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How You Can Live On More, Leave More, Or Both

By Raymond L. Adams, CFP®, CLU, ChFC


Would you like to look at the possibility of increasing your monthly retirement income without decreasing the amount you leave to your loved ones, and potentially still maintain your nest egg for your own potential long term care needs?

If your health permits, by simply repositioning some of your “tucked away” assets—perhaps from annuities, bonds, brokerage accounts, CD's, or any other savings you might have—to a Modified Endowment Contract, which is a specific type of life insurance policy, you can immediately create additional income for yourself and/or another, or provide long term care benefits, or do both, without jeopardizing the inheritance money you have set aside for loved ones.


A retired couple, concerned about the future financial situation of the wife, if the husband were to pass away first, had $200,000 set aside to offset the inevitable loss of one Social Security income check, and a reduction in pension income—both from the husband’s former employer and the military.

After learning about this repositioning technique, they took $100,000 of the $200,000 they had in savings, and moved it into a Modified Endowment Contract, which immediately established a $200,000 Death Benefit on the husband, to be paid to his wife upon his death. Additionally, his life insurance policy even allowed him an advance against the death proceeds for qualifying long term care expenses: home health care, assisted living, or nursing home care, if he ever needed such.


With the remaining $100,000, they purchased an income annuity which created an additional $658.23 per month, guaranteed* for as long as they both live.

If he passes away first, his wife will receive the proceeds of the $200,000 modified endowment contract, income tax free, which she can use to offset the loss of one Social Security check and the reduction in his pension income.

Of course, she will also continue to receive the $658.23 per month from the above mentioned income annuity they purchased.



Now, if circumstances are such that she passes away first, he will forfeit the smaller of the two Social Security checks, but will continue to receive his full pension and the $658.23 a month from the income annuity. As for the Modified Endowment Contract, which would no longer be needed for his deceased wife, he could cancel it and withdraw the cash value, if any, in the policy, or leave the $200,000 income tax-free death benefit intact for their children, while still retaining access to the death benefit, if needed, for any qualifying long term care expenses.




If you have sufficient income, you could reposition the full $ 200,000 and create even more money to leave to your beneficiaries, while also increasing the amount you have available for long term care needs.


The concept of the Modified Endowment Contract does not require any on-going out-of-pocket expenditure; it is merely a way you can reposition some money that is already set-aside to maintain the inheritance you wish to leave and provide additional income for yourself.


In a nutshell, with the Modified Endowment Contract you may be able to have more for you, or more for your heirs, or both.


To learn more about this concept and how it might help you, or your loved ones, or both, give me a call: (425) 827-9225—without obligation.


*Guarantees are subject to the claims paying ability of the underlying insurance company

Capital Enhancement Group, Inc. • 611 4th Ave. Suite A • Kirkland, WA 98033 • (425) 827-9225

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