glossary-content2

Maximum Earnings

The maximum amount of earnings we can count in any calendar year when computing your Social Security benefit.

Medicaid

A joint federal and state program that helps with medical costs for people with low incomes and limited resources.

Medicaid programs vary from state to state, but most health care costs are covered if you qualify for both Medicare and Medicaid.

Month of Election

This usually applies to retirement claims. In certain situations, you can choose the month in which your benefits will start.

Normal Retirement Age

See Full Retirement Age

Number Holder

See Wage Earner.

Nutrition Assistance Programs

The U. S. Department of Agriculture program that helps needy families buy food.

OASDI (Old Age Survivors and Disability Insurance)

The Social Security programs that provide monthly cash benefits to you and your dependents when you retire, to your surviving dependents, and to disabled workers and their dependents.

Old-Law Base

Amount the contribution and benefit base would have been if the 1977 amendments had not provided for ad hoc increases. The Social Security Amendments of 1972 provided for automatic annual indexing of the contribution and benefit base. The Social Security Amendments of 1977 provided for ad hoc increases to the bases for 1979 81, with subsequent bases updated in accordance with the normal indexing procedure.

Payment Dates for Social Security Benefits

If you applied for Social Security benefits before May 1, 1997, your payments usually are dated and delivered on the 3rd of the month following the month for which the payment is due. For example, payments for January are delivered on February 3rd.

If the 3rd of the month is a Saturday, Sunday or Federal holiday, your payments are dated and delivered on the first day before the 3rd of the month which is not a Saturday, Sunday or Federal holiday. For example, if the 3rd is a Saturday or Sunday, payments are delivered on the preceding Friday.

If you filed for Social Security benefits May 1, 1997, or later, you are assigned one of three new payment days based on date of birth:

  • Born: 1st through the 10th of the month – Delivered: Second Wednesday of the month
  • Born: 11th through 20th of the month – Delivered: Third Wednesday of the month
  • Born: 21st through end of the month – Delivered: Fourth Wednesday of the month

If your scheduled Wednesday payment day is a Federal holiday, we’ll send your payment on the preceding day that is not a Federal legal holiday.

Payment Dates for Supplemental Security Income (SSI) Payments

SSI payments are usually dated and delivered on the first day of the month for which they are due. However, if the first falls on a Saturday, Sunday or Federal holiday, they are dated and delivered on the first day preceding the first of the month which is not a Saturday, Sunday or Federal holiday.

PIA (Primary Insurance Amount)

The monthly amount payable if you are a retired worker who begins receiving benefits at full retirement age or if you’re disabled and have never received a retirement benefit reduced for age.

Present Value

The equivalent value, at the present time, of a future stream of payments (either income or cost). The present value of a future stream of payments may be thought of as the lumpsum amount that, if invested today, together with interest earnings would be just enough to meet each of the payments as they fell due. Present values are used widely in calculations involving financial transactions over long periods of time to account for the time value of money (interest). Present-value calculations for this report use the effective yield on trust fund assets.

Protective Filing Date

The date you first contact us about filing for benefits. It may be used to establish an earlier application date than when we receive your signed application.

Reduction Months

Months beginning with the first month you’re entitled to reduced benefits up to, but not including, the month in which you reach full retirement age.

Representative Payee

If you receive Social Security benefits or Supplemental Security Income (SSI) and become unable to handle your own financial affairs, we (after a careful investigation) appoint a relative, a friend, or an interested party to handle your Social Security matters.

Representative payees are required to maintain complete accounting records and periodically provide reports to Social Security. For additional information see Representative Payee Program.

Retirement Age – Full Benefits

Full retirement age was 65 for many years. However, beginning with the year 2000 (for workers and spouses born in 1938 or later, or widows or widowers born in 1940 or later), the retirement age increases gradually from age 65 until it reaches age 67 in the year 2022.

Retirement Age – Minimum

The minimum age for retirement-age 62 for workers, and age 60 for widows or widowers. You can choose a reduced benefit anytime before you reach full retirement age

Retirement Earnings Test

If you receive monthly Social Security benefits before your full retirement age and work, your earnings from wages and/or self-employment cannot exceed a certain amount without reducing your monthly benefits.

Retirement Eligibility Age

The age, currently age 62, at which a fully insured individual first becomes eligible to receive retired-worker benefits.

Retroactive Benefits (Back Pay)

Monthly benefits that you may be entitled to before the month you actually apply, if you meet the requirements

Retirement Benefit

Money that is payable to you upon retirement if you have enough Social Security credits.

Self-Employment Income

You are self-employed if you operate a trade, business or profession, either individually or as a partner, and have net earnings of $400 or more in a taxable year.

Social Security

Social Security is based on a simple concept: While you work, you pay taxes into the Social Security system, and when you retire or become disabled, you, your spouse and your dependent children receive monthly benefits that are based on your reported earnings. Also, your survivors can collect benefits if you die.

Social Security Number (Social Security Card)

Your first and continuous link with Social Security is your nine-digit Social Security Number. It helps us to maintain an accurate record of your wages or self-employment earnings that are covered under the Social Security Act, and to monitor your record once you start getting Social Security benefits.

Social Security Office

Your local Social Security office is the place where you can:

  • apply for a Social Security number
  • check on your earnings record
  • apply for Social Security benefits, Supplemental Security Income (SSI), and hospital insurance (Medicare) protection
  • enroll for medical insurance
  • get help applying for food stamps and
  • learn everything you need to know about your rights and obligations under the Social Security law

There is no charge for any of our services. You can also call our toll-free telephone number, 1-800-772-1213, to receive all these services. Our TTY number is 1-800-325-0778. This toll-free telephone number service is available from 7 a.m. to 7 p.m. any business day. All calls are confidential.

Spouse

You are the spouse of the worker if, when he or she applied for benefits:

  • you and the worker were married
  • you would have the status of a husband or a wife for that person’s personal property if they had no will
  • you went through a marriage ceremony in good faith, which would have been valid except for a legal impediment
Supplemental Security Income (SSI)

A federal supplemental income program funded by general tax revenues (not Social Security taxes). It helps aged, blind, and disabled people who have limited income and resources by providing monthly cash payments to meet basic needs for food, clothing, and shelter.

Survivors Benefits

Benefits based on your record (if you should die) are paid to your:

  • widow/widower age 60 or older, 50 or older if disabled, or any age if caring for a child under age 16 or disabled before age 22
  • children, if they are unmarried and under age 18, under 19 but still in school, or 18 or older but disabled before age 22
  • parents if you provided at least one-half of their support

An ex-spouse could also be eligible for a widow/widower’s benefit on your record. A special one-time lump sum payment of $255 may be made to your spouse or minor children.

