Many people are not aware there’s a life insurance policy you can use while you are still living, meaning you don’t have to die to use it.

 

This special policy has five key components which helps to classify it as life insurance you don’t have to die to use.

 

This  plan has a traditional death benefit a terminal illness benefit a critical illness benefit a chronic illness benefit along with a guaranteed income benefit.

 

Make sure you check out the other five segments as I detail each one of these benefits individually.

 

If you are not familiar with the phrase life insurance, you don’t have to die to use….. You might be more familiar with the terminology of a life insurance policy with living benefits.

 

As of 2023 most life insurance companies offer a product with living benefits. You can purchase a Term Policy with living benefits, a Whole Life policy with living benefits, an IUL – Indexed Universal Life Insurance policy with living benefits, and you can purchase a GUL – Guaranteed Universal l=Life Insurance policy with living benefits.

 

The examples I’ll use in this article will highlight the best life insurance policy with living benefits on the market or life insurance you don’t have to die to use.

 

I have a list of the top 25 companies offering life insurance with living benefits typically I usually only recommend the top five and for various reasons.

 

Number one, the company must be a-rated.

 

Number two, many companies that offer living benefits don’t offer the entire slate of living benefits a few may offer chronic illness along terminal illness, while not including critical illness and the guaranteed income.

 

With regards to the chronic illness benefit or long-term care benefit, many companies will only allow you to receive a 25% payout While others will allow you up to a 95% payout.

 

With the variations in policy design, it should be clear to see not all life insurance policies with living benefits are created equal.

 

When deciding on a type of life insurance policy to use for living benefits purposes my first recommendation is for a GUL Guaranteed Universal Life Insurance plan.

 

The GUL plan for life insurance you don’t have to die to use or living benefits, that I recommend, is the most complete plan on the market.  A GUL is a permanent life insurance policy with an adjustable term length from age 95 till age 100 or simply set it to age 121 just like a whole life insurance policy with guaranteed premiums.

 

The premiums for this guaranteed product is typically cheaper than a whole life insurance policy as a result of being able to adjust how long you need the coverage to last, if longevity is in your family genes we can set the term to age 110 or 121 if longevity is not in your genes we can set the guaranteed premium to age 95 this flexibility allows for much less expensive premiums than a whole life insurance policy with the same guarantee as a whole life insurance policy.

 

The death benefit is guaranteed level, the premiums are guaranteed level and there’s no extra charge for key benefits.

 

 

 

The terminal illness benefit is one of the first living benefits offered by life insurance companies.

 

The terminal illness benefit allows you to accelerate up to 95% of your death benefit when a licensed Medical Professional has deemed your life expectancy to be 12 months or less with many companies adapting the 24-month life expectancy guide.

 

Many individuals with a 24 month or less life expectancy are saddled with mounting medical debt.

 

If you have a million-dollar life insurance policy which allows you to accelerate a large portion of these funds certainly it can help to ease the stress and the financial burden your family is experiencing as a result of your life-ending illness.

 

 

Many people with access to terminal illness benefits have the necessary funds to explore alternative medication that could ease the pain of their terminal illness as well as extending their life.

 

As a result of receiving a lump sum income tax free benefit, instead of focusing on the financial burdens the terminal illness is causing your able to use these funds to create memories with grandchildren,  great grandchildren your spouse.

 

Many family members would love the opportunity to spend more time with the terminally ill family member… but due to financial constraints are unable to.  When you have a terminal illness living benefit it allows you to access your life insurance death benefit providing financial relief not only for yourself but other family members so that you can focus on spending quality time and making memories with those you love the most.

 

Many terminal clients enjoy having the ability to give financial gifts to their family members while living.  It’s in these moments the joy of providing for family members is the most important to them. The joy in giving their grandchildren a down payment for their first home, being able to see the home that they pick out or as a wedding gift or watching how the financial gift allows their family member to select and attend a college they had always dreamed of attending or having the ability to fulfill the goal of becoming debt free with your spouse.

 

When you have terminal illness income tax free benefits you can focus on creating lifelong lasting memories which are priceless.

 

 

Not sure if you have this benefit with your current life insurance policy or unsure of the payout, if it’s 12 months or 24 months give our office a call.

 

Critical Illness living benefits are an option not included with every living benefit life insurance policy however it’s one of the most important living benefits to have in a life insurance policy. 

