at 12:31 AM
“Success always comes when preparation meets opportunity.” — Henry Hartman
When thinking about the future of retirement and leaving a legacy behind for children and grandchildren, boomers characteristically stay optimistic and independently strong, thinking a financial crisis could never happen to them. While there are many events that could shatter retirement savings, one of the most daunting is an unexpected long-term care (LTC) event.
Boomers tend to lean toward optimism when it comes to their health and quality of life, understanding and implementing the growing importance of physical activity and healthy living. Even if a best friend or an immediate family member has been devastated by the cost of a serious illness, boomers hate the idea of having to pay premiums for a policy they think they will never use.
In reality, the front-runners of the boomer generation are hitting their mid-60s. This age group has a 70% chance of needing some type of extended medical treatment in the coming decades. It’s clear long-term care is one of the biggest threats to a boomer’s savings.
A hybrid plan
So what can we do to help clients realize the need for long-term care coverage? The answer is a hybrid life insurance/long-term care plan. Say a client has $100,000 deposited into his hybrid account. If he needs long-term care, he can withdraw $300,000 from this pool to finance his medical bills. (The actual figures vary by age and gender.). However, if the $100,000 is not used, a sum of, say, $150,000 in this hypothetical example comes through to the client’s beneficiary or beneficiaries as a death benefit, paid tax free in the form of a life insurance feature.
This design allows clients to plan for the worst without compromising their future retirement plans by pouring endless amounts of money into long-term policies. If their dreams of healthy living come true, with no debilitating illnesses requiring extra care, they can recoup the investment in the form of life insurance, which will guarantee a fulfilling legacy for their children and/or grandchildren.