Taxable Earnings

Wages or self-employment income, in employment covered by the OASDI or HI programs, that are under the applicable annual maximum taxable limit. For 1994 and later, no maximum taxable limit applies to the HI program.

Taxable Self-Employment Income

The maximum amount of net earnings from self-employment by an earner which, when added to any taxable wages, does not exceed the contribution and benefit base. For HI beginning in 1994, all net earnings from self-employment.

Taxation of Benefits

Beginning in 1984, Federal law subjected up to 50 percent of an individual’s or a couple’s OASDI benefits to Federal income taxation under certain circumstances. Treasury allocates the revenue derived from this provision to the OASI and DI Trust Funds on the basis of the income taxes paid on the benefits from each fund. Beginning in 1994, the law increased the maximum percentage from 50 percent to 85 percent. The HI Trust Fund receives the additional tax revenue resulting from the increase to 85 percent.

Termination

Cessation of payment because the beneficiary is no longer entitled to receive a specific type of benefit.

Wage Earner

A person who earns Social Security credits while working for wages or self-employment income. Sometimes referred to as the “Number Holder” or “Worker.”

Wages

All payment for services performed for an employer. Wages do not have to be cash. The cash value of all compensation paid to an employee in any form other than cash is also considered wages, unless the form of payment is specifically not covered under the Social Security Act

Widow(er)

You are the widow/widower of the worker if, at the time the insured person died:

  • you and the worker were validly married
  • you would have the status of a husband or a wife for that person’s personal property if he or she had no will
  • you went through a marriage ceremony in good faith that would have been valid except for a legal impediment
  • The minimum age for widows benefits is 60, or 50 if disabled.

    Lump Sum Death Payment

    A one-time payment of $255 paid in addition to any monthly survivors benefits that are due. This benefit is paid only to your widow/widower or minor children.

44-secrets-download

44-social-security-secrets-whitepaper

12 Secrets all Baby Boomers and current recipients need to know!

Download one of the most important tools you will need to be able to maximize your Social Security benefits.

Author: Dr. Laurence Kotlikoff

 

The Social Security Administration provides you with:

  • 567 ways to claim your benefits
  • ZERO employees to advise you on the best strategy
  • One chance to get this right (after twelve months, there are no do-overs)

glossary-content1

AIME Average Indexed Monthly Earnings

The dollar amount used to calculate your Social Security benefit if you attained age 62 or became disabled (or died) after 1978. To arrive at your AIME, we adjust your actual past earnings using an “average wage index,” so you won’t lose the value of your past earnings (when money was worth more) in relation to your more recent earnings. If you attained age 62 or became disabled (or died) before 1978, we use Average Monthly Earnings (AME).

AME (Average Monthly Earnings)

For Variable Annuities only. An annuity’s subaccount price per share during the accumulation phase. An AUV is the net asset value after income and capital gains have been included and subaccount management expenses have been subtracted. Many insurance companies keep daily charts for the tracking of AUV’s and also offer performance summary sheets.

Appeal (Appeal Rights)

You will receive a letter of explanation whenever Social Security makes a decision regarding your eligibility for Social Security or Supplemental Security Income (SSI) benefits. If you disagree with the decision, you have the right to appeal (ask us to review your case). If our decision was wrong, we’ll change it.

Application for Benefits

To receive Social Security benefits, Supplemental Security Income (SSI) payments, or Medicare, you must complete and sign an application. You can apply for retirement, disability, Medicare and spouse’s benefits online, in person at a local Social Security Office, or by telephone at 1-800-772-1213. The TTY number is 1-800-325-0778.

Application for a Social Security Card

The application form you need to complete to obtain a Social Security number, or a replacement card. For more information see Get or Replace a Social Security Card.

Auto cost-of-living benefit increase

The annual increase in benefits, effective for December, reflecting the increase, if any, in the cost of living. A benefit increase is applicable only after a beneficiary becomes eligible for benefits. In general, the benefit increase equals the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) measured from the third quarter of the previous year to the third quarter of the current year. If there is no increase in the CPI-W, there is no cost-of-living benefit increase.

Auxiliary Benefits

Monthly benefits payable to a spouse or child of a retired or disabled worker, or to a survivor of a deceased worker.

Award

An administrative determination that an individual is entitled to receive a specified type of OASDI benefit. Awards can represent not only new entrants to the benefit rolls but also persons already on the rolls who become entitled to a different type of benefit. Awards usually result in the immediate payment of benefits, although payments may be deferred or withheld depending on the individual’s particular circumstances.

Baby Boom

The period from the end of World War II (1946) through 1965 marked by unusually high birth rates.

Baptismal Certificate

An official religious record of your birth or baptism. In some situations we can use a baptismal certificate to establish your age.

Base Years

A worker’s (wage earner’s) base years for computing Social Security benefits are the years after 1950 up to the year of entitlement to retirement or disability insurance benefits. For a survivor’s claim, the base years include the year of the worker’s death.

Bend Points

The dollar amounts defining the AIME or PIA brackets in the benefit formulas.

Beneficiary

A person who has been awarded benefits on the basis of his or her own or another’s earnings record. The benefits may be either in current-payment status or withheld.

Benefit Payments

The amounts disbursed for OASI and DI benefits by the Department of the Treasury.

Benefit Verification Letter

An official letter from Social Security that verifies the amount an individual receives each month in Social Security benefits and/or Supplemental Security Income (SSI) payments. These letters are normally issued following a request from a person receiving benefits or his/her authorized representative.

Benefits

Social Security pays five types of benefits:

  • Retirement
  • Disability
  • Family (dependents)
  • Survivors
  • Medicare

The retirement, family (dependents), survivor and disability programs pay monthly cash benefits, and Medicare provides medical coverage.

Benefits-Reduced

You can get the following reduced monthly benefits before reaching full retirement age:

  • Retirement benefits at age 62 through the month before your reach Full Retirement Age;
  • Husband’s or wife’s benefits at age 62 through the month before you reach full retirement age, provided no child of your spouse either under age 18 or disabled and entitled to benefits is in your care;
  • Widow’s or widower’s benefits beginning at any time from age 50 through the month before you reach full retirement age;
  • Widow’s or widower’s benefits, if your spouse received a retirement benefit before full retirement age;
  • Disability benefits received after a reduced retirement benefit; or
  • Retirement or disability benefits received after a reduced widow’s or widower’s benefit. This applies only if you were born before 1928.
Birth Certificate (Original)

The record maintained by a governmental entity such as a state, county, parish, city, or borough that documents your birth. For additional information on obtaining a birth certificate see the NCHS – Alphabetical List.

