Leverage Your Annuities if You Plan to Self-Fund Long Term Care

Ok. So you’re not convinced that it is worth it to purchase Long Term Care Insurance to safeguard your retirement savings against the financial risk of a catastrophic health event as you age. 

“If I need it, I will just pay for it myself”. 

I hear this all the time. People view insurance as a use-it-or-lose-it proposition. If you are planning to pay for your own long term care, then give some thought to what assets you will use to pay for that care.

You may never need care, but if you did, how will that affect your family? Your spouse? Your adult children?

If you do need care, how will you pay for it? Where will the money come from?

If you are in retirement or nearing retirement, hopefully your portfolio is now balanced with a safe mix of aggressive versus conservative assets. What do you have for conservative assets?

 Leverage your Annuities 

If you have non-qualified annuities, these can be exchanged tax-free into a new hybrid annuity with Long Term Care benefits built in.

There are two key benefits from exchanging your annuities into a hybrid product…

  1. Under the Pension Protection Act, benefits paid out for Long Term Care are received tax-free. This means that your otherwise taxable annuity can be converted into tax-free benefits. If you surrendered you old annuity, you would pay tax on any gain. If you annuitize (turn on) the annuity, the income would normally be taxable.
  2. The Long Term Care benefits of these annuities are usually much greater than the face value of the annuity. So you can potentially turn a $100,000 annuity into $400,000 of tax-free benefits.

So would you rather pay for a dollar of future long term care with a dollar from your savings or turn your dollar of savings into four dollars of benefits?If you own annuities and want to preserve your assets, while maximizing their value toward the cost of long term care, consider exchanging those assets into Hybrid Annuities with linked Long Term Care benefits.

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No Rendering of Advice: The financial content in this document is provided for your personal education. It is not intended for trading purposes, and cannot substitute for professional financial advice. Always seek the advice of a competent financial advisor with any questions you may have regarding a financial matter. Information in this document is not appropriate for the purposes of making a decision to carry out a transaction or trade nor does it provide any form of advice (investment, tax, or legal) amounting to investment advice, or make any recommendations regarding particular financial instruments, investments, or products.

The sole purpose of life insurance is for the death benefit protection. Any other benefit is ancillary.