Planning matters

Long-term Care Insurance: You Have Options!

Big news! Insurance providers being innovative! And sometimes that is just what we need to adapt an existing ‘good’ product to a ‘great’ new product to better fit our life.

As an alternative to traditional long-term care insurance policies, insurers are offering new products, adding long-term care insurance benefits to either a life insurance policy or an annuity.

While these products have been on the market for a while, their popularity is increasing due to the Pension Protection Act of 2010. The law allows for tax-free distributions from life insurance and annuities to pay for long-term care costs. You can use non-qualified money or qualified money from your IRA to fund your policy. You can even use a 1035 exchange (full or partial) of another annuity to purchase a hybrid policy.

The cost and need for long-term care services continues to rise, but purchasing long-term care insurance lags behind. People tend to view long-term care as expensive. Some people do not want to pay premiums for insurance they may not even use. In addition, insurers are becoming more selective about who they approve for coverage.

There are a variety of options available to fit different needs. One option, a hybrid life insurance policy, allows a buyer to purchase cash-value life insurance using a one-time payment. If needed, a portion of the policy value can be used for long-term care benefits. When you die, the unused portion of the cash value becomes a death benefit payable to your beneficiaries–a great advantage over previous long-term care options.

The current hybrid annuity policies available vary. The basic product is a fixed deferred annuity with a long-term-care ‘rider’ attached. The rider allows for benefit payments to cover costs of long-term care and pays out benefits for a specific number of years or for life. The annuity offers a guaranteed interest rate, limited withdrawals, and any accumulated value passes to your beneficiaries upon your death.

When considering long-term care insurance coverage, it’s best to compare the rates, benefits and options available with both traditional and hybrid products. Even if you’ve considered Long-Term care in the past, these products make it worth re-thinking. I’d love to share and explain these latest products to you. Give me a call and let’s talk!

Written By Jeri Boston