Retirees Rick and Sherry’s experience with long-term care.

Life Insurance and Annuities

Rick and Sherry have worked hard their entire lives and raised four children, and at ages 68 and 62, respectively, they are looking forward to enjoying retirement. They have mapped out the first 10 years of their retirement and all of the activities they plan to do. According to their plans, Rick and Sherry think they have enough assets to comfortably retire with $650,000 in total retirement assets:

  • $500,000 of retirement assets 401(k), stocks, bonds, and savings
  • $150,000 fixed annuity
  • No debt

However, five years into retirement, Rick starts forgetting things. After multiple doctor visits, he’s diagnosed with Alzheimer’s Disease. He wishes to avoid being placed in a nursing home. Sherry agrees and with the help of family, friends, and home health aides, Rick lives for another 10 years. Besides the obvious emotional toll on Sherry, the financial toll on her remaining assets was extensive:

  • Sherry spent $580,000 of their retirement assets on in-home health care for Rick.
  • Sherry is left with only $70,000 of their total retirement savings after Rick’s health expenses.
  • If Sherry, now age 77, lives for an additional 20 years, she faces a difficult situation.

Could Rick and Sherry have done more?

Let’s see what would have happened if they had used a ForeCare fixed annuity:

  • If Rick and Sherry had taken $150,000 and placed that money instead in a ForeCare fixed annuity, they would have automatically doubled the long-term care coverage available with their contract value to $300,000 for qualified long-term
    care expenses upon approval.
  • But they might instead be approved to triple the long-term care coverage available with their contract value to $450,000 for qualified long-term care expenses.
  • With $450,000 available for qualified long-term care expenses. Rick and Sherry would not have needed to spend as much of their retirement assets on Rick’s medical care, as the ForeCare coverage would cover much of his qualified
    long-term care expenses.
  • In fact, Rick and Sherry could take as much as $5,000 per month in qualified benefits per insured, for ForeCare Premier with joint life coverage. With one insured receiving benefits, this would last 90 months. If both were receiving care the total amount of benefits would be the same but would pay out more quickly.
  • If Rick and Sherry had a ForeCare Premier benefit of $450,000, and spent $580,000 on Rick’s medical care, she’d have $370,000 of remaining retirement assets.

Source: Global Atlantic Financial Group

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