Professional Couple

Lee and Suzanne live on Bainbridge Island, a small island connected by ferry to Seattle. Lee is 68 years old and his wife, Suzanne, is 51 years old. Lee is an attorney and his wife Suzanne is a nurse. Lee has made between $250K and $500K per year. Suzanne retired from nursing when they married and homeschooled their four children. All of their children have professional degrees and are very successful. Lee and Suzanne have a net worth of approximately $10 million with $2 million in liquid assets.

They would like to pass as much of their estate on to their children as possible and do not want to be a financial burden on their children.

Solution:  Lee and Suzanne decided to purchase a single pay LTC policy. The premium for this policy was $346,000. Since the policy has an immediate cash surrender value of $118,916, the initial net cost of this policy was actually $227,448, which was $113,724 per insured. The LTC policy will pay up to $24,000 per month ($12,000 per person), or $288,000 annually ($144,000 per person), for the remainder of Lee and Suzanne's lives. If the policy is never used then the insurer will pay $400,000 on the second insured's death for a gain of $56,636. The beauty of this approach is that it provides a massive amount of LTC insurance for this couple at a relatively insignificant cost and, if the policy is never used, the couple will receive a refund that is greater than their initial cost.