 

When you are 45 and older the number one reason for having your home foreclosed on isn’t because of job loss it’s a result of having a major critical illness Health event such as a major heart attack, stroke or cancer.  

 

With the best health insurance plan on the market, having a critical illness could still leave you owing thousands of dollars. 

 

Owing thousands of dollars in medical related expenses along with lost earnings while recovering from your critical illness can lead to medical foreclosure and medical bankruptcy. 

 

The alternative is pulling money from your retirement accounts which could result in you having to delay your retirement several years or leave you with a retirement income deficit. 

 

 

 

Various studies seem to suggest individuals with money in the bank experience better recovery than individuals with no money in the bank in fact I was reading an article about a research study detailing how wealthy individuals outlive low-income individuals. 

 

Obviously if you have wealth, you can afford alternative medications, you can afford better recovery, you can afford not to rush back to work due to lack of income, you can afford not to miss or skip out on treatments due to lack of funds in the bank. 

 

With life insurance you don’t have to die to use, you don’t have to be wealthy, you just have to have a plan. 

 

The ideal amount of coverage is $1 million however you need to obtain this coverage while good health and age on your side. 

 

With a one million life insurance policy with living benefits, if you suffered a major heart attack stroke cancer ALS along with 14 more critical illnesses the plan would pay you up to $800,000 income tax free leaving your beneficiaries with a $200,000 death benefit. 

 

 

The primary purpose would be to help with medical bills, help while going through recovery and to replace any lost income, however this money is yours, to use as you see fit. 

 

 

If an unnecessary amount of stress on the job was one of the factors that led to having a major heart attack you could use part of this $800,000 to switch careers or start your own business. 

 

Use it to pay off debt, pay off a mortgage or go on vacation after you’ve recovered. It’s up to you how the money is used.  

 

This is life insurance you don’t have to die to use… a plan that allows “YOU” to be the beneficiary of your own policy. 

 

A one million GUL – Guaranteed Universal Life Insurance policy with living benefits, A life insurance plan you don’t have to die to use, will provide you with up to $800,000 income tax free.  

 

My preferred plan provides lump sum cash payouts when you suffer a: Heart Attack, Stroke, End-Stage Renal Failure, Invasive Cancer, Major Organ Transplant, ALS, Paralysis, Arterial Aneurysms, Blindness, Central Nervous System Tumors, Major Multi-System Trauma, Aids, Severe Disease Of Any Organ, Severe Central Nervous System Disease, Major Burns, Loss Of Limbs.  

 

Most living benefit life insurance plans only cover a fraction of these illnesses, put another way not all living benefit life insurance plans are created equal. 

 

Let’s look at an example of how this plan could be used. 

 

In this first example: We have a client aged 40-Male-Good Health-NS  

 

Purchases a $1,500,000 living benefits GUL plan.  

 

At age 60 suffers a major heart attack but survives. 

 

Our client receives $1,164,368 Lump Sum Cash from the insurance policy.  

 

Client decides to retire 5 years early after having the heart attack. 

 

The client keeps $500,000 cash to pay for out-of-pocket medical expenses and to replace his income for 5 years until age 65 when he’ll tap into his 401k account for retirement and potentially tap into his Social Security. 

 

The remaining lump sum cash benefit of $664,368 is put into an Income Annuity for 10 years. 

 

At age 70 he turns on the guaranteed income stream of $116,184.51  

 

If he lives 10 years beyond age 70, the total payout would be over a million dollars. 

 

If the client in this example at age 70 ends up needing long-term care services the total value of the payout could double from $116,184.51 each year up to $232,000 also as a result of accessing this money due to long-term care needs, the withdrawals would become income tax free. 

 

You might be asking how this is possible? 

An annuity with a long-term care Rider will double the face amount if funds are accessed for long-term care purposes so in our example after 10 years if the value of the annuity is 1.4 million and a client needs long-term care services the client will be able to turn on the long term care rider option of the annuity which at the minimum doubles the face amount of the annuity. The 1.4 million annuity would turn into 2.8 million. 

 

If client dies before the spouse dies the remaining income balance would transfer to the spouse and after the spouse dies what’s left over would then transfer to children or grandchildren. 

 

 

 

The strategy used in this example starts with the guaranteed universal life insurance policy with living benefits which then blossoms into a lifetime income via a fixed indexed annuity which then blossoms into an annuity with a long-term care rider. 

