Warning: include(../includes/header.php) [function.include]: failed to open stream: No such file or directory in /home/content/02/8346702/html/social/press_022014.php on line 11

Warning: include() [function.include]: Failed opening '../includes/header.php' for inclusion (include_path='.:/usr/local/php5_3/lib/php') in /home/content/02/8346702/html/social/press_022014.php on line 11

Betty's Corner

Warning: include(../includes/sub_nav.php) [function.include]: failed to open stream: No such file or directory in /home/content/02/8346702/html/social/press_022014.php on line 16

Warning: include() [function.include]: Failed opening '../includes/sub_nav.php' for inclusion (include_path='.:/usr/local/php5_3/lib/php') in /home/content/02/8346702/html/social/press_022014.php on line 16
< Back to All Articles
Warning: include(../includes/share_bar.php) [function.include]: failed to open stream: No such file or directory in /home/content/02/8346702/html/social/press_022014.php on line 23

Warning: include() [function.include]: Failed opening '../includes/share_bar.php' for inclusion (include_path='.:/usr/local/php5_3/lib/php') in /home/content/02/8346702/html/social/press_022014.php on line 23

Funding Retirement with Insurance Coverage


NEW YORK (MainStreet) — About 46% of Americans have less than $10,000 saved for retirement, according to the Employment Benefit Research Institute. That means most workers will be scrambling when they hit their expected retirement age, which is now 67 years old rather than 63. One way to catch up financially is by purchasing an insurance policy with an attached long term care rider that pays cash or a long term care insurance policy with a cash benefit rider.

For example, Prudential's BenefitsAccess Rider attached to a life insurance policy advances up to 100% of the death benefit should the policy holder become chronically or terminally ill by drawing down 2% per month until the death benefit is met.

"A distinction between BenefitAccess and a long term care rider is that it pays based on a condition not for specific care of a condition," said Mark Hug, executive vice president with Prudential Individual Life Insurance.

While traditional long-term care policies require receipts and invoices to reimburse for licensed home health care, Prudential's BenefitsAccess Rider disburses funds no questions asked once a claim for long-term care is approved.

"The downside to such accelerated death benefits is that they reduce the overall death benefit which will be paid to the insured's beneficiaries when the insured passes away," said Scott Page, president and CEO of the Lifeline Program. "The cash value of the insurance policy is also reduced."

Largely seven in ten 65-year-olds will need care and $71 out of $100 of the cost of that care will be paid out by family members, according to Dr. Robert Pokorski, vice president and medical director of Prudential Individual Life Insurance. Thus, cash benefit long term care policies that pay cash can be used to compensate these informal family member caregivers as well as other expenses once eligible.

"We've been committed to cash since 2004," said Tricia Burnett, director of marketing and communications with MedAmerica. "We believe in cash because it provides people with a good deal of flexibility especially when they are relying on family caregivers."

Although MedAmerica phased out its Simplicity 2 policy, which paid cash whether a policy holder was under home health care, nursing home or assisted living, it continues to offer its Flex Care policy with a cash benefit rider but only covers home health care and assisted living.

"We also find MedAmerica's cash benefit rider helpful when our clients may possibly retire outside the United States," said Brian Gordon, president of MAGA Long Term Care Planning in Illinois. "Because most of the non-cash plans will limit the amount of time you can use the policy outside the U.S."

As for using the cash option for retirement expenses, the benefit would have to be triggered before money is disbursed.

"These types of policies can provide an effective way to cover medical expenses after you retire, but they don't kick-in until you get sick," Page told MainStreet. "They don't offer any assistance in paying for food, housing or household bills for healthy seniors. These policies offer little value before a senior needs home health or nursing home care."

Triggers include cognitive impairment and being unable to perform two of the six activities of daily living, which include bathing, eating, dressing, toileting, walking and continence.

"The issue is being able to trigger the benefit and also be able to bring in a caregiver at a lower cost than what the policy pays so they could have some additional cash to work with in the future," Gordon told MainStreet.

Yet and still cash is king. Whatever way a retiree who hasn't saved can get it.

Another option to cover expenses in retirement is to sell an unneeded or unwanted life insurance policy for immediate cash. "A life settlement enables you to monetize a life insurance policy which may otherwise lapse," Page told MainStreet. "Many seniors sell their policies as a way to fund retirement."

—Written by Juliette Fairley for MainStreet

Warning: include(../includes/footer.php) [function.include]: failed to open stream: No such file or directory in /home/content/02/8346702/html/social/press_022014.php on line 73

Warning: include() [function.include]: Failed opening '../includes/footer.php' for inclusion (include_path='.:/usr/local/php5_3/lib/php') in /home/content/02/8346702/html/social/press_022014.php on line 73