Prudential gUL policy for someone in their 60s

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My father has recently been talking to his Edward Jones investment advisor about the merits of having LTC insurance. My dad is turning 64 this month, and is pretty much set to retire comfortably in 2 more years of part time work as a CRNA, but is worried about the potential for having to pay upwards of $70,000/yr for LTC for several years. This advisor has suggested to my dad to consider a gUL policy from Prudential, which is set up to have a yearly premium payment of $12,500 for a total of 10 years, with a death benefit of $250,000. This benefit can be withdrawn from to cover medical expenses starting from day 1 after the first premium is payed. My dad wanted some more information, but is unsure about what specifically to ask to really determine if this product makes sense for him. The Edward Jones advisor is going to bring a representative from Prudential to talk to my dad, but if he's like the likely majority of representatives selling a whole life insurance policy from their own company, I'm going to assume he/she is going to get a handsome commission, and will therefore be biased.

Due to having read many posts and reviews of whole life insurance, of which this seems to be a similar-ish product, should I be throwing up a red flag in my dad's face and tell him to exercise extreme caution? What questions would you ask if you were in my dad's position?

I read a forum thread here on WCI that was started last November about this particular product. There was a verbal back and forth between a physician forum user and an insurance salesman. You can guess who was for and who was against, but I couldn't really relate my dad's situation to their discussion because he is already at retirement age. Any help is much appreciated!

[Jason Veirs]

If your dad is looking to mitigate the potential risk of depleting his nest egg with a LTC claim (very important thing to consider), and he isn't necessarily concerned with the death benefit, then he should probably just stick with a Traditional LTC policy, as it will most likely be a lot cheaper than the GUL with the LTC rider. Much like a Disability policy, the Traditional LTC policies are a "use it or lose it" sort of situation, but they are typically less in cost than the Prudential GUL that your father's EJ Advisor is recommending.

Many people are now going with Hybrid Life/LTC policies, where you can re-position an existing asset in order to leverage the potential cost of LTC. There are quite a few of these products on the market today, where you can use existing funds to earmark the potential need for LTC. There is even a policy which covers BOTH spouses on 1 policy, while providing lifetime LTC benefits if needed. The good thing with these Hybrid Life/LTC policies, is that if you do not need/use LTC, then the death benefit passes to your heirs, income tax free.

We write these policies all of the time, and with this particular policy there are a variety of different funding/payment options available, such as funding the policy with a single premium from an existing asset, which would include savings, a CD, a 401(k) or an IRA, or paying on the policy continuously, over a 10-20 year period, or even over your entire lifetime. The good thing is that you can leverage an existing asset that you may currently already have (ie: lazy money), in order to use it for tax-free LTCi benefit. You can also pay on the policy on a continuous basis, if you're not interested in using a lump sum.

I would definitely encourage your father to shop around, as there are many options available. Hope this helps.

[jfoxcpacfp]

Why not purchase a LTCI policy? It will cost a lost less. He might even consider short-term LTCI. You can read more in this post.

You might also want to talk to Brian Fechtel, owner of Breadwinners' Insurance Co. Brian is an insurance agent who is well-known for exposing the tricks in the insurance industry. I've spoken with him several times and have consistently been impressed with his integrity. WCI has posted an article by him and he has also been published in the Journal of Financial Planning.

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Thanks for the responses and for the links to the posts. I'll pass on the info.