 

It’s important you deal with an advisor who understands how various products can blend together creating a total plan, a plan that I call the FBI protection plan.  

 

It’s not always just about the product, most of the time it’s about the plan and strategy. 

Critical illnesses pose a significant threat to your income while working, chronic illnesses pose a significant threat to your income while retired.

 

 

Assuming your mortgage is paid off by the time you reach retirement, the two largest expenses a retiree will experience is paying for healthcare and health related expenses along with taxes. There was a recent study conducted which showed on average retirees spent 31% of their income on taxes to include, income taxes paid on Social Security with up to 85% of Social Security benefits receiving a tax along with taxes on your retirement accounts and investment accounts along with taxes paid on a mortgage.

 

The numbers are scary especially when you consider in most circumstances a retiree will receive a 30% to 40% reduction of income during retirement along with losing many of the tax write-offs you had while you were working and deductions paid on a mortgage loan.

 

 

Outside of experiencing a critical illness prior to age 65 the most expensive time of your life from a healthcare standpoint will be 65 and older with long-term care causing significant damage to a family’s retirement income.

 

 

In 2022 the average State Pension Plan is $30,000 and the average federal pension plan  $34,000.

 

 

$47,620 is the median total income for a retiree 65 and older, these figures include Social Security along with retirement accounts.

 

The median income for a married couple 65 years and over is $75,819.

 

 

The average cost of long-term care services on the low end was $54,000 in 2022.

 

Low end long-term care services equal 37% more than the average federal pension plan. 12% more than the median total retirement income for a single person, and finally low-end long-term care services represent 72% of a married couple’s total medium retirement income… Yikes!

 

Out of 54 million current retirees only 7 million retirees have some kind of long-term care service, just 14% of all retirees are covered with long-term care insurance.

 

In the US we have a long-term care dilemma, a long-term care ticking time bomb.

 

The typical scenario that usually plays out is this:

 

We have a married couple the male is 7 years older than the female also women usually outlive men by 8 years this leaves an average 15-year life expectancy Gap.

 

When the husband’s health starts to decline, needing long-term care services this creates a tremendous burden for both partners, often they must reach into their retirement accounts to pull out a lump sum amount to help offset the financial burden.

 

This scenario creates a tremendous income shortfall for the female after the husband passes away especially if they didn’t have adequate amount of Life Insurance.

 

 

Long-term care insurance is the typical solution for covering long-term care expenses, however the rising cost of long-term care insurance during retirement becomes unaffordable for most.

 

Very few long-term care plans offer a guaranteed premium for the life of the policy. The majority of these long-term care plans will increase 28% – 50% and sometimes more every 5 years.

 

A client might start off with a long-term care plan that offers cost of living increases to adjust for inflation, typically it will be a loaded-up plan with all the bells and whistles but at the 5-year mark when you receive the first price increase of 28% or more the bells and whistles are the first benefits deleted from the plan.

 

When you receive a price increase and you’re already on a fixed income, already experiencing increases in what you pay for taxes and to add insult to injury you have a price increase with your long-term care plan! Not a good situation to be in!

 

If you want to keep this coverage, you’re only option is to reduce benefits, and this is the Dilemma many people who purchase a traditional long-term care plan are faced with and ultimately, they end up reducing their benefits with many dropping the coverage altogether.

 

With a traditional long-term care plan the policy acts more like a reimbursement of expenses. The plan doesn’t provide you with a lump sum cash payout in the event you need long-term care services, it’s only paid as a reimbursement! Compare receiving funds as a reimbursement monthly let’s say $4,500 per month compare versus receiving a lump sum of $890,000 income tax free for you to use however you want.

 

With my favorite GUL living benefit life insurance policy or life insurance you don’t have to die to use, if you need to access the chronic illness benefits you could reach into your policy and pull out $100,000 each year income tax-free for 8 years or you can pull out the entire $890,000 as a lump sum.

 

 

With the flexibility of receiving your long-term care benefits as a lump sum you’ll have the ability to maximize your total payout as I highlighted in the last segment when talking about the critical illness benefits.

 

The ideal scenario is to purchase a 1 million GUL living benefit permanent life insurance policy.

 

Let’s assume you don’t go with a $1 million policy as a result of maybe age and health conditions instead you purchase a $500,000 policy that would pay out $450,000 for long-term care / chronic illness benefits actually let’s take it one step further and let’s assume that you could only purchase a $275,000 GUL living benefit life insurance policy which would give you roughly $200,000 for chronic illness / long-term care services.

