State Life Insurance Company is a OneAmerica company. We previously did a review on American United Life (AUL), another OneAmerica company. However, we felt the need to do a separate review of State Life because of its focus on wealth preservation.
About State Life Insurance Company
The State Life Insurance Company focuses on a specific niche in the world of life insurance, particularly asset-based long-term care products. The Company is the recognized leader in hybrid long term care life insurance solutions. We will address the policy specifics below, but just know that this type of whole life insurance protection is crucial to safeguard your estate and provide maximum asset protection.
At the end of 2016, State Life had over $6.8 billion in assets. The Company also had over $11.7 billion of life insurance in force.
State Life Insurance Company Ratings
The different life insurance ratings agencies have given State Life high marks.
- A.M. Best rating: A+, Superior (2nd highest of 16)
- S&P rating: AA- (4th highest of 22)
- Comdex ranking: 95 (out of 100)
These ratings indicate that State Life is financially strong and will be able to meet its ongoing obligations to its policyholders.
Long Term Care Insurance
The costs associated with long term care pose a serious threat to anyone’s financial health. One solution is long term care insurance (LTCI). Traditionally, long term care insurance provided an income benefit for costs associated with long term care. However, due to rising costs and fees, many of the companies that used to offer LTCI as standalone policies have ceased to do so. Enter the hybrid combination Life+LTC insurance policies.
Long term care life insurance combination policies combine the benefits of life insurance and long term care. So, you get a death benefit that passes to your beneficiary income tax free when you die. In addition, your policy provides an income benefit that helps cover long term care costs. You policy also builds cash value that can be used via withdrawals and tax free policy loans.
Long term care insurance benefits are triggered by one of two scenarios:
- If you are unable to perform 2 of 6 activities of daily living (ADLs); or
- You require care due to a cognitive impairment such as Alzheimer’s disease, Parkinson’s disease, or Dementia.
Your long-term care benefits provide help for different expenses including in home care, nursing home care, or care in an assisted living facility. Your income benefit is considered an advance of the death benefit and is income tax free.
To receive your long-term care benefits you must meet the requirements mentioned above. In addition, you must file a claim with the insurer and wait for the policy elimination period to pass. Your elimination period represents the time you must wait until you can receive your income benefits.
Once you are eligible to receive benefits, you can receive benefits for as long as your benefit period lasts. State Life Insurance Company’s Asset-Care plan provides an optional lifetime benefit rider.
Permanent Life Insurance
The Hybrid LTC+Life insurance policies are a form of permanent life insurance. One of the more popular policies are indexed universal life insurance. The current statistics show that around 25% of all IUL policies are some type of hybrid LTC/IUL policy.
Whole Life Insurance
Another popular combination is long term care whole life insurance. The best whole life insurance provides guaranteed cash value growth, guaranteed death benefit protection and guaranteed fixed premiums. Due to the stability whole life insurance provides, it is a good choice for anyone looking for the closest they can get to a “sure” thing.
Whole life insurance is a non-correlated asset, which means that it is not tied to the performance of the stock market. And when used in conjunction with a long-term care rider, whole life insurance is a good investment to make for anyone serious about wealth preservation.
State Life Insurance Company provides a LTC/Life Hybrid called Asset-Care.
There are four variations of Asset Care available:
- Asset-Care I: Single premium whole life insurance
- Asset-Care II: Non-qualified annuity that funds a 20 pay whole life insurance policy
- Asset-Care III: Individual Retirement Account (IRA) that funds a 20 pay whole life insurance policy
- Asset-Care IV: Whole Life Insurance 10 Pay, 20 Pay, or to age 100.
All Asset-Care plans include a guaranteed death benefit, guaranteed cash value growth and access to 100% of the death benefit for qualifying long-term care expenses. In addition, you can add on lifetime long term care coverage with premiums that never increase.
Asset-Care offers single premium whole life insurance protection. With single premium, you make a one time lump sum payment. You are guaranteed to never have to make another premium payment. Single premium is great because you do not have to worry about your coverage any longer. The one potential drawback is the policy will be considered a modified endowment contract (MEC).
Asset-Care provides limited pay life insurance with long term care options. The benefit to limited pay whole life is your premiums are due for either 10 years or 20 years. At the end of the period, your policy is paid-up and you no longer need to make premium payments.
Asset-Care also allows you to purchase survivorship life insurance with long term care. The benefit of a hybrid second-to-die long term care life insurance policy is both insureds can qualify for the long-term care. And upon the death of the second spouse, the remaining death benefit is paid out to the beneficiaries.
Asset-Care LTC+Life Insurance Policy Features and Benefits
Our main focus is on the Company’s single premium, 10 pay, 20 pay and to age 100 whole life insurance.
- Available for ages 35-80 for SPWL and 20-80 for 10 Pay, 20 Pay, or to Age 100.
- Guaranteed minimum 4% interest rate
- Guaranteed death benefit
- Elimination Period 30 day in home care; all other care 60 days
- Income benefit 2, 3, or 4% (additional premium required for 3 or 4%)
- Premiums waived if receiving qualified care
- Continuation of Benefits rider: limited and lifetime
- Non-cancelable which means the premiums remain the same
- Inflation Protection rider
- You have 4 options to choose from: 3% simple or compound growth and 5% simple or compound growth
- Life insurance loans are available but they will reduce the LTC benefits.
State Life Insurance Company Review Conclusion
If you have wealth and you do not have a plan in place that takes into long term care costs, you are putting your entire legacy at risk.
For Americans over age 65, there is around a 50% chance that they will need some form of long term care. As people are living longer, that rate will most likely climb.
And long term care is not cheap. You are probably looking at paying around $100,000 a year for a nursing home and $50,000 a year for assisted living. And according to a 2016 Genworth report, in home care runs around $3,800 a month. And these numbers go up every year with inflation. In 10 years time, at 5% inflation, you are looking at almost double the costs.
So what can you do? The first step would be to get informed. We can help you with the life insurance long term care planning side. Simply reach out to us by phone or email to get started. If you are interested in an illustration of the State Life Insurance Company’s Asset-Care whole life insurance or any of the other companies we represent, please give us a call today.