Long-Term Care Protection

In good times and in bad, you have always put your family first. But what happens when you’re gone? Although choosing life insurance can be a daunting task, selecting the right policy is critical to your family’s financial well-being.

Having insufficient coverage, or worse, having no coverage at all, may be detrimental to your loved ones during a time when they need support the most.

Raymond James understands the importance of your family. And because you are our first priority, we want to help ensure the financial well-being of those you love most. In fact, we were one of the first firms to understand and emphasize the role insurance plays in a comprehensive financial plan.

Do I Need Life Insurance?

Are others dependent upon you for financial support? If you’re children, spouse or other loved ones had to continue without you, would they have ample income to do so?

An essential part of financial planning, life insurance can help replace income that would be lost upon your death. It can also help ensure that dependents are not burdened with significant debt, affording them financial security in a difficult time.

How Much Life Insurance Do I Need?

Your financial advisor can assist you in determining how much insurance you may need. Some factors for consideration include:

Immediate expenses such as hospital bills, funeral costs and estate taxes,
Funds for the readjustment period, enabling loved ones to move or find a job, and
Short- and long-term financial needs such as monthly bills, college tuition or retirement.

What Type of Policy Is Best for Me and My Family?

It is usually best to begin by comparing different types of policies. Although nothing can replace the advice of a financial advisor when making the final decision, this table can be a helpful starting point.

	Term Life	Whole Life	Universal Life	Variable Life
Policy term	Stated in policy	Life	Life	Life
Type of death benefit	Face value	Face value (dividends)	Face value and/or face + cash value	Face value and/or face + cash value
Cash value	None	Fixed rate, guaranteed	Current rate, guaranteed minimum	Variable rate, not guaranteed
Investment choice	N/A	No	No	Yes
Regulatory agency	Insurance	Insurance	Insurance	Insurance and securities

Term Life Insurance

If you’re looking for protection during a specific time period at a reasonable price, consider term life insurance.

Protection is limited to a specified and finite period of time, usually between one and 20 years.
Death benefits are paid only if death occurs during the period covered by the policy.
Coverage ceases when premiums are not paid.
Policy costs less than other types of insurance, but provides equal protection.
It provides the largest immediate coverage per dollar since is last only for a specific period of time.

You may have two additional options available when purchasing term life insurance: renewable and convertible policies.

Renewable Term Life Insurance

Under this type of policy, the holder does not need to provide evidence of insurability to renew the policy. Premiums may increase, however, at time of renewal.

Convertible Term Life Insurance

Convertible term life policies can be exchanged for whole life, universal or variable policies. Policyholders do not need to provide evidence of insurability, but premiums will increase since you are moving from a term to a permanent policy.

Whole Life Insurance

As its name suggests, a whole life policy remains in effect your entire life. It differs from term insurance in that a portion of the premiums goes into a cash value account.

Protection is provided for as long as you live.
Death benefit is guaranteed.
Cash value grows income tax deferred.
Cash value may be borrowed from the policy.
Premiums are designed to be level and do not increase as you get older.
Insurance proceeds paid to the beneficiary are received income tax free.

Universal Life Insurance

This policy offers a wide range of choices regarding premium payments, allowing you to choose how much will be paid and when.

Premiums are flexible and are subject to specified minimums and maximums.
Death benefits, which are generally free from federal income tax, can be increased or decreased as necessary.
Cash value of the policy accumulates, tax-deferred, at current interest rates.
You receive cash value when redeemed, which reflects the interest earned on the account. This is only upon termination of the insurance policy.
Portions of the cash value, up to cost basis, may be withdrawn for special needs, such as college tuition, without paying interest or surrendering the policy.

Variable Life Insurance

Designed for growth, this policy allows you to invest the cash value of the policy into various investment alternatives. This affords cash value the potential to grow at a faster rate than it would in another type of plan.

The insurance amount is designed to be level or increases as the policy cash value increases.
Policy cash value fluctuates according to underlying investment performance.
Cash value and death benefit may be invested in sub-accounts containing domestic or international stocks, bonds, real estate and other, more speculative investments.
Higher cash values and death benefits may be obtained or lost due to the financial climate and investment performance.
Investment earnings are income tax-deferred.

For more information on selecting the right policy for you, please contact your financial advisor.

