As a financial planner, I see part of my job as showing others how the insurance game is played, for insurance is a plan to transfer risk away from you to the insurance company for a fee. Though it’s not always that simple is it?
So part of how I help is to show clients what insurances they need, what they may not need and most importantly to explain the benefits and definitions of either new or existing policies that are often difficult to understand.
As with any financial or legal document, a translator is often required…
Insurance is something we buy it in hopes that we never have to use it…we plan for the worst and hope for the best. Nevertheless when the rough waters arise, it is a welcomed life preserver to have.
One unknown and very important benefit to most Florida-issued life insurance policies is a built-in rider called ‘the accelerated death benefit.’
Although it sounds gruesome, it can be the most helpful thing in your life financially if you or a loved one is diagnosed by a doctor with a terminal illness.
This rider gives the insured the option to take a percentage of the life insurance death benefit (between 25-95% depending on the insurance company) while they are alive if they are diagnosed with a terminal illness that lowers their life expectancy (usually between under six months to two years).
The other important benefit of this rider is that it is most often not a taxable event since life insurance is not a taxable asset. Unfortunately, the medical profession doesn’t know about this benefit and legally speaking only a licensed life insurance agent could inform you of it.
Of course your life insurance agent is not the person you think to reach out to when diagnosed with a terminal illness. But you should!
Insurance premiums in Florida are higher than most other states for just about all types of insurance due to our aging population. Well here is an area where it is finally beneficial!
Most life insurance policies written in the State of Florida (meaning sold within the state) come with the accelerated death benefit rider. Florida encourages this so as to give its citizens the option to get access to funds in these difficult situations. Florida has an incentive of course since otherwise the situation may force the person who is ill into the Medicaid system which is thereby funded by the state….makes sense now doesn’t it?
About seven years ago I had a family friend who was diagnosed with terminal cancer. She had good health insurance but we all know there is a limit to coverage, especially in regards to expensive cancer treatment. She found out about the accelerated death benefit option and contacted her life insurance company (in this case her group policy at work).
At first the insurance company gave her push back, and tried to refuse the claim. She contacted an attorney. It took one letter from the attorney and two weeks later she had a $200,000 check in her hand. She was then able to easily afford any excess medical costs that came her way, and she and her husband were able to buy a nicer and more comfortable home.
My friend passed away three years later but she lived longer than expected, but more importantly, she lived more comfortably and happier than expected. I like to think that this was partially due to the lowered stress and further financial freedom she received from obtaining the funds from her life insurance policy.
I really love my job because of how much I can help people. Sometimes the discussions I have with are hard and the solutions to financial problems aren’t easy, but in this case it was using a benefit many in Florida don’t know they have. So spread the word…it could help someone you know too.
Author Kimberly Newsome offers complimentary initial consultations and prides herself on her no pressure, highly educational approach to working with her clients. Have questions for Kimberly or would like a complimentary consultation? She can be reach at: knewsome@rfwwealthadvisors.com or by phone at 904-517-5417.
Individuals should consult a financial professional or insurance agent in regards to their personalized situations. Your results may vary from the example discussed in this blog. Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Cambridge and RFW Wealth Advisors are not affiliated. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor.
