Life Insurance Selling

UNIVERSAL LIFE

beneficiary as a final expense payment.

UL insurance policies and annuities with long-term care riders are available in the market, but these are newer, expensive products. It will be some years before a substantial percentage of policy owners are using this option to fund their needs. Using life settlements as a way to monetize life insurance policies for long-term care is another possibility, but many life settlement companies focus on high net-worth individuals with large face policies. The average size of an in-force life insurance policy is $173,000. For the vast majority of middle-class seniors, challenged to pay for long-term care and owning life insurance with a death benefit of less than $500,000, a life settlement is not a likely scenario.

Providers of long-term care services
such as nursing homes, assisted liv-
ing communities, home health agen-
cies and state governments, are real-
izing there is tremendous value for the
consumer in converting life insurance
policies to help pay for the costs of
long-term care. Life insurance is an
unqualified asset for Medicaid appli-
cants, and it has been standard practice
to abandon a life insurance policy if it
is within the legally required five-year
look-back spend-down period.

Opportunities for producers

As is the case with any product or service, when consumers understand all the options and benefits available to them, they’re more empowered to make a well-informed buying decision. In the case of life insurance, the vast majority of consumers do not understand their legal rights as owners of this asset. Many policy owners mistakenly believe the insurance company owns the policy and that they “rent” the death benefit through premium payments. In fact, life insurance is legally recognized as personal property, with the same ownership rights as any other asset, such as a home, stock or a vehicle. In the case of life insurance, this is a very strong aspect to highlight with clients.