Options for Long-Term Care Planning

Below you will find information on the various options we use when designing Long-Term Care plans; each offers unique features and benefits to allow a Long-Term Care plan to become an integral part of a comprehensive financial plan.  As you will see, there are many factors to consider when determining how to design a Long-Term Care plan; including cost certainty, plan funding, residual value, underwriting and taxation

 

Please contact us for a copy of the "Options for Long-Term Care Planning" below. 

Long-Term Care Insurance

 

Plan Funding:  Premium payments are generally ongoing, usually for life, unless a shortened payment period is available for the plan.

 

Basic Plan Platform:  Provides  “use it, or lose it” types of benefits, much like home owner's or auto insurance.

 

Cost Certainty:  NO - LTC Insurance is essentially a form of health insurance, and plan costs can (and likely will) rise in the future.

 

Residual Value:  There is generally no residual value, unless a very costly “return of premium” rider is purchased.

 

Underwriting:   LTC Insurance is underwritten for “morbidity” and, with relatively few providers in the marketplace, preferred ratings can be quite difficult to obtain.

 

Features & Benefits:   Flexible Plan Design which Allows for customization, with plan premiums based on the benefit level, duration and other options selected.

 

Benefits Taxation:   Benefits are intended to be income TAX-FREE under current tax law, up to federal limits, and will be paid or reimbursed up to the maximum policy benefit for all levels of care of the contract.

Life/LTC Insurance Hybrid

 

Plan Funding:  This plan offers flexible funding from monthly to lump sum; even using cash values or the exchange of an existinglife insurance or annuity contract.  Qualified (IRA) funds can also be used.

 

Basic Plan Platform:   The purchase of life insurance provides a guaranteed death benefit, with LTC benefits based on that death benefit.

 

Cost Certainty:   Yes - Once the plan is in place, all premiums can be fully guaranteed.

 

Residual Value:   The death benefit is passed onto heirs tax-free, as would be the case with traditional life insurance.

 

Underwriting:   Simplified underwriting is usually available, including an application with medical questions and a phone interview for cognitive testing.  Medical records may be requested, if needed.

 

Features & Benefits:   Flexible Plan Design which Allows for customization, with plan premiums based on the benefit level, duration and other options selected.

 

Benefits Taxation:   Benefits are intended to be income TAX-FREE under current tax law, up to federal limits, and will be paid or reimbursed up to the maximum policy benefit for all levels of care of the contract.

 

Life Insurance with a LTC or Chronic Illness Rider

 

Plan Funding:   This plan offers flexible funding from monthly to lump sum; even the potential to use cash values or the exchange of an existing life insurance or annuity contract.

 

Basic Plan Platform:   The purchase of life insurance provides a death benefit, and the “rider” provides access to that death benefit for LTC benefits.

 

Cost Certainty:   Yes - Once the plan is in place, all premiums can be fully guaranteed.

 

Residual Value:   The death benefit is passed onto heirs tax-free, as would be the case with traditional life insurance.

 

Underwriting:   Normal life insurance underwriting requirements would apply.  However, life insurance underwriting tends to be more liberal than underwriting for LTC insurance.

 

Features & Benefits:   Basic Plan Design which Allows for little customization as LTC benefits are generally based simply on the death benefit.

 

Benefits Taxation:   Benefits are intended to be income TAX-FREE under current tax law, up to federal limits, and will be paid or reimbursed up to the maximum policy benefit for all levels of care of the contract.

Annuity/LTC Hybrid

 

Plan Funding:   Plan may be funded with a lump sum of cash, qualified funds or an exchange of an existing annuity or life insurance contract..  Qualified (IRA) funds can also be used under certain conditions.

 

Basic Plan Platform:   The purchase of an annuity provides a LTC benefit; which is essentially a “multiplier” of the accumulated cash value of the annuity.

 

Cost Certainty:   Yes - Once the plan is in place, all premiums can be fully guaranteed.

 

Residual Value:   The death benefit is passed onto heirs as would be the case with any other annuity.

 

Underwriting:   Simplified underwriting is usually available, including an application with medical questions and a phone interview for cognitive testing.  Medical records may be requested, if needed.

 

Features & Benefits:   Flexible Plan Design which Allows for customization, with plan premiums based on the benefit level, duration and other options selected.

 

Benefits Taxation:   Benefits are intended to be income TAX-FREE under current tax law, up to federal limits, and will be paid or reimbursed up to the maximum policy benefit for all levels of care of the contract.

Annuity With Income Benefits for

Confinement or ADL Impairment

 

Plan Funding:   Plan may be funded with a lump sum of cash, qualified funds or an exchange of an existing annuity or life insurance contract.  Qualified (IRA) funds can also be used under certain conditions.

 

Basic Plan Platform:   The purchase of annuity provides a LTC benefit; which is based on the income guarantees of the annuity.

 

Cost Certainty:   Yes - Once the plan is in place, all premiums can be fully guaranteed.

 

Residual Value:   The Annuity’s death benefit is passed onto heirs, however Qualified (IRA) accounts may be subject to other rules regarding transfer or taxation.

 

Underwriting:   Generally, little if any underwriting is required, however activation of income riders may be delayed for

a specified period of time.

 

Features & Benefits:   Allows for little customization as LTC benefits are based simply on the initial deposit & annuity value.

 

Benefits Taxation:   Generally, benefits will be taxable in the year taken.

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