Long Term Care in Annuity contracts

Market research consistently confirms a need for long term care insurance by individuals at or near retirement age. The research also shows resistance to conventional solutions, because of their cost and the fear that significant premium dollars may be expended without any benefit return. (Standalone LTC is “use it or lose it.”)
The Pension Protection Act of 2006 (PPA) provides for extremely favorable income tax treatment of qualified Long Term Care Insurance Riders/Provisions attached to Annuity Contracts. All types of annuities are so covered. The significant amount of assets accumulating within annuities and mutual funds by owners at or near retirement age provide an optimal source of funding for such annuities.
POINTS TO CONSIDER
•	TREATMENT OF GAIN. The LTC Rider transforms the tax-deferred annuity into an income tax-free annuity when payments are made to cover LTC expenses.

•	EXCHANGE PROVISIONS. The PPA enables tax free exchanges to combination annuities thus enabling large amounts of gain within existing contracts to potentially be paid out income tax-free.

•	POTENTIAL LTC BENEFIT GROWTH. The LTC benefits may be structured to grow with performance.

•	LOCK-IN PROVISION. