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Long Term Care

According to longermcare.gov, 2 out of every 3 individuals turning 65 today will need some form of long term care before they die. Planning for long term care is an imperative task when any financial and retirement decision are being made. One of our relationships is with a successful financial planner who tells her clients, "If we don't plan for long term care first, what is the point of coming up with an investment plan? We cannot reasonably establish any investment time horizons, as you may need access to those funds tomorrow for long term care expenses."

We represent and support a number of options for long term care protection, which includes both traditional and non-traditional coverage. Several carriers have begun to offer hybrid policies which are built upon a Life and/or Annuity contract, and include a qualified long-term care rider (filed as 7702b). These type of contracts may be more suitable for your affluent clients and those clients who want to secure guaranteed LTC charges.

Coverage Types

​Below is a description of the various types of LTC coverage we support and offer. Note that all information on this page refers to "qualified" long term care filed under US Code 7702b. There is a difference between qualified long term care and accelerated DB riders filed under US Code 101g. Call our office so we can explain further.

Life/LTC Hybrid

Several insurers have recently introduced Life insurance contracts with linked LTC benefits. Some of these products are more focused on the death benefit whereas other products are more weighted towards the LTC benefit. The common feature for life/ltc "linked benefit" products is a guaranteed return of principal when coverage is purchased as a single premium (some carriers require a 3-5 year rate for 100% ROP) and a death benefit that can be used for long-term care protection upon qualification (2 of 6 ADLs or cognitive impairment). We work with insurers who offer a single pay, 10 to 20 pay, and life pay schedule of premiums.

The accessibility of principal through single pay schedule with return of premium feature, allows funds used to purchase coverage to remain as an asset within your client's portfolio. One could conceptually describe the transaction as showing your client how to leverage their funds by taking money out of their right pocket and putting it into their left pocket. Note how the image demonstrates $125k cash remaining within the client's portfolio while offering double its value in death benefit and long-term care coverage.

​​Selecting the most suitable linked benefit product will depend on on your client's available funds, his or her desired objectives for coverage, and the number of insureds to be covered under the policy. Some instances when these plans may be suitable for your clients are listed below.

  • ​• Desire for guaranteed return of premium
  • • Maximized leverage potential for conservative investments (CD's, Money Market accounts, Savings accounts)
  • • Available cash in permanent life insurance products for 1035 exchange
  • • Guarantee that the cost of LTC benefit will never increase
  • • Protection against loss of premium should insured pass away before needing long term care benefit
  • • Need for life insurance death benefit and convenience of addition LTC protection
  • • Available qualified money, not needed for retirement income, used to turn taxable money into tax-free long-term care and life insurance benefits.

    Be aware that not all products and features are approved in all states. Contact our office for further information and list of available products within your state.

    Annuity/LTC Hybrid

    The Pension Protection Act of 2006 (PPA) provided for individuals to take cash value withdrawals, from specially designed and PPA approved non-qualified annuities, for long-term care expenses income tax-free. This provision took effect for all withdrawals made after January 1, 2010 and is available regardless of contract cost basis. Please note that deferred annuities offering a waiver of surrender charges for a long term care event may not be PPA approved. This may results in taxation of funds considered as gains within the contract.

    Consider clients who currently have non-qualified annuities with a potential tax burden due to growth within the contract. Would this individual like to avoid annuitization, position funds to possibly elimination any tax implications on their gains, double, triple or even quadruple the value of the contract towards LTC protection, and protecting their estate from the rising cost of a long-term care event? The answer is an emphatic YES!

    ​State Life Insurance Company, a OneAmerica company, has allowed producers to provide a "win-win" solution to thousands of insureds and their families for over 20 years. The company has the experience and stability your clients are looking for when considering options to protect their loved ones and estate. Contact our agency for more produce information.

    In addition to State Life, we offer similar PPA compliant Annuity/LTC products through Lincoln National, Guaranty Income Life, and ForeThought. Product comparison and competitive analysis are available upon request.

    Traditional LTC Insurance

    Most individuals associate a traditional long term care product when discussing LTC insurance. Traditional long term care insurance offer the most flexibility for creating specific benefits within a policy. An individual can choose from multiple benefit periods, inflation protection, daily or month benefit amounts, and have the option to add several riders to the policy. Some of these riders offered by the insurer are unique to their products, while other are standard within the industry.

    The common misconception is that traditional long term care insurance only pays for nursing home expenses. This is not true. Most traditional long term care insurance products will provide payment of several benefits received within the home. In fact, coverage may provide the insured with the option to stay in the home whereas a placement would have been necessary without coverage. Long term care insurance is the PLAN that can PAY for the COST, associated with a long term care event.

    Each individual insurer defines expenses that are payable under the terms of their contract, but several policies provide the below.

    • • Adult supervision and daycare
    • • Assistances with daily activities (administration of medication, meal preparations, bathing, dressing, ect.)
    • • Most care facility expenses
    • • Some homemaker services, such as light housekeeping
    • • Home modifications
    • • Respite care
    • • Caregiver training

We consider long term care planning a serious matter that must be discussed not only with your clients, but with your friends and family as well. The potential risk can be financially and emotionally devastating. Considering the significant impact of this risk exposure, we have aligned with those carriers possessing financial strength, experience, and commitment within the LTC marketplace.

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