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Yet another LTC Thread II
Old 07-08-2011, 07:01 PM   #1
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Yet another LTC Thread II

Has anyone any experience with annuities with a LTC rider? I never heard of this until today, in a spam email or all places, go figure...

Milliman Insight - Combo LTC annuities: Here they come

In my continuing struggle to come up with a strategy for dealing with potential LTC costs, this may be an alternative to a one pay LTC policy.

Has anybody heard of this?

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Old 07-08-2011, 07:32 PM   #2
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I have never heard about these types of annuities, but look forward to reading other members' views and experiences about these products.

Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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Old 07-08-2011, 07:54 PM   #3
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LTC annuities don't qualify for partnership programs and are very expensive for the benefits you get. They are not comparable replacements for LTC insurance and in my personal opinion, should only be used for people who can't qualify for LTC insurance and can only get one of these with the relaxed underwriting.

Lincoln National has a product that combines universal life insurance and LTC benefits called MoneyGuard. When I break down the numbers, I usually find it's cheaper to buy a single-pay universal life policy and a single-pay LTC policy than combining the two into one product and watering down the LTC benefits.

Run the numbers and compare with an LTC insurance policy and I think you will agree with me. Any time you combine two or more types of insurance into a single product, you are probably going to be worse off than getting both products separately.
Disclaimer - I am an independent insurance agent. If the above message contains insurance-related content, it is NOT intended as advice, and may not be accurate, applicable or sufficient depending on specific circumstances. Don't rely on it for any purpose. I do encourage you to consult an independent agent for insurance-related advice if you have a question that is specific in nature.
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Old 07-09-2011, 05:37 AM   #4
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I wonder if this will turn a VA into a cost effective LTC asset accumulation mechanism.

Depending on how the products are structured, they could offer a decent way to self insure (accumulate funds) that are not taxed during a growth phase.

It will be interesting to see what types of products the insurance companies create!

Some, will no doubt offer an insurance rider at a cost (guarantee of some amount of LTC payout).

But, I wonder if any of them will just have a no fee provision for LTC that enables the money to be spent on LTC and therefore characterized as a Hybrid Annuity for tax purposes.

But I think there still may be a complication for taxes.

How are funds in a deferred annuity handled at death? Are assets in a deferred annuity treated like life insurance for the beneficiary? Would the spouse (if they are the beneficiary) have to pay tax on it immediately? If not, income taxes may be due upon death. Plus, if one exceeds the Estate tax exemption... they might run into that tax.
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