Life Insurance

Choosing the right life insurance product can be daunting. With so many options, how will you know what you need? We can help guide you to the most appropriate policy for your situation and stage of life. Meanwhile, here a few of the basics:

Term life insurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires, coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments and/or conditions. If the insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis.

Whole life, universal life, and variable universal life are forms of permanent life insurance, which guarantees coverage at fixed premiums for the lifetime of the covered individual. Term insurance is not generally used for estate planning needs or charitable giving strategies but for pure income replacement needs for an individual. Many permanent life insurance products also build a predetermined cash value over the life of the contract, available for later withdrawal by the client under specific conditions. However, on most cash value policies like Whole Life insurance, the only way to receive the cash value is to cash out the policy. The beneficiaries receive the face value of the insurance but NEVER the cash value with Whole Life policies. Financial advisers generally advise buying term life insurance and investing the difference elsewhere to those who still qualify to contribute to other tax-deferred investment growth such as IRA’s or 401k’s.

Medicaid Compliant Annuities

A Medicaid complaint annuity is single premium immediate annuity (SPIA) purchased on or after February 8, 2006, that meets the guidelines described in the Deficit Reduction Act of 2005 (DRA). The income from this type of annuity is not considered a countable resource, purchasing a Medicaid compliant annuity may help an individual or a couple, who would otherwise have too many resources, to qualify for Medicaid. If properly structured, it will allow you to take a sum of money that would otherwise have to be spent on nursing home care, keep it, and turn it into a stream of income that will pay you back over a period of years.

Medicaid only allows you to keep a certain amount of assets. The solution under federal law is the purchase of a Medicaid compliant annuity by the applicant or the applicant’s spouse is not deemed a transfer that creates a disqualification period under Medicaid, nor is the income from such an annuity considered a countable resource.

The sum of money put into the annuity does not count toward the Medicaid allowance. You can keep the annuity amount, over and above, the Medicaid allowance. The annuity is immediate, in that it begins paying you back immediately, a fixed, regular, monthly amount. There is usually no fee to you for the purchase or this kind of annuity. If the annuity is not properly structured, it will disqualify you from Medicaid.

The Medicaid compliant annuity may be an individual retirement annuity, or it may be purchased with cash or with proceeds from certain retirement assets, such as an IRA. Also, it must be non-assignable and irrevocable, actuarially sound, provide for benefit payments in equal amounts.

Work with us and I will ensure your annuity is appropriate for you and properly structured. A Medicaid qualification can help protect your life’s savings.

The Fishman Financial Group

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