# Critical Care Policy Pros & Cons



## JimW (May 22, 2019)

I recently found out that due to my moderate Rheumatoid Arthritis diagnosis and the drugs I take for it, I will not be eligible to purchase a long term care policy because of the R/A risk factors. It appears my only feasible option at this time will be a critical care policy. Most of these policies cover less than an ltc policy covers, but they do cover most major illnesses such as cancer, heart attack, stroke & alzheimers. Depending on how much you want to pay for a premium (usually less than an ltc policy), the insurance companies offer a one time lump sum payout after you've been diagnosed with any of the covered illnesses. The money can be used to pay for just about anything you want, it doesn't necessarily have to go towards medical services.

My questions are this:

Does anyone here have a critical care policy? 

What do you consider to be the pros and cons of this type of policy?

Any info is appreciated.


----------



## GreenSky (May 22, 2019)

Not only do I own a critical illness policy I recommend them as well to my clients.

This type of coverage should not be confused with LTC as they are completely different.  Generally, your coverage is for a lump sum benefit when diagnosed with cancer, heart attack or stroke.  Regardless of owning a LTC policy a plan to cover critical illness is very important (and not at all expensive).

If money is an issue (and how often is it not?), at least consider a cancer policy.  

Should anyone need help please let me know.  

Rick


----------



## JimW (May 22, 2019)

GreenSky said:


> Not only do I own a critical illness policy I recommend them as well to my clients.
> 
> This type of coverage should not be confused with LTC as they are completely different.  Generally, your coverage is for a lump sum benefit when diagnosed with cancer, heart attack or stroke.  Regardless of owning a LTC policy a plan to cover critical illness is very important (and not at all expensive).
> 
> ...



Hi Rick,

As I mentioned previously, due to an existing R/A diagnosis I don't qualify for an ltc policy. I am interested in a critical illness policy and am currently seeking quotes. Are you licensed to sell in Mass? I believe Mutual Of Omaha may be the only carrier currently writing critical illness policies in Mass.


----------



## GreenSky (May 22, 2019)

JimW said:


> Hi Rick,
> 
> As I mentioned previously, due to an existing R/A diagnosis I don't qualify for an ltc policy. I am interested in a critical illness policy and am currently seeking quotes. Are you licensed to sell in Mass? I believe Mutual Of Omaha may be the only carrier currently writing critical illness policies in Mass.



I'm not licensed in Mass however I probably can steer you to a few options (and I'm happy to help).  If you wish to call me my number is 818-THREE4TWO-9200.  Or send me a PM with your contact info and I'll call you.

But I'm pretty sure other companies write plans there.

Rick


----------



## JimW (May 23, 2019)

GreenSky said:


> I'm not licensed in Mass however I probably can steer you to a few options (and I'm happy to help).  If you wish to call me my number is 818-THREE4TWO-9200.  Or send me a PM with your contact info and I'll call you.
> 
> But I'm pretty sure other companies write plans there.
> 
> Rick



I appreciate the offer Rick and I might take you up on it. Right now I've got two local brokers working on quotes for me and my wife. If I run into a snag, I'll let you know.


----------



## New2Old (May 26, 2019)

Greensky, I'm new here, been reading about insurance. I can't figure out how to PM you....Help?!


----------



## GreenSky (May 27, 2019)

New2Old said:


> Greensky, I'm new here, been reading about insurance. I can't figure out how to PM you....Help?!



Let;s make this easy.  My email is insure(AT)greenskyins(DOT)com.

And thank you for wanting to reach out to me.  Always happy to help.

Rick


----------



## oldman (May 31, 2019)

I have a policy through my financial investment coordinator (not sure of his exact title) and I have a long term care policy that also includes a life insurance policy. I just bought this policy last year and the way it works is that I pay him $5000.00 per year for the policy. Keep in mind that by IRS rules, I must take out a percentage of my IRA, regardless if I need the money or not. It is referred to as RMD, or Required Minimum Distribution. 

So, just for an example of how this works, let’s say hypothetically, that I have to take $15,000.00 out each year anyway, even though the money may not be needed. I pay him the $5000.00 and the remaining $10,000.00 I will invest into my Grandchildren’s trust accounts. 

For the $5000.00 a year, I get $335,000.00 of long term care or the same amount in life insurance, or if I only use $200,000.00 for long term care the remaining money becomes available for life insurance and will go to my beneficiary. According to the IRS calculations, I am supposed to live another 14 years. That means, again hypothetically, that I will be paying $70,000.00 for a $335,000.00 return to someone, but also some protection for me if I need to use the LTC. 

*Rick*:
Do do you think this is a good plan? I feel confident having it, but still haven’t found anyone else who has heard of this plan. Is this something that is unique? I would like to have someone that knows the business tell me that I am on track with having this plan. Thanks for any help that you may be able to give me.


----------



## GreenSky (May 31, 2019)

oldman said:


> I have a policy through my financial investment coordinator (not sure of his exact title) and I have a long term care policy that also includes a life insurance policy. I just bought this policy last year and the way it works is that I pay him $5000.00 per year for the policy. Keep in mind that by IRS rules, I must take out a percentage of my IRA, regardless if I need the money or not. It is referred to as RMD, or Required Minimum Distribution.
> 
> So, just for an example of how this works, let’s say hypothetically, that I have to take $15,000.00 out each year anyway, even though the money may not be needed. I pay him the $5000.00 and the remaining $10,000.00 I will invest into my Grandchildren’s trust accounts.
> 
> ...



First, thank you for your service.  You did what I was unwilling to do and I'm always grateful to vets who were and are willing to protect our freedom.

