Money asleep in the bank, doing three jobs at once

One function is no longer enough for a single product. The structure I want to describe here is built for money parked in a savings account with no particular plan attached to it. Sleeping money.

It goes after three things at once, so let me take them one at a time.

First, long-term care. The death benefit can be drawn on to pay for care. Standalone long-term care policies are expensive and hard to qualify for, and this folds that function into the life insurance instead. The coverage terms are not identical to a dedicated policy, but for someone whose health makes traditional underwriting difficult it is a realistic alternative.

Second, a longevity benefit, which is the part people find most surprising. Suppose you reach an advanced age in good health, care never became necessary, and your children are doing well enough that leaving an inheritance is no longer the priority. In that case you can take the entire death benefit yourself, spread over five years, like an income. Two conditions apply: the policy must have been in force fifteen years, and you must be past 85.

Third, growth. If the money does not grow then neither does the death benefit, so this matters. A 15% bonus is credited at the outset. The standing figure is 12%; 15% is a limited promotional rate, and there is no telling when it reverts.

There is also provision for changing your mind. Surrendering early normally means surrender charges, and this policy includes a return-of-premium safeguard so the principal can be recovered.

Left in a deposit account, none of those three happen. The interest is low, care costs come straight out of the balance, and the tax position on what passes to your family is unchanged.

This is not right for everyone. It ties up a lump sum and the conditions need checking. But if you are holding money you have no near-term plan for, it is worth asking what that money is currently doing.

The rates and product terms in this post were current when it was written. They vary by carrier and by state and can change without notice. I will confirm what is available today when we speak.