Alternative Long Term Care Solutions
Long Term Care Annuities - Long Term Care Life
Long Term Care Annuities
Long term care (LTC) annuities are single premium deferred annuities with a long term care benefit attached. They are safe, the funds accrue at a competitive interest rate, and the account grows tax deferred.
To form an LTC annuity, the insurance company has built in a “long term care option”. It is not a rider and there is no additional premium for this option. The insurance company provides up to three times the single premium as an additional LTC benefit.
Usually LTC annuities credit interest at a lower rate than single premium deferred annuities. If the client does not need long term care, the annuity continues to grow tax deferred, but if sometime in the future a long term care need does arise, they will be able to draw from their annuity as a long term care benefit. Note: when the client draws on their LTC annuity for long term care benefits it proportionally draws down their annuity value. The annuity value could be zero, but the LTC “three times benefit” will still be providing LTC benefits, until it is exhausted.
The Pension Protection Act of 2006 stated that benefits for long term care used from LTC annuities will not create a taxable event (effective January 1, 2010).
To qualify, a person only needs to lose two of six activities of daily living (ALD). ADLs include eating, bathing, dressing, toileting, transferring (walking) and continence. There are many advantages and some concerns your client should consider when analyzing how to cover the costs of a long term care stay. To get more information about a Long Term Care Annuity, please contact us at 866.452.3670.
Life with LTC
Life with long term care combines the best features of life insurance and long-term care into one design; it is typically sold as a universal life contract that requires a single premium and that funds an accelerated death benefit rider to pay out long-term care benefits if needed.
A single premium payment into this universal life product combines three features in one product.
Once the premium is inside the universal life insurance policy, the account value earns an interest rate (typically at least 4%) on a tax deferred basis, building up a cash reserve that can be used tax free to cover nursing or home-care costs. Any money that is not spent on nursing care benefits will be distributed to your heirs as an income tax-free death benefit under Internal Revenue Code Section 101(a)(1).
Call PIPAC LIFE Brokerage to learn more at 866.452.3670 or email us at sales@pipaclife.com.