Child

We use the term “Child” to include your biological child or any other child who can inherit your personal property under State law or who meets certain specific requirements under the Social Security Act; such as:

  • a legally adopted child,
  • an equitably adopted child,
  • a stepchild, or
  • a grandchild.
Cost of Living Adjustment (COLA)

Social Security benefits and Supplemental Security Income (SSI) payments may be automatically increased each year to keep pace with increases in the cost-of-living (inflation).

Computation Years

Computation years are the years with highest earnings selected from the “base years.” We add total earnings in the computation years and divide by the number of months in those years to get the AME or the AIME. (We use your 35 highest years of earnings to compute your retirement benefits.)

Covered Earnings/h5>

Earnings in employment covered by the OASDI program.

Covered Employment

All employment for which earnings are creditable for Social Security purposes. The program covers almost all employment. Some exceptions are:

  • Self-employed workers earning less than $400 in a calendar year.
  • State and local government employees whose employer has not elected to be covered under Social Security and who are participating in an employer-provided pension plans.
  • Current Federal civilian workers hired before 1984 who have not elected to be covered.
Covered Worker

A person who has earnings creditable for Social Security purposes based on services for wages in covered employment or income from covered self-employment.

CPI-Indexed Dollars

Amounts adjusted by the CPI to the value of the dollar in a particular year.

CPI-W (Consumer Price Index)

An index prepared by the U. S. Department of Labor that charts the rise in costs for selected goods and services. This index is used to compute Cost of living adjustments.

Creditable Earnings

Wage or self-employment earnings posted to a worker’s earnings record. Such earnings determine eligibility for benefits and the amount of benefits on that worker’s record. The contribution and benefit base is the maximum amount of creditable earnings for each worker in a calendar year.

Credits (Social Security Credits)

Previously called “Quarters of Coverage.” As you work and pay taxes, you earn credits that count toward your eligibility for future Social Security benefits. You can earn a maximum of four credits each year. Most people need 40 credits to qualify for benefits. Younger people need fewer credits to qualify for disability or survivors benefits.
For more information read: How You Earn Credits (05-10072).

Current Dollars

Amounts expressed in nominal dollars with no adjustment for inflationary changes in the value of the dollar over time.

Currently Insured Status

Amounts expressed in nominal dollars with no adjustment for inflationary changes in the value of the dollar over time.

Current-Payment Status

Amounts expressed in nominal dollars with no adjustment for inflationary changes in the value of the dollar over time.

Decision Notice (Award Letter or Denial Letter)

When you apply for Social Security, we decide if you will receive benefits. We send you an official letter explaining our decision and, if benefits are payable, we tell you the amount you will get each month.

Delayed Retirement Credits (DRC)

Social Security benefits are increased by a certain percentage (depending on date of birth) if a person delays taking retirement benefits beyond full retirement age.
The benefit increase no longer applies after age 70, even if the person continues to delay taking benefits.

Dependent Benefits

See Family Benefits.

Direct Deposit

The standard way to receive Social Security benefits and Supplemental Security Income (SSI). Your money is sent electronically to an account in a financial institution (bank, trust company, savings and loan association, brokerage agency or credit union). For more information see Social Security Direct Deposit.

Disability Benefits

You can get disability benefits if you:

  • are under full retirement age
  • have enough Social Security credits and
  • have a severe medical impairment (physical or mental) that’s expected to prevent you from doing “substantial” work for a year or more, or have a condition that is expected to result in death.
Documents (Proofs)

Forms and papers such as birth certificates, marriage certificates, W2 forms, tax returns, deeds, etc., submitted by individuals applying for benefits and services. We can accept only originals or copies certified by the agency that has the original document.

Early Retirement

You can start getting Social Security retirement benefits as early as age 62, but your benefit amount will be less than you would have gotten if you waited until your full retirement age.

If you take retirement benefits early, your benefit will remain permanently reduced, based on the number of months you received benefits before you reached full retirement age.

Early Retirement Age

Age 62.

Earnings Record (lifetime record of earnings)

A chronological history of the amount of money you earned each year during your working lifetime. The credits you earned remain on your Social Security record even when you change jobs or have no earnings.

Earnings Test

The provision requiring the withholding of benefits if beneficiaries under normal retirement age have earnings in excess of certain exempt amounts.

Evidence (Proofs)

“Proofs.” The documents you must submit to support a factor of entitlement or payment amount. The people in your Social Security office can explain what evidence is required to establish entitlement and help you to get it.

Excess Wages

Wages in excess of the contribution and benefit base on which a worker initially makes payroll tax contributions, usually as a result of working for more than one employer during a year. Employee payroll taxes on excess wages are refundable to affected employees, while the employer taxes are not refundable.

Family Benefits (Dependent Benefits)

When you’re eligible for retirement or disability benefits, the following people may receive benefits on your record:

  • spouse if he or she is at least 62 years old (or any age but caring for an entitled child under age 16 or disabled)
  • children if they are unmarried and under age 18, or under age 19 and a full-time elementary or secondary student
  • children age 18 or older but disabled before age 22
  • ex-spouses age 62 or older
Family Maximum

The maximum amount of benefits payable to an entire family on any one worker’s record.

Federal Insurance Contributions Act (FICA)

Provision authorizing payroll taxes on the wages of employed persons to provide for Old-Age, Survivors, and Disability Insurance, and for Hospital Insurance. Workers and their employers generally pay the tax in equal amounts.

FICA Tax

FICA stands for “Federal Insurance Contributions Act.” It’s the tax withheld from your salary or self-employment income that funds the Social Security and Medicare programs.

Full Retirement Age

The age at which a person may first become entitled to full or unreduced benefits based on age.
For workers and spouses born in 1938 or later and widows/widowers born in 1940 or later, the full retirement age increases gradually from age 65 until it reaches age 67 for

  • Workers and spouses in the year 2027
  • Widows and widowers in the year 2029

This increase affects the amount of the reduction for persons who begin receiving reduced benefits.

