Traditional Long Term Care Insurance (LTCI) policies are often paid for on a monthly or annual basis, with premiums continuing for the duration of your lifetime (some offer single premium options). On the other hand, a long term care annuity (LTCA) is deemed 'fully funded' once the initial premium has been paid. There are no ongoing premiums or required payments.
Most traditional long term care insurance (LTCI) policies do not offer you a cash withdrawal benefit, or benefits in the event that you don't require long term care during your lifetime. A long term care annuity (LTCA) may allow you to access cash value during your lifetime, even if you never require care. In addition, when the annuity contract matures, your contract's remaining cash value may be passed onto your named beneficiaries.
Long term care insurance requires underwriting, which can be limiting if you have a pre-existing condition. Most long term care annuities do not require traditional underwriting and therefore could be a viable option if you would possibly be turned down for traditional long term care insurance.
Qualified benefits paid by both long term care insurance policies and long term care annuities are received on a tax-free basis to the contract/policy owner.
Long term care insurance and long term care annuities both offer benefits worth consideration. If you are seeking a simple, tax-advantaged method of providing some long term care coverage, an annuity may be the most viable option.1
1. Source: Courtesy of Insurance Associate Group April 2017 Newsletter
Contact me at (941) 404-5334 to discuss your long term care options and/or get you started on the right track of getting yourself insured.