Investors should carefully consider the investment objectives, risks, charges and expenses of variable life insurance before investing. The prospectus contains this and other information about variable life insurance. The prospectus is available from your financial advisor and should be read carefully before investing.

There are fees and charges associated with variable life insurance policies. Charges vary based on the circumstances of the insured life. Surrender charges vary by issue age, risk class and gender. Loans and partial withdrawals will decrease the death benefit and cash value and may be subject to policy limitations and income tax. A 10% federal tax penalty may also apply if the loan or withdrawal is taken prior to age 59½. All guarantees, including death benefits, are subject to the claims-paying ability of the issuing insurance company. An investment in variable life insurance involves risk, including possible loss of principal. Investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than the original investment.

Long-Term Care Protection >>

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An important part of investment planning

The most pressing financial concerns of many people tend to revolve around providing for their families, assuring adequate retirement income and preserving their estates for the future. However, few people consider what would happen to their families, themselves and the assets they have worked so hard to accumulate over the years if they were to require long-term care due to a prolonged illness or disability.

Consider the following facts. According to the San Diego Daily Transcript, approximately 70% of all people over 65 will require some form of long-term care during their lifetime. The average annual cost of nursing home care for one person is more than $66,000. Medicare pays for less than 2% of all long-term care cases – including nursing home care, assisted living and custodial care – for a maximum of only 100 days. Medicaid pays for long-term care only after an individual has spent almost his or her entire estate, qualifies as impoverished and is admitted into a nursing home that accepts Medicaid.

Fortunately, there is a solution to assist in paying for these expenses and leaving more of an individual’s estate intact – long-term care insurance. Without long-term care protection, expenses associated with assisting in the activities of daily living can drain – and sometimes even deplete – a person’s entire estate, potentially putting family members into debt.

Everyone can benefit

Many people often think of long-term care as something for “old people,” telling themselves, “We don’t need that now. We’ll consider that later when we’re older and get closer to needing it.”

Unfortunately, this is far from the truth. While certainly appropriate for care of the elderly who require it, long-term care is not something reserved exclusively for older individuals. One third of all 700,000 stroke victims are under 65, and one eighth of all Alzheimer’s patients are diagnosed before the age of 65. In fact, 30% of all those who are receiving home health care, and almost 10% of those receiving nursing home care are pre-retirement age adults, ranging in age from 18 to 64. Their needs were created by accidents, strokes, brain injuries or tumors, mental conditions, AIDS, multiple sclerosis, muscular dystrophy, or even early onset of Alzheimer’s and Parkinson’s diseases.

When younger people need care, it is often truly financially devastating. For example, the average length of stay in a nursing home for a male younger than 59 is 3,840 days – that’s more than 10 years and far longer than the benefits provided by conventional group or individual health insurance, including HMOs.

Moreover, a recent Prudential Research Report showed that 58% of Americans believed that they would never need long-term care – no nursing homes, no assisted living facilities, no adult day care or home care. Yet the facts tell us that almost half of us will spend some time in a nursing home when we are older, while 72% of us will use home healthcare services. Even worse is that 46% of those with health insurance believe that their insurance would cover the majority of the long-term care costs. In other words, long-term care protection is important for everyone. When considering the purchase of this benefit, individuals should keep in mind that the best long-term care policy is one that provides comprehensive benefits – covering all types of care, including at-home or adult day care, or care in an assisted living facility or nursing home. Benefits should be available for the care that is most appropriate for the individual’s long-term needs.

Selecting a policy

A long-term care policy should be adequate to cover the potential need, considering the daily amount and how long benefits may need to be paid.

As with any type of insurance, the purpose of long-term care protection is to safeguard individuals and their assets against catastrophe. Therefore, while the average length of a stay in a nursing home is only almost two-and-a-half years, when we consider only those nursing home stays that are for chronic conditions – those lasting more than one year – then the average length of the stay is more than six years. That makes a policy with unlimited, lifetime benefits the most desirable.

The policy should also provide protection against inflation. Individuals should think about those benefits that might need to be available in 10, 20 or even 30 years. Perhaps just as important, it is critical to contemplate what the costs could be at that time compared to the costs today.

Give yourself one less thing to worry about by taking steps now to protect your hard-earned assets and your independence in the future.

For more information about making long-term care insurance part of your comprehensive investment plan, consult your financial advisor.