Health Insurance (Medicare)

The federal health insurance program for:

  • people 65 years of age or older
  • certain younger people with disabilities
  • people with permanent kidney failure with dialysis or a transplant, sometimes called ESRD (End-Stage Renal Disease)

Inflation

An increase in the general price level of goods and services.

Insured Status

If you worked and earned enough Social Security credits to be eligible for retirement or disability benefits or enable your dependents to be eligible for benefits due to your retirement, disability, or death, you have insured status.

Interest

A payment in exchange for the use of money during a specified period.

Lawful Alien Status

People admitted to the U.S. who are granted permanent authorization to work by the United States Citizenship and Immigration Services (USCIS) (formerly INS) or admitted to the U.S. on a temporary basis with USCIS or INS authorization to work.

Life Expectancy

Average remaining number of years expected prior to death.

Lifetime Earnings “Earnings Record”

A chronological history of the amount of money you earned each year during your working lifetime. The credits you earned remain on your Social Security record even when you change jobs or have no earnings.

Lump Sum Death Payment

A one-time payment of $255 paid in addition to any monthly survivors benefits that are due. This benefit is paid only to your widow/widower or minor children.

Maximum Earnings

The maximum amount of earnings we can count in any calendar year when computing your Social Security benefit.

Medicaid

A joint federal and state program that helps with medical costs for people with low incomes and limited resources.

Medicaid programs vary from state to state, but most health care costs are covered if you qualify for both Medicare and Medicaid.

Month of Election

This usually applies to retirement claims. In certain situations, you can choose the month in which your benefits will start.

Normal Retirement Age

See Full Retirement Age

Number Holder

See Wage Earner.

Nutrition Assistance Programs

The U. S. Department of Agriculture program that helps needy families buy food.

OASDI (Old Age Survivors and Disability Insurance)

The Social Security programs that provide monthly cash benefits to you and your dependents when you retire, to your surviving dependents, and to disabled workers and their dependents.

Old-Law Base

Amount the contribution and benefit base would have been if the 1977 amendments had not provided for ad hoc increases. The Social Security Amendments of 1972 provided for automatic annual indexing of the contribution and benefit base. The Social Security Amendments of 1977 provided for ad hoc increases to the bases for 1979 81, with subsequent bases updated in accordance with the normal indexing procedure.

Payment Dates for Social Security Benefits

If you applied for Social Security benefits before May 1, 1997, your payments usually are dated and delivered on the 3rd of the month following the month for which the payment is due. For example, payments for January are delivered on February 3rd.

If the 3rd of the month is a Saturday, Sunday or Federal holiday, your payments are dated and delivered on the first day before the 3rd of the month which is not a Saturday, Sunday or Federal holiday. For example, if the 3rd is a Saturday or Sunday, payments are delivered on the preceding Friday.

If you filed for Social Security benefits May 1, 1997, or later, you are assigned one of three new payment days based on date of birth:

  • Born: 1st through the 10th of the month – Delivered: Second Wednesday of the month
  • Born: 11th through 20th of the month – Delivered: Third Wednesday of the month
  • Born: 21st through end of the month – Delivered: Fourth Wednesday of the month

If your scheduled Wednesday payment day is a Federal holiday, we’ll send your payment on the preceding day that is not a Federal legal holiday.

Payment Dates for Supplemental Security Income (SSI) Payments

SSI payments are usually dated and delivered on the first day of the month for which they are due. However, if the first falls on a Saturday, Sunday or Federal holiday, they are dated and delivered on the first day preceding the first of the month which is not a Saturday, Sunday or Federal holiday.

PIA (Primary Insurance Amount)

The monthly amount payable if you are a retired worker who begins receiving benefits at full retirement age or if you’re disabled and have never received a retirement benefit reduced for age.

Present Value

The equivalent value, at the present time, of a future stream of payments (either income or cost). The present value of a future stream of payments may be thought of as the lumpsum amount that, if invested today, together with interest earnings would be just enough to meet each of the payments as they fell due. Present values are used widely in calculations involving financial transactions over long periods of time to account for the time value of money (interest). Present-value calculations for this report use the effective yield on trust fund assets.

Protective Filing Date

The date you first contact us about filing for benefits. It may be used to establish an earlier application date than when we receive your signed application.

Reduction Months

Months beginning with the first month you’re entitled to reduced benefits up to, but not including, the month in which you reach full retirement age.

Representative Payee

If you receive Social Security benefits or Supplemental Security Income (SSI) and become unable to handle your own financial affairs, we (after a careful investigation) appoint a relative, a friend, or an interested party to handle your Social Security matters.

Representative payees are required to maintain complete accounting records and periodically provide reports to Social Security. For additional information see Representative Payee Program.

Retirement Age – Full Benefits

Full retirement age was 65 for many years. However, beginning with the year 2000 (for workers and spouses born in 1938 or later, or widows or widowers born in 1940 or later), the retirement age increases gradually from age 65 until it reaches age 67 in the year 2022.

Retirement Age – Minimum

The minimum age for retirement-age 62 for workers, and age 60 for widows or widowers. You can choose a reduced benefit anytime before you reach full retirement age

Retirement Earnings Test

If you receive monthly Social Security benefits before your full retirement age and work, your earnings from wages and/or self-employment cannot exceed a certain amount without reducing your monthly benefits.

Retirement Eligibility Age

The age, currently age 62, at which a fully insured individual first becomes eligible to receive retired-worker benefits.

Retroactive Benefits (Back Pay)

Monthly benefits that you may be entitled to before the month you actually apply, if you meet the requirements

Retirement Benefit

Money that is payable to you upon retirement if you have enough Social Security credits.

Self-Employment Income

You are self-employed if you operate a trade, business or profession, either individually or as a partner, and have net earnings of $400 or more in a taxable year.

Social Security

Social Security is based on a simple concept: While you work, you pay taxes into the Social Security system, and when you retire or become disabled, you, your spouse and your dependent children receive monthly benefits that are based on your reported earnings. Also, your survivors can collect benefits if you die.

Social Security Number (Social Security Card)

Your first and continuous link with Social Security is your nine-digit Social Security Number. It helps us to maintain an accurate record of your wages or self-employment earnings that are covered under the Social Security Act, and to monitor your record once you start getting Social Security benefits.

Social Security Office

Your local Social Security office is the place where you can:

  • apply for a Social Security number
  • check on your earnings record
  • apply for Social Security benefits, Supplemental Security Income (SSI), and hospital insurance (Medicare) protection
  • enroll for medical insurance
  • get help applying for food stamps and
  • learn everything you need to know about your rights and obligations under the Social Security law

There is no charge for any of our services. You can also call our toll-free telephone number, 1-800-772-1213, to receive all these services. Our TTY number is 1-800-325-0778. This toll-free telephone number service is available from 7 a.m. to 7 p.m. any business day. All calls are confidential.

