Life Insurance Plus Long-Term Care

I took part in a life insurance presentation with Industrial Alliance last week. While I spend most of my time working on the wealth side, I will share with you what I learned that day. IA has a product called Life and Serenity 65, it is a permanent life insurance product with a long-term care feature. Premiums are payable for life, LTC benefits are available after age 65. If a client suffers from either Alzheimer’s, Parkinson’s, Paralysis, or the inability to perform two of the activities of daily living, the contract will pay out 1% of the death benefit monthly for a maximum of 100 months. When the LTC claim occurs, premiums stop and the death benefit is reduced by 1% per month while the client is on claim. If the client remains on claim for more than 100 months, the monthly benefit will end but the contract will remain in force with 25% of the original death benefit in place. For example, if a client has a Life and Serenity 65 with a $500,000 death benefit and requires the long-term care payment, they will receive $5,000 per month. If they remain on claim for 100 months, their remaining death benefit will be $125,000. In other words, their death benefit will always be the greater of $500,000 less the sum of LTC payments or $125,000. If a client is under the age of 65 and suffers from one of the protected diseases, premiums stop but the LTC benefit will not start until age 65. How does this connect with wealth management? Benefits similar to the ones provided by Life and Serenity 65 conserve a client’s retirement nest-egg. Clients will not have to liquidate RRSP savings to pay for health care. And, if this product is combined with a life annuity, premiums can be paid by the annuity. If the client goes on claim, premiums stop so the client will be receiving the benefit from the policy plus the annuity income (because the premiums have been waived). Long-term care is not inexpensive; $4,000 to $5,000 per month is not inconceivable. Why not protect your clients and their wealth with a long-term care solution? I look forward to your comments. Take care, Scott Edgington Director of Wealth Qualified Financial Services 416.786.4140