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Life insurance coverage may end after age 100

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People are living longer than ever before. But that may mean they will outlive some of their benefits particulary their life insurance.

If you live to be age 100 or older, your life insurance policy may not provide coverage, according to the Society of Financial Service Professionals, formerly the American Society of CLU and ChFC. Now is the time to call an insurance professional to find out what the financial future may hold for you and your loved ones, the society stated.

Providing life insurance coverage to those people who reach or surpass age 100 was discussed at "The Changing World of Life Insurance: What's Hot and What's Not," a recent national video teleconference, co-sponsored by the Society of Financial Service Professionals and the National Association of Estate Planners & Councils.

A panel of professionals looked at changes that may affect a new generation of insurance consumers a generation that may live to see the turn of not one but two centuries. This issue raises several questions, because most existing life insurance policies do not provide coverage for elder Americans age 100 or older, the society stated.

"In the future, as many as 32 states may have demographics like Florida does today," said Tracy W. Oishi, CLU, CHFC, LUTCF, of American Express Financial Advisors, Algonquin, Ill. Oishi also revealed some life expectancy statistics: One in three people who are 50 today will celebrate their 100th birthdays; one in five people who are 60 will live to be 100; and one in four persons who are age 70 will make it to 100 years old.

"With people living longer and healthier lives these days, this is a significant issue for the insurance industry," Oishi said. "Term insurance might not survive at all because it's not designed to provide coverage for people so advanced in years.

"Insurance agents and companies need to be better prepared to deal with consumers' questions, especially with regard to providing death benefits after age 100, long-term care policy provisions and personal disability insurance for active retirees," Oishi added.

"Clients need some assurance that their family's future will be secure," said another panelist, Richard Shechtman, JD, LLM, of Hartford, Conn. "Life insurance plays such a vital role in making that happen.

"One way to keep the proceeds of a life insurance policy out of the insured's estate is to set up an irrevocable life insurance trust and have a trustee own the policy and pay policy premiums," Shechtman added. "This highly effective planning strategy allows the policy's proceeds to pass to their heirs estate tax-free or provides the cash required to pay other estate costs."

If you think your estate may be heavily taxed, Jonathan Blattmachr, an estate planning attorney in New York City, recommends looking into more complicated trust arrangements such as Alaska or offshore trusts. No matter how large or small your estate will be in the future, it's never too late to work with your attorney and a trusted financial adviser.

In some cases, Blattmachr said, it's prudent to have a team of advisers working with you on an estate plan, including your accountant, attorney, life insurance agent/broker, and a bank trust officer.

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