Spouse

You are the spouse of the worker if, when he or she applied for benefits:

  • you and the worker were married
  • you would have the status of a husband or a wife for that person’s personal property if they had no will
  • you went through a marriage ceremony in good faith, which would have been valid except for a legal impediment
Supplemental Security Income (SSI)

A federal supplemental income program funded by general tax revenues (not Social Security taxes). It helps aged, blind, and disabled people who have limited income and resources by providing monthly cash payments to meet basic needs for food, clothing, and shelter.

Survivors Benefits

Benefits based on your record (if you should die) are paid to your:

  • widow/widower age 60 or older, 50 or older if disabled, or any age if caring for a child under age 16 or disabled before age 22
  • children, if they are unmarried and under age 18, under 19 but still in school, or 18 or older but disabled before age 22
  • parents if you provided at least one-half of their support

An ex-spouse could also be eligible for a widow/widower’s benefit on your record. A special one-time lump sum payment of $255 may be made to your spouse or minor children.

Taxable Earnings

Wages or self-employment income, in employment covered by the OASDI or HI programs, that are under the applicable annual maximum taxable limit. For 1994 and later, no maximum taxable limit applies to the HI program.

Taxable Self-Employment Income

The maximum amount of net earnings from self-employment by an earner which, when added to any taxable wages, does not exceed the contribution and benefit base. For HI beginning in 1994, all net earnings from self-employment.

Taxation of Benefits

Beginning in 1984, Federal law subjected up to 50 percent of an individual’s or a couple’s OASDI benefits to Federal income taxation under certain circumstances. Treasury allocates the revenue derived from this provision to the OASI and DI Trust Funds on the basis of the income taxes paid on the benefits from each fund. Beginning in 1994, the law increased the maximum percentage from 50 percent to 85 percent. The HI Trust Fund receives the additional tax revenue resulting from the increase to 85 percent.

Termination

Cessation of payment because the beneficiary is no longer entitled to receive a specific type of benefit.

Wage Earner

A person who earns Social Security credits while working for wages or self-employment income. Sometimes referred to as the “Number Holder” or “Worker.”

Wages

All payment for services performed for an employer. Wages do not have to be cash. The cash value of all compensation paid to an employee in any form other than cash is also considered wages, unless the form of payment is specifically not covered under the Social Security Act

Widow(er)

You are the widow/widower of the worker if, at the time the insured person died:

  • you and the worker were validly married
  • you would have the status of a husband or a wife for that person’s personal property if he or she had no will
  • you went through a marriage ceremony in good faith that would have been valid except for a legal impediment
  • The minimum age for widows benefits is 60, or 50 if disabled.

    Lump Sum Death Payment

    A one-time payment of $255 paid in addition to any monthly survivors benefits that are due. This benefit is paid only to your widow/widower or minor children.

faq-content1

You will have to pay federal taxes on your Social Security benefits if you file a federal tax return as an individual and your total income is more than $25,000. If you file a joint return, you will have to pay taxes if you and your spouse have a total income of more than $32,000.

Use the Internal Revenue Service (IRS) Notice 703 shown on the back of the Social Security Benefit Statement, SSA Form 1099, to determine if any of your benefits may be taxable.

Social Security has no authority to withhold state or local taxes from your benefit. Many states and local authorities do not tax Social Security benefits. However, you should contact your state or local taxing authority for more information.

If you applied for benefits, you can check the status of your application online.

Your application status shows:

  • The date we received your application
  • Any requests for additional documents
  • The address of the office processing your application
  • If a decision has been made.

If you receive an error, it may be because:

  • You entered an incorrect Social Security number or confirmation number
  • You did not complete the application
  • We made a final decision on your application more than four months ago

If anything prevents you from checking your application status online, call us at 1-800-772-1213 (TTY 1-800-325-0778) between 7 a.m. to 7 p.m., Monday through Friday.

If you live outside the United States, refer to Service Around the World.

The maximum benefit depends on the age a worker chooses to retire. For example, for a worker retiring at age 66 in 2015, the amount is $2,663. This figure is based on earnings at the maximum taxable amount for every year after age 21.

The amount you can earn while receiving Social Security depends on your age. Your earnings in (and after) the month you reach full retirement age will not affect your Social Security benefits. However, your benefit is reduced if your earnings exceed certain limits for the months before you reach your full retirement age.

If you are under full retirement age for the entire year:

  • You can earn $15,640 gross wages or net self-employment a year and not lose any benefits in 2015.
  • We will deduct $1 in benefits for every $2 earned above $15,720.

In the year you reach full retirement age:

  • You can earn $41,880 gross wages or net self-employment prior to the month you reach full retirement age and not lose any benefits in 2015.
  • We will deduct $1 in benefits for every $3 earned above $41,880.

The same earnings limits apply to a spouse or child who works and receives benefits on your record. You should report earnings to us for any months and years prior to full retirement age.

Retirement Earnings Test Calculator to get an estimate of the effect of your earnings on your benefits.

If you work outside the United States, refer to Your Payments While Outside The United States.

A person can receive benefits as a divorced spouse on a former spouse’s Social Security record if he or she:

  • Was married to the former spouse for at least 10 years
  • Is at least age 62 years old
  • Is unmarried
  • Is not entitled to a higher Social Security benefit on his or her own record.

In addition, the former spouse must be entitled to receive his or her own retirement or disability benefit. If the former spouse is eligible for a benefit, but has not yet applied for it, the divorced spouse can still receive a benefit if he or she meets the eligibility requirements above and has been divorced from the former spouse for at least two years.

Generally, we cannot pay benefits if the divorced spouse remarries someone other than the former spouse, unless the latter marriage ends (whether by death, divorce, or annulment), or the marriage is to a person entitled to certain types of Social Security auxiliary or survivor’s benefits.

A person can receive benefits as a surviving divorced spouse on the Social Security record of a former spouse who died fully insured, if he or she:

  • Is at least age 60, or age 50 and disabled
  • Was married to the former spouse for at least 10 years
  • Is not entitled to a higher Social Security benefit on his or her own record

If the surviving divorced spouse age 60 or over applying for benefits remarried after age 60, or after age 50 and at the time of remarriage was entitled to disability benefits, we disregard the marriage. If a person is already entitled to benefits as an aged or disabled surviving divorced spouse and remarries, benefits continue regardless of the person’s age at the time of remarriage.

