In this Case Success Story, the client had already come to the decision to surrender his life insurance contract. The only question was what to do with the cash value? Without a clear objective, MoneyGuard became an interesting choice: Huge leverage for Long-Term Care should the need arise and preservation of the cash from the existing contract.  Read on for the rest of the story.


AT A GLANCE:

Product: MoneyGuard Reserve Plus
Target: $80,000 MoneyGuard Premium

Situation:

  • Advisor was working with a 56-year-old male client who currently owned a life insurance contract with $80K in surrender value.
  • One of the “holes in her game” was a complete lack of knowledge or familiarity with MoneyGuard
  • The contract was no longer needed or wanted, and the client was seeking a solution that avoided the tax on the modest gain in the contract as well as providing excellent liquidity should he need to access the cash for other planning purposes downstream.

Solution:

  • MoneyGuard Reserve Plus funded via a 1035 Exchange
  • Optimized MoneyGuard Design using COLA

Results:

  • Given that the client had already decided to terminate the existing life contract, the real question as what to do with the funds?
  • The Advisor recommended MoneyGuard based on the client’s lack of a risk management strategy around Long-Term Care and the need for preservation of and access to cash values.
  • The exchange amount was not enough to fully insure the risk, with a level benefit design only producing a monthly benefit of $3945.
  • Based on an “optimized benefits” design and the knowledge that nearly 90% of LTC claims occur after age 70, the Advisor recommended an alternative design that used MoneyGuard’s COLA feature to optimize benefits.
  • The optimized design produced $4686 in monthly benefits at age 70 and $6298 at age 80, where over 63% of Long-Term Care claims occur.
  • The end result? A great solution for the client, and $80K of MoneyGuard premium placed in force.

Illustrations:

For more on the Optimized Design and how it can either save clients money or maximize benefits, check out this edition of the MoneyGuard Briefing