 

As a result of the lump sum benefit if you needed to access this plan for chronic illness purposes you would receive $200,000 income tax free, the Next Step would be to maximize this $200,000 by purchasing an annuity with a long-term care Rider that would double your benefit from $200,000 to $400,000 of income tax free money used for long-term care services.

 

A traditional long-term care plan doesn’t afford you this kind of flexibility and that’s one of the reasons why I’ve never sold a traditional long-term care policy the 27 years I’ve been licensed to do so.

 

Another major friction point with a traditional long-term care policy is this: if you pay for your long-term care policy from age 60 let’s just say to age 90 and you pass away your beneficiaries receive nothing.

 

Assuming you purchased the long-term care policy at age 60 you’ll pay close to $100,000 in premiums (assuming you purchase the least expensive plan) by the time you reach age 90 and if you pass away without ever needing these long-term care benefits your beneficiaries receive nothing not even a return of Premium.

 

A GUL with living benefits assuming a $1 million death benefit would provide your beneficiaries $1 million of income tax free money if you never had to use any of the living benefits.

 

One added feature of my favorite living benefits life insurance policy is this: if for whatever reason you decided you no longer wanted the policy after 20 years you can receive 100% of your money back. This plan offers three different cash outs. A 50% cash out at year 15, a 100% cash out after 20 years and again a 100% cash out at year 25, these cash out options are guaranteed.

 

If your 20-year cash out option is at age 80, I’m not too sure that’s the best move to make however you do have the flexibility of taking the 100% cash out.

 

I suppose if you didn’t have any beneficiaries and more income was a higher priority, rest assured you’d be able to receive a 100% payout.

 

Let’s review the qualifications for receiving chronic illness / long-term care benefits from a guaranteed universal life insurance policy with living benefits.

 

If unable to perform 2 of 6 activities of daily living for a period of at least 90 days or requires constant supervision to protect from threats to health or safety due to severe cognitive impairment: The ADLs include bathing, continence, dressing, eating, toileting, and transferring.

 

Unlike a traditional long-term care policy if you need to access benefits you could do so as a lump sum instead of a reimbursement which allows you more flexibility in maximizing your overall benefits, if you died without ever using the benefits your beneficiaries would receive an inheritance, if you decided after 20 years or after 25 years you didn’t want to continue with the policy you could cash the policy out and receive 100% of every dime you paid into the policy.

 

The premiums for a GUL policy versus an LTC policy generally are cheaper plus the premiums don’t increase every year, the premiums are guaranteed level for the life of the policy.

 

If you purchase a GUL policy at the age of 30 and keep the policy until age 90 you would pay less money for this GUL policy, than if you purchased a long-term care policy at the age of 60 and kept it to 90.

 

A GUL policy for equal benefits purchased at age 30 keeping it for 60 years will end up costing you 35% less than purchasing a long-term care policy at the age of 60 and keeping it for 30 years. If you wait until age 60 before purchasing a long-term care policy and you have health conditions, the cost difference could be more than double!

 

 

For example, a female age 30 in good health purchase a $250,000 GUL with living benefits. If unable to perform 2 out of 6 daily living activities the plan would pay up to $189,000 lump sum, with $61,000 left as a death benefit. The monthly premium is $72.33 guaranteed to age 100!

Total premiums for 60 years until age 90 is: $52,077.60.

 

Female age 60 purchases a Long-Term Care Plan with a daily max benefit of $150 for 3 years of coverage with a total payout of $164,250 is $222.91 per month. This premium assumes our 60-year-old female is in good health. (It’s important to note – Less than 17% of all 60-year-old females will qualify for this rate). I’m only using this premium, and coverage amount because a few famous guru financial entertainers advertise this suggested premium on their website.

 

$222.91 for 30 years is a total of $80,250 assuming the premiums don’t go up, however the real-life scenario with long term care premiums is an average rate increase of 28% every 5 years. With long-term care rate increases during this 30-year time frame the premiums could exceed $100,000!

 

If you don’t care about potentially paying an extra $30,000 or $60,000, I guess waiting until age 60 might work out for you, assuming you can still qualify by the time you reach age 60!

 

A GUL with living benefits is a multipurpose plan protecting you and the ones you love the most against dying prematurely, getting sick along the way unable to pay your bills, or waking up one morning unable to bathe or dress yourself.