The benefits paid to a divorced spouse or a surviving divorced spouse will not affect the benefit amount paid to other family members who receive benefits on the same record.

If you would like to receive an estimate of benefits you may receive as a divorced spouse or a surviving divorced spouse, you may contact our representatives at our toll-free number, 1-800-772-1213. They may be able to provide you with this information over the telephone. If you prefer, you may visit one of our offices. You can get the address and directions to your nearest office from the Social Security Office Locator that is available on the Internet.

A spouse receives one-half of the retired worker’s full benefit unless the spouse begins collecting benefits before full retirement age. If the spouse begins collecting benefits before full retirement age, the amount of the spouse’s benefit is reduced by a percentage based on the number of months before he/she reaches full retirement age.

For example, based on the full retirement age of 66, if a spouse begins collecting benefits:

  • At age 65, the benefit amount would be about 46 percent of the retired worker’s full benefit
  • At age 64, it would be about 42 percent
  • At age 63, 37.5 percent
  • At age 62, 35 percent

However, if a spouse is taking care of a child who is either under age 16 or disabled and receives Social Security benefits, a spouse will get full benefits, regardless of age.

If you are eligible for both your own retirement benefit and for benefits as a spouse, we will always pay you benefits based on your record first. If your benefit as a spouse is higher than your retirement benefit, you will receive a combination of benefits equaling the higher spouse’s benefits.

You can apply for Social Security retirement benefits when you are at least 61 years and 9 months of age and want your benefits to start in the next three months. Even if you are not ready to retire, you still should sign up for Medicare three months before your 65th birthday.

The Social Security number followed by one of these codes is often referred to as a claim number. We assign these codes once you apply for benefits. These letter codes may appear on correspondence you receive from Social Security or on your Medicare card. They will never appear on a Social Security card.

For example, if the wage earner applying for benefits and your number is 123-45-6789, then your claim number is 123-45-6789A. This number will also be used as your Medicare claim number, once you are eligible for Medicare.

MedicareChart

NOTE: This list is not complete, but shows the most common beneficiary codes.

Report the death by calling toll free, 1-800-772-1213 (TTY 1-800-325-0778), 7 a.m. to 7 p.m., Monday through Friday. Please have the deceased person’s Social Security number when you call.

In addition to reporting the death to Social Security, you should:

  • Notify the bank or other financial institution of the beneficiary’s death.
  • Request the bank or other financial institution return any funds received for the month of death or thereafter.

*Do not cash any checks received for the month in which the beneficiary died or any checks received thereafter. Return any un-cashed checks to your local field office.

If your pension is from work where you paid Social Security taxes, it will not affect the amount of your Social Security benefit. However, if any part of your pension is from work where you did not pay Social Security taxes, it could affect the amount of your Social Security benefit.

A pension based on work that is not covered by Social Security (for example, Federal civil service and some State or local government agencies, such as police officers and some teachers) may cause the amount of your Social Security benefit to be reduced. Your benefit can be reduced based on one of two provisions:

  • The first provision, called Government Pension Offset (GPO), applies only if you receive a government pension not covered by Social Security and are eligible for Social Security benefits as a spouse or widow(er). Under this provision, we may reduce your Social Security benefit as a spouse or widow(er). See our GPO page for more information; and
  • The second provision, called the Windfall Elimination Provision (WEP), affects how we calculate your Social Security retirement or disability benefits if you receive a pension from work not covered by Social Security. See ourWEP page for more information.

Retirement Roundtable: Chapter 5

Reasons for Optimism (07:58)

Our experts share how we can use products that offer the benefits and options retirees are looking
for in an innovative insurance product as part of an overall comprehensive retirement plan.

< Click to return to Chapter 4

Retirement Roundtable: Chapter 4

To Good to Be True (06:59)

The panel discusses and debunks myths and incorrect assumptions
about the recent innovations to annuity insurance products.

Click to continue to Chapter 5 >

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Meet Your Annuity Roundtable Panelists:

Don ShelbyDon Shelby has been a reporter and television anchor for 45 years. Before retiring from daily journalism in November of 2010, he worked for 32 years as anchor, investigative reporter and environmental correspondent for WCCO-TV in Minneapolis and St. Paul, Minnesota.

He is considered the most honored and decorated local television journalist in the country. He has won three national Emmys, the Columbia-duPont, the Scripps-Howard, the National Distinguished Service Award from the Society of Professional Journalists, and has twice won the Pulitzer Prize of broadcasting: The George Foster Peabody. He was honored in 1983 with the top award for investigative reporting by the International Radio and Television News Directors Association. He has been awarded more than two-dozen regional top honors from the National Academy of Television Arts and Sciences, Associated Press and United Press International.

Don was inducted into the Broadcasters Hall of Fame in 2008, and television’s Silver Circle. He was named the Reverend Dr. Martin Luther King Humanitarian of the Year, and was presented with the Great American Traditions Award from B’nai B’rith. In 2010, Don was named Distinguished Minnesotan, an honor he shares with such luminaries as Sigurd Olson and polar explorer Will Steger.

Since his retirement, Don continues his work in environmental journalism, reporting for MinnPost, the on-line daily, and is a member of the Climate Science Rapid Response Team roundtable. He currently serves on the board of Minnesota GreenStar, the Minnesota Center for Environmental Advocacy and is the Capital Campaign Chair for the Washburn Center for Children.

Dr. David BabbelDr. David Babbel is senior advisor to Charles River Associates (CRA) and practice leader of insurance economics. Prior to joining CRA, he was a senior financial economist in the Financial Sector Development Department of the World Bank and a vice president in the Pension and Insurance Department and senior advisor to Goldman Sachs.

With more than 100 articles and publications to his credit, along with a number of books and monographs, Dr. Babbel is an expert in the fields of finance, investments, risk management, insurance, pensions, and international business. His specialties within these fields are life insurance, annuities, asset/liability management, fixed income securities, and valuation. In addition, Dr. Babbel is Professor Emeritus at The Wharton School of the University of Pennsylvania, having previously served on the finance, insurance and international finance faculty at the Haas School of the University of California at Berkeley. During his more than 25-year career as an educator, Dr. Babbel has taught courses in finance, investments, fixed income, insurance, and risk management at the undergraduate, graduate, doctoral, and executive level. He has also been invited to speak before many conferences, conventions, and seminars, both in the United States and abroad.

