My Secret Alternative to Health Insurance

I’m going to let you in on a my secret to paying for healthcare. I’m healthy right now, but I’m now saving money that can be used for major medical expenses. I’m not paying most of my health insurance dollars to a health insurance company either. No, I’m not talking about a Health Savings Account (HSA). I’ve purchased a life insurance policy through a company that offers what are called living benefits. It is a universal indexed life policy that comes with provisions that allow me to access death benefit dollars in the event that I become terminally, chronically or critically ill. It’s life insurance you don’t have to die to use.

Here’s how it works.

For terminal illness I can access approximately 90% of the death benefit. Terminal Illness is defined as being diagnosed terminal in 12 months. The laws differ from state to state, but here in Idaho, it’s 12 months. Others will allow a diagnosis of death within 24 months. As an example a person who has a death benefit of $400,000 will receive about $380,952.00. What makes this great is that you can take the entire amount for experimental treatments which could save your life, or just enough to cross off those important “bucket list” to do’s.

For chronic illness, or what is also called disability, our sample insured can access 2% of the death benefit per month for 50 months. So, our sample insured with a $400,000 death benefit can get $8000.00. for 4 years and 2 months. You can take less to stretch the term out longer as well. Chronically ill is defined as being unable to perform 2 out of the 6 activities of daily living without the assistance of another person. Activities of daily living are defined as bathing, continence, dressing, eating, using the toilet, and transferring (moving from place to place). OUr guy is also covered in the case of cognitive impairment.

Critical illness, like heart attack, stroke, diagnosis of cancer, diagnosis of end stage renal(kidney) failure, major organ transplants, diagnosis of ALS, and blindness are also covered. Our 40 year old sample insured, in this case, can access a portion of the death benefit based  on a scale of severity. At age 65 he  will receive $327,869.00 for any of the critical illnesses I listed above that are life threatening.

What happens if you get to retirement age and you haven’t died or become ill? You can start taking policy loans tax free. Yup, I said tax free! There are no age restrictions so you can take a loan from your cash value at any time for any reason. As long as there is cash in the policy to pay the cost of insurance, you don’t have to pay the loans back, because they will come out of the death benefit when you die. In our sample, the 40 year old who puts $3756.00 dollars a year in this asset is projected to be able to take loans of approximately $68,000.00, tax free, for rest of his life. Because the loans are not taxable, they will not create any burden on other benefits like draws from IRAs, 401s, or Social Security.

The money you will save from not purchasing health insurance can be quite large. I’ve got a policy for everyone in my household. For the medical needs that aren’t covered, I purchased a supplemental policy that covers accidents and doctors visits, and dental care. That only costs about $80.00 a month, and a modest deductible.

If you live in Idaho and would like to hear more, because there is a lot more to this, please contact me through the form below. I like this asset so much, I became an insurance agent for the company. There are some interesting applications for business as well.