Wall Street Journal article on Long Term Care and Annuities

 There’s a good article in the Wall Street Journal, It’s entitled New Strategies for Long-Term Care, by Kelly Greene.  She discusses the costs of LTC and how such a policy can be tied to annuities  and other products, reaping some tax benefits.  She discusses how there are initial high cash outlays in such programs.  These combo products have many ramifications and can be extremely complex, but can beneficial for certain people.  It all depends on the individual’s personal, family and community goals.

She begins by noting how people are either afraid to go without LTC or are fearful of paying for the premiums.  She notes that LTC covers home health, assisted living or nursing home care, which will help protect your estate in the case of extended disability.  She notes correctly that LTC policies cost an average of $2,200 per year, but implies that’s a waste if you never need it.  We disagree with her on this point, however, because LTC coverage does offer security and peace of mind, which is worth a lot.

She discusses deferred fixed annuities, where LTC benefits are packaged with LTC benefits, showing how a large initial investment grows over a lifetime and the LTC portion is not taxed, but does reduce the death benefit if used.  New rules in the Pension Protection Act of 2006 allow for money to be distributed free of taxes.  Six companies are now offering annuities tied to a LTC component.  For example, Genworth has an annuity product that can pay up to three times the annuity’s value for long term care.

Basically these products meet two needs.  You can leave your annuity to your heirs or create one for yourself and then cover your long term care needs.  This, of course, involves an initial expensive outlay, so it’s not for everyone.   And using up your benefits on LTC leaves your heirs with a lesser amount upon your death.  We work with all type of long term care insurance and annuity products so for more information call us any time or fill in the form below.