Life insurance consumers who have assets that they won’t need in their lifetime can leverage them and transfer them to future beneficiaries, such as children, grandchildren or other loved ones. When suggesting this financial method to consumers, life insurance agents should be sure to lay out all factors, such as income taxes, estate taxes, and other transfer costs.
However, if done effectively, wealth can be transferred to the next generation with few costs or other taxes. One of the ways to do so is through a life insurance policy with a long-term care rider, which is available at an additional cost and, like all guarantees of the policy, is subject to the claims paying ability of the insurance company.
New insurance products offered by agents and touted by financial advisors can help clients leverage their assets – such as a deferred annuity – put them in a position to address more than one potential liability. For example, some products can hedge for LTC costs while also increasing the amount to be transferred to heirs.
Life Insurance policies with a long-term care riders are a great tools for consumers who:
- Would like to transfer their wealth more efficiently to their heirs;
- Have expressed concerns about LTC costs but have been hesitant because of the inherent “use it or lose it” nature of the policies;
- Have an asset they have ear-marked to cover LTC needs and plan to self-insure; and
- Would consider leveraging a strategy that could give them added flexibility to manage both LTC costs and wealth transfer needs.