 

This is “Life Insurance You Don’t Have To Die To Use”

A life insurance you don’t have to die to use plan is a multi-purpose product protecting you against foreclosure bankruptcy and loss of income, it’s an important part of my FBI protection plan. 

 

Foreclosure Bankruptcy Income protection plan 

 

The technical name for “Life Insurance You Don’t Have To Die To Use” is a Guaranteed Universal Life Insurance, GUL for short. 

 

With this plan the premiums are guaranteed for your entire life with the flexibility of changing the guarantee from age 95 up to age 121.  

 

The premiums are guaranteed for life and the coverage is guaranteed for life. 

 

Obviously if you reach into the policy for the purposes of critical illness or long-term care services your coverage or death benefit is reduced by the amount of money you pull from the policy, if you choose to exercise one of three Cash Out options the policy will end upon receiving your cash out. 

 

In this segment I would like to share with you a strategy on how to use your guaranteed universal life insurance policy or life insurance you don’t have to die to use in order to create a guaranteed income you can never outlive. 

 

If you’ve followed along with the other segments, you should already be aware of how this process works when accessing the money for critical illness and chronic illness purposes. 

 

I usually recommend a one million policy and I recommend you obtain this coverage as soon as possible, the younger the better. 

 

With a one-million-dollar policy you have options. You could access $300,000 of the benefits to cover any critical illness or long-term care services while using an additional $200,000 to become debt free, the remaining $500,000 can be rolled into a fixed index annuity for the purpose of creating you an income you can never outlive, guaranteed for life.  

 

The reason why I use a fixed indexed annuity for this scenario is simple, you don’t need a million dollars in order to create the same income a million-dollar stock portfolio account would provide. 

 

A $500,000 FIA can provide you with the same income stream as one million in a 401k or brokerage account. 

 

 

For more details on how an FIA can accomplish this make sure you read the section on fixed indexed annuities lifetime guaranteed income option. 

 

My number one recommended guaranteed universal life insurance product as mentioned before comes with three different cash out periods. 

 

If you decide you no longer need the policy after 15 years you can request a 50% payout, keep the policy five more years for a total of 20 years and you’re eligible for a 100% cash out. If you pass on the first 15-year option and pass on the 20-year option, you have a final Cash Out option which is at year 25 for 100% return of all money paid into the policy. 

 

Choose this option carefully because according to the data most people are going to experience a critical illness or chronic illness in their lifetime. 

 

If you have a million-dollar policy and you decide to cash out after 25 years and you’ve only paid $100,000 into the into the plan and heaven forbid you suffer a major heart attack 3 years later I’m sure you’ll agree, having access to $890,000 cash would certainly Trump the $100,000 cash out option you chose. 

 

For clients who decide to cash out their policy after 20 or 25 years the following is an example of how this could work. 

 

Throughout the segments I’ve been using the example of a female age 30 in good health with a one million policy and a monthly premium of $241.75. 

 

If the 25-year Cash Out option is chosen, almost 76,000 would be rolled into an FIA. 

 

Starting at age 65 the client can retire as normal withdrawing income from their pension or retirement accounts.  

 

I like the idea of delaying Social Security benefits until age 70 however in this scenario you would start taking your Social Security benefits at age 68. 

 

At age 70 we would then turn on the lifetime guaranteed income generated from your guaranteed universal life insurance policy. 

 

In this scenario and based upon current interest rates the income generated is $20,123.87 guaranteed for life. If the client lives until age 95 in this scenario that would equal a total payout of $704,335.45. 

 

Assuming this client receives a median retirement income of $47,000 annually, which is a combination of Social Security and regular retirement income, our client in this scenario would receive over 2 million dollars in retirement. 

 

 

Most retirees experience a 25% to 35% reduction of income during retirement, using this strategy you would be able to replace your reduction of income paying yourself equal to or more than what you were receiving during your last few working years. 

 

 

A GULs guaranteed 100% Cash Out option allows you to create a guaranteed lifetime income to supplement any existing retirement or Social Security income while also providing you the Peace of Mind knowing if you became critically ill or chronically ill you could be financially taken care of and if you die unexpectedly your family would be taken care of. 

 

With life insurance you don’t have to die to use there’s something for everyone. 

 

Currently there’s only one company offering guaranteed premiums for life with a guaranteed 100% Cash Out option.  

 

Contact my office today for more details.