I suspect what you have is a life insurance policy that includes a LTC benefit.  I've used this on a single premium basis which can turn (for example) $100,000 that was sitting in a CD into a life insurance policy with both death and living benefits.  The IRA you have cannot be used to pay for a LTC policy or life insurance so something else is going on here.

No one can comment on if you have a "perfect" plan but if it's working for you then I suspect it's a proper way to go.  However, life insurance is NOT allowed in an IRA so a RMD should not be involved in life insurance.  What can be done is to turn the IRA into an immediate annuity.  You give up the ownership of the money in exchange for a tax-leveraged monthly or annual income.  You can then take some of that income and purchase a life insurance policy to do just what you are talking about.  This MAY be what is happening but I can't be sure.

There is another option as far as leaving money to family/charity while protecting yourself against LTC costs.  You could purchase a single premium policy (let's use a deposit of $100,000 as an example).  The $10,000 will allow
   1)  An increase of the deposit depending on age of 50-60-90% as a death benefit.  Obviously a $100,000 deposit would increase by at least $50,000;
   2)  The increase can be tired to the upside of the stock market with absolutely no downside risk.  (Yeah, this is amazing to me!);
   3)  If you need the money for chronic or critical care you may take a withdrawal based upon the benefit, not the deposit.
   4)  Anytime you wish you can change your mind and receive back no less than 100% of your deposit.

For those with "leave behind money" this is a winner.  

Not sure if this helps you specifically but others might be interested.

Rick


----------



## oldman (May 31, 2019)

Rick: So without mentioning numbers, here is how this all went down. I had a trust handed to me by my parents worth $xxxxxx dollars. I also saved into my 401(k) through work. Upon my retirement, I received an early out package. To avoid paying taxes on the 401(k). I did a Trust to Trust transfer to Fidelity. 

A few years ago, my tax man also sells investment instruments for retirees. The plan that I took was an annuity based on the S&P Index (SPX). I transferred all but $xxx amount of dollars into this annuity, which is based on the Morgan Stanley something or other. He kept referring to it as MSDSI. If the S&P Index goes over 5% for the year, which for me ends May 31, 2019. IOW, it is based on one year from when you became a member. 

If the S&P goes down 5%, I lose nothing. It never goes down, only up or zero gain. 

Then, he sold me the insurance plan that allows me to pay him the $5000.00 per year, which when I take my RMD, I then give him a check for the $5000.00 and the remainder of the RMD goes into my Grandchildren’s Trusts. I will never use any of this money. Between my pension, SS and Trust, it’s already more than I made during my working years. 

Yes, it’s great to be in my position, but each April, the tax man cometh lightning the load, if you get my drift. We (wife and I) donate money to a few charities, but with the new tax laws, it’s of very little benefit. My wife is a retired Professor from a university here in the east and has done financially well also. We both have this type of account now.

My concern is that no one that I have spoken with has heard of this type of LTC policy with death benefits that I pay for in the manner that I do. I don’t believe it to be a scam, but just wanted to get feedback as to whether I am making good choices.

Oh, I also am holding $xxxx amount of dollars in savings bonds, which have passed maturity, but continue to collect interest because only some of them are older than the 30-year mark.


----------



## GreenSky (May 31, 2019)

You have an index annuity.  I too have them for our retirement.

When you take the RMD you are simply receiving cash.  You are taking $5,000 of that cash and paying for a LTC policy.  You can do whatever you wish with the money.

If your goal with the money is savings bonds (and other cash) is to leave it for the family then please consider the single premium life policy I mentioned.  It may be a better way of providing for the family.

Rick


----------



## oldman (Jun 1, 2019)

Do you mean in addition to the policy that my LTC insurance covers? How does the SPL policy work? What would be the benefit? 

The only reason I have savings bonds is because back in 1983, the airline that I worked for had a drive to offer the bonds on behalf of a local bank. I thought “What the heck” I’ll buy one $25.00 bond each pay. It cost me $12.50. This went on for years. Then, in 2000 something, those bonds were no longer available and I had to go to a $50.00 bond, which was still OK. We kept the bonds in our safe that we have lagged down to the cement floor in the basement. When I retired, I went online and went to the Savings Bonds site. There I saw that there was an inventory program that I could install in my computer and then type in all my bonds’ serial numbers and the graph would give me what they were worth, so between my wife and I, we spent 3 days on and off, typing in serial numbers. Bummer! I was really surprised at how much we had accumulated in bonds. With everyone taken care of in the will and all the trusts set up, we decided to have the attorney draft an addendum to our will stating that “IF” there were any savings bonds in the safe that they would be donated to the local branch of the SPCA.


----------



## GreenSky (Jun 1, 2019)

Let's use just the savings bonds as an example - and I thank you SO much for your support of animals.  My charity of choice is an animal sanctuary in Utah called Best Friends.

Like any life insurance policy a single premium policy has three components; 1) the premium  2) the cash value  3) death benefit.  With a single premium obviously it's designed to have just one premium, anything from $10,000 to $500,000 or more.  Typically the cash value is equal to the deposit and the growth can be tied to the upside of the stock market, just like the index annuity you (and I) own.  And lastly there is a death benefit.

Just to make things simple, a 70 year old woman can deposit $100,000 and with an immediate death benefit of $180,000.  (Men die sooner than women so the benefit is lower).  Should there be a chronic or critical illness the policyholder can tap part of the death benefit rather than having to cash in the policy.

If the goal of savings primarily is to leave to family or charity this can be a terrific way of increasing the benefit without losing control of one's savings.

I'm happy to provide you or anyone else with a proposal and more information.  Hope this helps.

Rick


----------



## oldman (Jun 2, 2019)

Thank you for the information. I am going to take a little to study on this. I definitely see the benefit, especially if donating the instrument to a non profit.


----------

