Does Your Life Insurance Need Long-Term Care?

You buy life insurance because you want to provide security for your family’s future. That’s why it can be so disconcerting for some policy holders to find out their life insurance is in need of critical or long-term care.

Some individuals buy policies that they believe to be permanent life insurance. In fact, these policies provide guarantees of maximum mortality expenses that are typically deducted on a monthly basis and a guaranteed minimum interest rate that can be credited to the policy. When the policy is originally sold, it reflects the current cost of insurance or mortality charges that are being deducted from the account value of the contract on a monthly basis. These costs can change and, in many cases, have changed over time.

Many of these policy holders believe that these changes would only occur if their health was to worsen. However, this is not always the case. This is largely contributed to by the very low interest rates we've experienced in our economy for some time. These low interest rates have impacted insurance companies' returns on the reserves they need to pay life insurance death claims.

As a result, these individuals are receiving letters informing them that their premium is no longer sufficient to sustain their policies. In most cases, these statements have been there all along—but in smaller fonts in their annual statements. Unfortunately, many people skip or miss this fine print and are therefore unaware of the changes in their policy.

Often, individuals only find out about these issues when they have about 12 months to put more money into their contract to help prevent the policy from lapsing. This is especially critical for individuals who, subsequent to the purchase of their insurance, have had a substantial change in their health. For these people, a lapse of the policy and loss of coverage could result in being locked out of the ability to acquire any new insurance.

It is crucial that anyone holding one of these policies works with a financial professional to review the policy and ensure they are taking the necessary steps to keep it in good standing. At GCW Capital Group, we provide this type of long-term care and nurturing to these life insurance contracts. Our financial professionals are experienced in working with life insurance and can provide consultation and insight on how to address such policies. Contact us today to find out more.

GCW Capital, LLC is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered or exempt from registration. Primary office located at 38 Lake Street, Hamburg, NY 14075. Before making any investment decisions, please contact our office at (716) 256-1682 or to obtain a copy of our firm ADV Part 2A for more information and fee schedules.