Professor Laurence KotlikoffDr. Laurence J. Kotlikoff is a William Fairfield Warren Professor at Boston University, a Professor of Economics at Boston University, a Fellow of the American Academy of Arts and Sciences, a Fellow of the Econometric Society, a Research Associate of the National Bureau of Economic Research, President of Economic Security Planning, Inc., a company specializing in financial planning software, a columnist for Bloomberg, a columnist for Forbes, and a blogger for The Economist. Professor Kotlikoff received his B.A. in Economics from the University of Pennsylvania in 1973 and his Ph.D. in Economics from Harvard University in 1977.

From 1977 through 1983 he served on the faculties of economics of the University of California, Los Angeles and Yale University. In 1981-82, Professor Kotlikoff was a Senior Economist with the President’s Council of Economic Advisers.

Professor Kotlikoff is author or co-author of 14 books and hundreds of professional journal articles. His most recent books are Jimmy Stewart Is Dead (forthcoming February 22, 2010, John Wiley and Sons, Spend ‘Til the End, co-authored with Scott Burns, Simon & Schuster, The Healthcare Fix (MIT Press), and The Coming Generational Storm (co-authored with Scott Burns, MIT Press).

Professor Kotlikoff publishes extensively in newspapers, and magazines on issues of financial reform, personal finance, taxes, Social Security, healthcare, deficits, generational accounting, pensions, saving, and insurance.

Professor Kotlikoff has served as a consultant to the International Monetary Fund, the World Bank, the Harvard Institute for International Development, the Organization for Economic Cooperation and Development, the Swedish Ministry of Finance, the Norwegian Ministry of Finance, the Bank of Italy, the Bank of Japan, the Bank of England, the Government of Russia, the Government of Ukraine, the Government of Bolivia, the Government of Bulgaria, the Treasury of New Zealand, the Office of Management and Budget, the U.S. Department of Education, the U.S. Department of Labor, the Joint Committee on Taxation, The Commonwealth of Massachusetts, The American Council of Life Insurance, Merrill Lynch, Fidelity Investments, AT&T, AON Corp., and other major U.S. corporations.

He has provided expert testimony on numerous occasions to committees of Congress including the Senate Finance Committee, the House Ways and Means Committee, and the Joint Economic Committee.

Karlan TuckerAt age 22, Karlan Tucker began his personal practice as a one-man show as a licensed insurance producer. Today, his practice has grown; and he is the CEO of one of America’s most successful Retirement Planning Organizations – Tucker Advisory Group, Inc.

Karlan has personally protected more than $100 million in Life, LTC and Indexed Annuities. He has spent more than 10,000 hours in consulting with Baby Boomers throughout his 30-year career.

Karlan Tucker is a prolific author, writing some of the most sought-after industry articles by chronicling his experiences with more than 5,000 client appointments. Soon, Karlan will release his book “Retirement in Crisis,” re-educating the general public about the power and protection found in a vehicle that offers increasing income on a decreasing asset.

Karlan was recognized as American Equity’s number two advisor in 2008 and he has been a member of the Million Dollar Round Table and the Top of the Table for the past seven years. Additionally, Karlan was recognized by Denver’s 5280 Magazine as a FIVE STAR: Best in Client Satisfaction Wealth Manager™ for 2009.

Karlan and his wife have helped fund and build orphanages in Myanmar and Cambodia, as well as churches in the Netherlands, India, Mongolia and beyond.

Van MuellerVan Mueller is a Registered Representative with the Wisconsin Agency of New England Financial Services. January 23, 2011 marks Van’s 38th year as an insurance agent. Van was named the 2010 Advisor of the Year by Senior Market Advisor Magazine and was awarded the Milwaukee NAIFA Distinguished Service Award for 2003.

He has also qualified for the National Sales Achievement Award, the National Quality Award, the Health Insurance Quality Award, and has qualified many times for the National Association of Health Underwriters Leading Producers Round Table.

Van supports many industry organizations. In addition to membership in the National Association of Insurance & Financial Advisors and the Million Dollar Round Table, he is a member of the Association of Health Insurance Agents and the National Association of Health Underwriters. He is also a member of the Society of Financial Service Professionals, an Emissary Contributor to IFAPAC and a Diamond Knight of the Million Dollar Round Table Foundation.

Van has spoken to groups all over the country and now all over the world, including being a main-platform speaker at MDRT in 1998 in Chicago and the Main Platform Speaker at the 2001 Top of the Table Meeting in Maui, HI. Van was a Main Platform Speaker at the 2003 NAIFA meeting in Kansas City. He has also written many articles for various publications.

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Common Questions About Life Insurance

Life insurance companies have stellar records, in many cases dating back to before the Great Depression. To date, there has never been a recorded instance of a company not paying out a claim on a death benefit due to the company’s inability to do so.

With regard to the investment portion of the product, there are different types of life insurance products that allow the carrier more flexibility in how they invest the “holding tank” funds. These products range from conservative to aggressive and anywhere in between. Although there are pros and cons to all investment vehicles, utilizing insurance products that don’t place your cash value directly into the market, such as whole life insurance or indexed universal life insurance, typically offer modest growth potential with zero potential for loss through market exposure.

Life insurance is first and foremost just that: LIFE INSURANCE! And in many cases the death benefit paid out by life insurance policies is the most beneficial and useful aspect of the product. But the ability to aggressively build cash value and borrow from it tax-free can be an equally attractive and in some cases crucial part of one’s planning.

Consider using Tax-Free Loans for:

  • College funding – Did you know that “Free Application for Federal Student Aid” (FAFSA) doesn’t look at the cash inside of a life insurance policy as an appropriate means for funding college education? That means that in many cases life insurance can be a used as a tool to help cover the cost of these expenses without disqualifying your children or grandchildren from student aid.
  • Unexpected expenses – Depending on how it is structured, life insurance can offer growth potential without sacrificing much needed liquidity in times of emergency. And, since loans are borrowed from the policy on non-qualified (already-taxed) dollars, there is no limitation on how old one needs to be to withdraw funds from the account.
  • Business needs – Life insurance can be structured to provide cash benefits to owners while also providing valuable coverage to the business. You can read more about this in the What Will Happen To My Business topic.
  • Retirement – Many people find themselves deep into retirement with a life insurance policy that they may not need anymore. By choosing a policy with lots of growth potential, you can allow yourself the flexibility of utilizing the cash within your policy to supplement your other sources of retirement income tax-free.

