Brian Gruss Licensed Insurance Planner

Think It Over Carefully Before You Sell Your Life Insurance Policy

If you are suffering from a terminal illness, you may find yourself without enough money to pay for everyday necessities due to overwhelming medical expenses. You need cash quickly, so you may consider selling your life insurance policy. However, before you do, you should consider whether this is really the best solution to your cash flow problem.

Selling a life insurance policy is called “viatication.” The policy owner, usually a terminally ill person with a life expectancy of less than two years, sells their policy to a third-party for a lump sum cash settlement. The amount the policy owner receives is typically less than the face value of the policy, but more than the current cash surrender value. A viatical settlement can be as much as 50 to 80 percent of the policy’s face value.

The third party, who may be an individual investor or a viatical company, is responsible for paying the premiums and becomes the designated beneficiary on the policy.

In spite of how attractive the prospect of receiving a large sum of money all at once may be, there are some things you should consider before agreeing to a viatical settlement:

• Indiscriminate access to your private medical records – The viatical company will continually scrutinize your medical records to follow your prognosis because the longer you live, the less they will get from your policy. In addition, they will probably not use discretion when contacting you.  They may communicate with you by phone or mail, and that can make your personal business known to others.
• Negative financial implications – You should discuss with a financial planner if accepting a settlement will negatively impact probate and estate settlements. Also, you need to determine if the proceeds of the viatical settlement are considered taxable income. Under the Health Insurance Portability and Accountability Act, if the insured is terminally ill, the settlement is not subject to federal income taxes; but if the illness isn’t serious or the insured is healthy, the settlement is considered a capital gain and taxed accordingly.
• Negative impact on your eligibility for public assistance – Since public assistance is based on financial need, receiving a large settlement could affect whether you receive public assistance, and how much you receive.
• The reputability of the viatical company – Payout amounts vary by company, so you should shop around and compare. The Viatical Association of America recommends getting at least three different offers. In addition, you should contact your state insurance department to see if there are any laws that regulate how viatical companies operate and whether or not they need to be licensed.

Since selling your life insurance policy affects your family, you should discuss it with them before you make your decision. If they are depending on the policy proceeds to pay the remaining cost of your medical treatment, or for funeral expenses, they may need time to make other arrangements.

Finally, look for other alternatives. Ask your insurance company if they offer an accelerated death benefit. This provides for the payment of a portion of your life insurance policy proceeds while you are still living. Your insurer may charge you a fee, but you still retain ownership of your policy.

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Why Life Insurance Is a Must-Have for the Self-Employed

Being self-employed definitely has its perks: freedom, flexibility, autonomy. Unfortunately, the long list of self-employment benefits doesn’t usually include an actual benefit plan. That means you’re on your own when it comes to insuring yourself.

If you’re self-employed and don’t own life insurance, you’re putting your family at great financial risk. Not only would a life insurance policy provide for your family if something were to happen to you, but it would also cover the costs of your business debts.

Everyone needs life insurance

Any financial expert will tell you that whether you’re self-employed or company-employed, you need life insurance—especially if you have a family who depends on your income. As long as you’re alive and kicking, you can continue to earn money and maintain your family’s lifestyle. However, if you were to die without life insurance, your family may find themselves in a financial crisis.

Without your income, your family certainly wouldn’t be able to maintain their former lifestyle, and they may have a hard time making ends meet. They would probably struggle to pay monthly expenses, including the mortgage, credit cards and utilities. On top of that, they could face some hefty bills associated with your death, including burial and funeral costs and medical expenses.

An effective life insurance plan will ensure that all of your family’s financial needs will be covered in the event of your death—from the monthly mortgage to final expenses to your child’s college education.

A necessity for the self-employed

Although everyone should have life insurance, it’s an absolute necessity for the self-employed. Why? In the eyes of the law, there is no difference between your personal and business assets. That means that you are personally responsible for any and all business debts.

When the owner of a sole proprietorship dies, the business legally comes to an end. Therefore, if you were to die, any of the debts or losses associated with your business will become the responsibility of your estate. This could include business loans, your office mortgage or lease payments, local, state and federal taxes, lawyer and accountant fees and any payments due to your employees, suppliers or vendors.

To pay off these debts and cover your business’ financial obligations, your family may have to sell off personal assets. This would leave them with even less money to cover their ongoing financial needs.

However, with an effective life insurance plan, your family would have enough to pay off these business debts and provide for their ongoing financial needs after your death. This is why it’s crucial for any self-employed person to have a life insurance plan.

Meet with Brian Gruss to discuss your life insurance options. He can assess your situation and find a plan that fits your unique needs as a sole proprietor.

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Expatriate Insurance: Playing Safe While Living Abroad

You have the opportunity of a lifetime to live abroad for the next year.  You’ve planned every part of your stay down to the last detail – or so you think.  Have you thought about what will happen if you become so ill that you require extended medical treatment?  Even if you live in the most cosmopolitan of cities, if you become critically ill you will want to return home to be near family and friends while you recover.

You may believe if that scenario arises, you can depend on your managed care plan.  However, your stateside health insurance plan is not designed to cover extended stays out of the country.  Health Maintenance Organizations (HMOs) cover emergency room treatment anywhere, but typically offer other coverage through provider networks in the state where you live.  Preferred Provider Organizations (PPOs) cover a larger percentage of medical expenses if you visit network doctors, which are usually local.  Medicare offers no coverage at all for medical expenses incurred while living outside the United States.

What about travel insurance?  Your instinct tells you this is where you will find the coverage you need.  It seems logical, but it isn’t quite correct.  Travel insurance usually offers coverage for a period of six months.  Should you become sick or injured during the benefit period, your treatment is only covered until you reach the end of the six months.  After that point, you would be responsible for your own medical expenses.

So what alternative do you have to make sure this trip doesn’t end up costing you far more than expected because of unanticipated medical bills?  You can purchase expatriate health insurance.  The name tells you exactly what the coverage offers.  It is derived from the Latin language in which “ex” means away from, and “patria” means Fatherland.  This insurance is especially developed for people who will be away from their home country for six months or more.  Expatriate health coverage is designed to overcome the problems with the geographic limitations and restrictive provider networks that are associated with your managed care plan.  It also helps a sick or injured expatriate deal with language translation, currency exchange, and transportation to Western treatment centers when trying to navigate through the maze of a foreign health care system.

There are two types of plans. The basic plan offers coverage for in-patient or in-hospital care including your actual hospital stay, various medical service providers and transportation by local ambulance. You can purchase enhanced basic plans that may also include outpatient visits, some therapies as well as prescribed drugs. At-home nursing care and emergency dentistry are also covered typically.

If you require more extensive coverage, comprehensive plans can be obtained for much higher premiums. Comprehensive plans may cover psychiatry, rehabilitation, home nursing, childbirth, eye and ear specialists, dietitians, psychotherapists, chiropractors and osteopaths. Diagnostic tests and prescription drugs may also be covered.

Emergency medical evacuation coverage is available in a number of the basic plans. However, almost all plans allow you to include it for an additional charge. This coverage provides for immediate transportation from anywhere in the world to the nearest medically advanced treatment center for in-patient emergency conditions. Generally such plans also allow for reasonable return fare to your country of residence.

All these health plans have some restrictions and exclusions. If you are employed in a hazardous occupation some plans will not cover you. Pre-existing conditions, either known or unknown at the time you apply for coverage, are usually not covered. Depending on the condition, however, some carriers may be willing to underwrite it for an added charge. Injuries resulting from war or riot are not covered. Some plans do cover acts of passive war and terrorism such as an injury that occurred while you were an innocent bystander.

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