Long Term Care Annuities
A Long Term Care Annuity is an annuity with a long term care rider. The LTC annuity creates a pool of money to cover long term care costs. It includes the advantages of a traditional annuity, plus the added benefits of long term care protection.
Long Term Care Annuities have gained significant popularity in recent years. They're also referred to as asset based or hybrid long term care plans. The term asset based because they're funded with assets rather than ongoing premiums.
Popular ways to fund a long term care annuity include repositioning an existing annuity, or funding from a bank CD, savings account, life insurance policy, IRA or retirement plan. You may be able to increase your current return while protecting yourself with tax free long term care benefits.
Advantages Include: No Premium Increases, Simplified Health Underwriting and Premiums Invested Are Not Lost.
Long Term Care Life Insurance
Long Term Care Life Insurance combines life insurance with a long term care rider. Like LTC annuities, Long Term Care Life Insurance has gained significant market share.
You can fund a Long Term Care Life Insurance policy with either a single premium payment or over time. Like traditional life insurance, there is a death benefit that will transfer assets to your heirs. Or, the death benefit can accelerate to cover your long term care needs.
Long Term Care Life Insurance is also referred to as Linked Benefit Long Term Care, Long Term Care Hybrid Insurance or Asset Based Long Term Care. The term Linked Benefit refers to a long term care insurance rider being linked to a life insurance policy. Regardless of the term, these policies join either whole life or universal life insurance with a long term care insurance rider.
Advantages of Long Term Care Life Insurance: No Premium Increases, Health Underwriting may be Less Restrictive, Assets Can Transfer Tax Free to Heirs, Premiums Invested Are Not Lost, plus other estate planning benefits.
1035 Exchanges For Life Insurance & Annuities
A 1035 exchange is a U.S. tax code provision allowing you, as a policyholder, to transfer funds from a life insurance or annuity to a new policy, without having to pay taxes.1
A 1035 exchange can allow you to convert your existing life insurance to long term care life insurance. Similarly, you may be able to convert an existing annuity into a long term care annuity. The 1035 exchange defers the internal build up of gains associated with your existing life or annuity insurance policy.
Because of the tax-free nature of long term care insurance, a 1035 exchange ensures the taxable gain disappears if used to pay for long term care expenses.