Long-term cash accumulation:

  • One of the key features of both whole life insurance and indexed universal life insurance is that your principal is protected from market volatility – it is kept safe and sound in the insurer’s conservative portfolio earning a low, safe rate of return.
  • In fact, no one has ever lost their money to market volatility in these kinds of policies.
  • However, higher returns can be achieved by using just the low yield to safely link your growth to a market index, such as the S&P 500. In this way, your principal is kept safe while exchanging the low guaranteed return for the potential to earn many times that.

 

Startling Statistics:

Did you know that about 70% of people over the age of 65 will require some type of long-term care services during their lifetime?

According to recent studies conducted by the National Clearinghouse for Long-Term Care Information (www.longtermcare.gov), more than 40% will need care in a nursing home. Do you have a plan to help cover these costs?

Why Not?

Why is it that some people don’t own long-term care insurance? Many say it is too expensive and they don’t want to pay for something they may never use. Fair enough – those are valid reasons! So how will you pay for long-term care?

  • Rely on your children?
  • Depend on Medicaid?
  • Use your retirement savings?
  • Continue working?

Discover the Real Need:

It is important to explore your options and plan ahead. How much coverage will you need?

  • Take this planning quiz to help you decide! www.longtermcare.gov
  • Find out the cost of care in your state: www.longtermcare.gov

 

Tax-free Death Benefit

When planning your legacy, unlike typical investments that may leave your family with a large tax burden when you die, life insurance allows you to leverage your money in a way that is free of taxes. The proceeds of life insurance are always tax-free. Life insurance is one of the easiest ways to transfer money from this generation to the next. Take a look at your full financial picture, and ask yourself 3 questions:

  1. Would my family’s lifestyle be drastically changed if I died tomorrow?
  2. Do I have enough saved to pay my debts, so that I don’t burden my loved ones?
  3. Will my retirement assets grow into a value that will be sufficient to see my spouse through their lifetime?

Avoid Regrets In the Future!

Are you looking for ways to reduce the size of your estate upon death? Are you concerned that the taxes incurred on your estate will significantly reduce the legacy you want to leave behind? Gifting is one way to solve this problem, but exactly how you gift money can make all the difference. Life insurance is an excellent strategy that maximizes your gifting dollars by providing a guaranteed higher value (the death benefit) that is tax-free to beneficiaries upon death.

Protecting Your Loved Ones

As we have already covered, life insurance is the best tool for income replacement during your primary income-earning years. It can also offer much needed cash to supplement the cost of estate taxes upon death. Did you also know that life insurance is very flexible and can be held inside a variety of trusts, thus protecting the benefits from creditors, probate, and other end-of-life hurdles?

No matter the size of your company, as a business owner, you have a responsibility to care for your employees, partners, and customers. The inherent flexibility of life insurance makes it an excellent tool for handling many problems that small business owners often face, such as employee retention, succession planning, and even deferred compensation.

Protect your business

Let’s say you have an employee who is of particular importance to a company. Maybe they are a designer for a clothing line and their good eye for style has made the company very successful. Or perhaps, they’re a technical person who understands systems within your company and without that person’s expertise; operations would come to a screeching halt. These types of people are extremely valuable to companies and, their untimely sudden removal can cause catastrophic financial loss to companies without proper protection.

Key-Person Coverage is purchased on a “key” employee to recoup the financial loss the business would incur upon the employee’s death. Key-Person insurance is owned and paid for by the company. This coverage can provide crucial business stability.

Succession Planning

A typical business owner can often relate to phrases such as “asset rich” and “cash poor”, meaning they typically reinvest personal earnings into their business to build it up to sell later in life as a large part of a retirement plan. The problem arises when a business partner dies unexpectedly and their portion of the company is owed to their beneficiaries. Many times, the equity is tied up in other business assets and is completely inaccessible without selling large portions of the company, thus causing considerable financial loss to the surviving business partner(s).

How can life insurance help? By providing the much needed cash to a spouse or other beneficiaries to buy out the interest in a business without having to liquidate company assets. This is called a buy-sell agreement. In a nutshell, it is a legal contract restricting the right to dispose of a business interest to specified parties according to specified terms, and is most easily executed by life insurance.

Executive Bonuses and Deferred Compensation via Life Insurance

Sometimes called a section 162 plan, an executive bonus arrangement is a private, non-qualified means of rewarding select employees with permanent, cash value life insurance for the beneficiaries of the executive as well as potential for cash value accumulation. In essence, the executive takes out a life insurance policy on themselves, and the company bonuses the premiums paid by the employee. This bonus is a tax write-off for the company, and can be added to the cash value of the policy, and grown for the owner of the life policy, the employee.

This same process can be done as a deferred compensation program, whereby the company, not the employee, owns the life insurance policy and the premiums are paid outright by the company. This gives the company more control over the life insurance, but it still acts as a cash bonus to the executive.

Advantages to Cash Value Life Insurance as a Benefit to Employees.

  • Provides valuable benefit to employee(s) at little or no expense.
  • Flexibility: The business has discretion with regard to who will be covered and to what extent, unlike 401(k)’s. As opposed to traditional 401(k) plans where all employees must be able to contribute, in a 162 plan the business owner has flexibility to decide who receives the plan and can use this as a reward for higher earning employees.
  • Extremely high contribution potential: Often, based on earnings, age, and other factors, employees can contribute tens of thousands of dollars into plans.
  • Portable to employee.
  • Potential future supplemental income: Because of the nature of the life insurance investments that are inside of section 162 plans, they are often provide more flexible and sustainable income streams as opposed to traditional 401(k) plans.

 

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CoupleOnBikesDevelop Your Plan

Although traditional long term care policies remain the cornerstone of a great strategy to prepare for the likelihood of chronic illness striking your family, we have discovered a powerful new way to use life insurance to meet those needs or supplement existing coverage.

  • Modern life insurance policies can now allow you to have access to large pools of money for long term care without paying extra monthly premiums.
  • Many policies actually have riders built in, at no additional cost, that will allow you to take some or most of the death benefit out to fund long term care while you’re still alive.
  • Many individuals have found that by placing a lump sum inside this kind of policy, they can turn $1 into $2, $3, $4 or even $5 of death benefit that can in turn be used for long term care when needed – we call this leverage – one of the key benefits of life insurance.
  • Additionally, some policies can provide a little less leverage with the option of keeping all of your premium liquid in case you need it back.