In addition to the role annuities may play in a retirement or financial plan, there are some compelling arguments to be made for utilizing an annuity in a Long-Term Care plan as well.  Few advisors or consumers know that annuities have been around since the Roman Empire, and contrary to media pundits and talking heads, "annuity" is not a four-letter word!!  

In fact, according to Maria Wood of LifeHealthPro.com, "research from the Insured Retirement Institute (IRI) and Cogent Research shows that annuities are gaining greater acceptance among investors."  For many Americans, it may be time to take a closer look at annuities to better understand some options available today.  

 

Long-Term Care Annuities

We often discuss how Asset-Based Long-Term Care plans and annuities are a great option in certain circumstances.  Not only are there tax-deferred annuities with enhanced income features, but there are also other “qualified” annuities specifically tailored for a Long-Term Care plan!!   CDs, money markets, savings accounts, etc., are still paying historically low interest rates.  As your clients continue to look for higher returns for their "safe money," there are many Long-Term Care annuities offering very attractive interest rates.  These solutions also guarantee Long-Term Care benefits at a level of TWO OR EVEN THREE TIMES their accumulated account value.  If that sounds like a fairy tale, IT'S NOT…..there are annuities today offering just that!!

Leveraging The Pension Protection Act.....

Provisions of the Pension Protection Act (PPA) allow Americans who already own annuities to use their savings dollars in new, tax-friendly ways.   When the expenses incurred for Long-Term Care are funded by PPA-compliant solutions, those withdrawals will be TAX-FREE and NOT considered taxable income.  If you're unfamiliar with this strategy to "upgrade" old annuities or life insurance contracts into PPA-compliant solutions for Long-Term Care planning, you might appreciate learning more about The Power of The Pension Protection Act.  The government is giving everyone an excellent reason to plan for their Long-Term Care needs, and using existing annuities may be a great way to implement a Long-Term Care Plan. 

Income For Life.....with a KICKER!!

One of the best features of an annuity continues to be the guaranteed income it provides.  There are several high-quality, income-oriented annuity solutions offering substantial Long-Term Care benefits.  These products not only offer a lifetime income guaranteed but also a "Step Up" of that income should you have (1) the inability to perform 2 of 6 activities of daily living or (2) a nursing home confinement need.  These solutions are often recommended in a "layered" Long-Term Care plan or when underwriting qualification for a PPA-compliant solution isn't possible.  Additionally, qualified dollars from a 401(k), SEP, IRA, etc, can be used to fund these solutions.   Finally, when studies indicate the majority of those in or near retirement are concerned with outliving their savings, the income feature of annuities may be a consideration for retirement and Long-Term Care planning.



Please contact us to discuss ways to use annuities to implement a client's Long-Term Care plan.

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