Annuity Can Buy Long Term Care Insurance

Let’s say you desire long term care protection but do not want to pay annual premiums for coverage.  Here’s an idea that can get you the protection and eliminate annual premiums.  Make a single deposit into an immediate annuity and have it make lifetime payments to your long term care policy.

Let’s take an example of Mr. Jones, age 70.  He is willing to make a one time payment of $20,000 for $150,000 of long term care protection.  Based on a $20,000 deposit, he can obtain lifetime payments of $175 per month, a sufficient amount to buy the long term care coverage he desires.

Two issues to keep in mind:

1.      The payment from the immediate annuity are partially taxable (part is considered return of principal and is not taxed). 

2.      The long term care premiums may not be guaranteed.  While some companies guarantee the premium for 5 or 10 years, we have found no company that will guarantee the annual premium rate for life.

Therefore, consider yet another solution.  Some long term care companies will accept a one time deposit that pays up the long term care policy for life.  With such an option, your policy is paid up and even if they raise rates for other policyholders, those who have paid the single premium are fully paid.

Is it better to use the annuity idea above or find a company that accepts the single deposit themselves?  The only way to answer that is to check the numbers for each individual taking into account their age, health status and long term care coverage they desire.

To have such a comparison made for you, contact your local Certified Retirement Financial Advisor.