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1. Not enough research: Understand the type of policy (term, permanent, cash value, etc.), what you need if for (short term need, permanent need, business, personal) and the financial solvency of the company issuing the policy (S and P rating, A.M. Best, Dun and Bradstreet, etc.)

2. Do not have the insured, owner and beneficiary be different people. Generally life insurance is income and gift tax-free to the beneficiary (although not always estate tax free depending upon the size of your taxable estate). If they are all different there is a possible gift tax due upon death. To avoid this make sure the owner and insured are the same or the owner and the beneficiary are the same person. You can also use a trust to own life insurance but this is unnecessarily complex unless the policy and/or your estate is large.

3. Failure to name a successor owner or beneficiary. In either case the proceeds may end up in your probate estate which may take more time to administer than if you simply had a successor owner or beneficiary named on the policy.

4. Gift of a policy subject to a loan. If you have taken a loan against the cash value of your life insurance and then transfer the policy, the IRS treats the transfer as a sale and any loan that was forgiven is considered taxable to the extent it exceeds the total of all premiums paid into the policy.

5. Taking policy cash withdrawals (as opposed to loans) within the first 15 years. If you take withdrawals of cash value (as opposed to a loan) during the first 15 years of the policy’s existence than a portion of it may be treated as a taxable withdrawal.

The “Myths of the High Medical Cost of  Old Age and Dying” identifies and dispels seven myths about caring for older people at the end of life.

Myth 1: The growing number of older people has been the primary factor driving the rise in America’s health care costs. Fact: Population aging is not the principal determinant of rising health care costs.

Myth 2: As the population ages, health care costs for older Americans will necessarily overwhelm and bankrupt the nation. Fact: Population aging need not impose a crushing economic burden, especially if we start now to conduct the necessary research and develop policies on health care at the end of life.

Myth 3: Putting limits on health care for the very old at the end of life would save Medicare significant amounts of money. Fact: Limiting acute care for the very old at the end of life would save only a small fraction of the nation’s total health care bill. The proportion of Medicare spending attributable to beneficiaries in the last year of life has remained stable over the past two decades.

Myth 4: Aggressive hospital care for the aged is futile; the money spent is wasted. Fact: Many older people who receive aggressive care survive and do well for an extended period.

Myth 5: It is common for older people to receive heroic, high-tech treatments at the end of life. Fact: Only a fraction of people over age 65 receive aggressive care at the end of life. The older people are, the less likely they are to receive aggressive care when dying.

Myth 6: Medicare covers everything that older adults need in terms of their health care. Fact: Medicare does not cover several essential components of health care for older Americans. For example, Medicare pays for custodial services only in the setting of acute illness; it does not pay for long-term care.

Myth 7: If all older patients had living wills or other kinds of advance directives, it would resolve dilemmas of how aggressively to provide care. Fact: Living wills and other forms of advance directives are not a panacea. They often have little impact on or relevance to end-of-life decision-making. Physicians and health care professionals need to be trained in communicating and advising patients and families about their options, potential outcomes, and time-limited trials, especially in the face of advancing medical technology.

To download the full report or purchase a hard copy visit www.ilcusa.org or email publications@ilcusa.org. The “Myths of the High Medical Cost of Old Age and Dying” is part of the ILC-USA’s project on Ageism In America with generous support from the Open Society Institute.