FIRST MIDWEST FINANCIAL NETWORK - INSURANCE
Insurance, as part of a strong financial plan, may help protect the ones you love and the things which you’ve worked so hard for. What would happen if something happened to you? Make sure that the people who depend on you will be fully protected. Your First Midwest Financial Network consultant has access to a variety of insurance types for your personal protection needs:1
- Long Term Care (LTC)
- Buy/Sell Funding
- Key Person
At First Midwest Financial Network, our experienced professionals will help you feel confident that the coverage you have is the coverage you need. Any guarantees are based on the claims-paying ability of the issuing company.
First Midwest Financial Network1 offers access to a full range of insurance products and services from a variety of carefully selected providers.
Term life insurance is the most cost-effective form of life insurance and is generally used to provide basic protection for a specified period of time. However, owners of term insurance accumulate no cash value in their policies.
These policies generally provide coverage for the insured’s entire life if premiums are paid on time. The death benefit goes to the beneficiaries upon the death of the insured. Permanent life policies have cash value or a savings feature. Whole life, universal, and variable insurance are different types of permanent life insurance and are discussed in depth below.
The premium, death benefit, and cash value amounts quoted at the time of purchase remain the same throughout this type of permanent policy’s life. The benefit of such policies is that the cash value always stays intact and earns interest, and the death benefit will never decrease as long as the premium is paid. The disadvantage is that the carrier invests the premiums conservatively, meaning these policies typically generate less-than-competitive returns.
This product is a flexible version of whole life insurance where premiums can be adjusted within predetermined boundaries. As a consequence, the death benefit can vary. The flexibility of premiums also means that the policy’s cash value, which is interest-sensitive, cannot be guaranteed. However, many new universal life products on the market offer a minimum guaranteed rate of return and death benefit guarantees.
This type of permanent coverage allows owners to choose the policy’s investments. This feature adds risk, as the policy’s cash value depends on investment performance. As a consequence, insurers don’t offer a minimum guarantee. Contributions and income remain tax-deferred until the policy is redeemed.3
Sometimes, no matter how well you plan, you may still come up short when it’s time to start paying for college. If so, you may want to consider these options:
- Your child can attend a more affordable community college for the first year or two, then transfer to a public or private four-year institution. It’s wise to check with both schools in advance about course prerequisites, transfer credits and other requirements.
- If you have significant equity in your home you may want to consider refinancing your mortgage with a cash-out option or secure a home equity line of credit to obtain money for college expenses.
- Encourage your child to get a part-time job and/or work during summers to earn money toward their own college expenses.
First Midwest Financial Network1 offers access to insurance products for every stage of life and all financial situations, including long-term care insurance (LTCI). LTCI is an array of medical and support services for people with degenerative conditions (e.g., Parkinson’s), prolonged illness (e.g., cancer), a cognitive disorder (e.g., Alzheimer’s), or who are unable to perform two to three activities of daily living (bathing, continence, dressing, eating, toileting, and transferring). This assistance can be provided through a nursing home, home healthcare, assisted living facility, or adult day care.
Long-term care insurance policies and riders have limitations and exclusions, are subject to medical underwriting, and riders may carry additional fees and charges. Your Financial Consultant can help you find the appropriate LTCI coverage to address your needs.
Who Might Want Long-Term Care Insurance?
Individuals age 50-70 who are relatively healthy and have assets worth protecting might want to consider LTCI. Also, individuals who have a family history of Alzheimer’s, Parkinson’s, cancer, and even longevity might want to discuss this form of insurance with a Financial Consultant.
Why Should I Buy Long-Term Care Insurance?
Medicare is not long-term care. It provides care for up to 100 days and only if it is needed following a hospital stay. It usually does not cover home healthcare. Medicaid is available only after full spend down and does not allow a choice of facilities. Medicaid facilities may not be where you would want your parent or grandparent to stay.
What Does Long-Term Care Insurance Cost?
The average cost for one year in a semi-private room at a nursing home is approximately $90,156.4 With the average nursing home stay at two and a half years,5 this stay would cost around $225,000. The average policy premium for a 60-year-old applying for $150/day, five years of coverage, 90-day elimination period, and compound inflation would be $2,050. If that same individual owned that policy for 15 years before needing benefits, it would take just 100 days of care to recoup his or her premiums and break even.
What Should I Look for in a Long-Term Care Policy?
- Financial strength – Most benefits are not needed from a policy for 10 to 20 years after issue, so you need a carrier that has the financial strength to be around in 20 years. Find out how long they have been in the LTCI business, what their ratings are, who they are endorsed by, and whether they have ever had a premium increase.
- Adequate daily benefit – Investigate the cost of care where you live or where you plan to retire and determine whether the policy's daily benefit will provide adequate coverage.
- Inflation protection – Make sure the benefit you buy will be sufficient when it is needed in 10 to 20 years by purchasing inflation protection. Suggestion: Try using compound inflation up to age 68, simple inflation from 69–74, and no inflation from 75+.
- Comprehensive coverage – Make sure the policy provides coverage in all the settings in which you are interested (home care, adult day care, etc.). Also be sure that the benefit period is adequate to cover the average stay in a nursing home of two and a half years.
- Stable premiums – LTC carriers have the right to raise premiums. The policies are guaranteed renewable, which prevents a carrier from singling out individuals for rate increases, but they may raise premiums for a class of policyholders. Be careful of carriers that are priced substantially below the competition. Find out if the proposed carrier has ever increased in-force premiums.
If you couldn't live comfortably without your income in the event you suffered a significant illness or injury, you need disability insurance. Disability insurance replaces a portion of your income if you become disabled and are no longer able to work. Typical policies will cover up to 60 percent of your current salary. Supplements and individual plans are available that will cover up to 80 percent of your current salary, with benefits lasting for a predetermined number of years or until you reach retirement age. Disability income insurance policies and riders have limitations and exclusions, are subject to medical underwriting, and riders may carry additional fees and charges.
It's important to understand the difference between short-term disability and long-term disability.
Short-term disability begins when you're unable to work as a result of an illness, injury or the birth of a child. Most employers provide some type of short-term disability, with durations up to one year. Long-term disability coverage takes over when your short-term coverage runs out. While providing long-term coverage is not required, many employers do provide at least some type of long-term disability insurance.
If your employer does not offer any coverage — or if you are self-employed – talk to your Financial Consultant about options to maintain your standard of living even if you can no longer work. Disability insurance products:
- Provide monthly income to help maintain your standard of living.
- Can be customized to fit your individual situation.
- Help keep your financial goals for the future intact.
Disability products protect your income when you need it most, so you can focus on the most important thing: getting better.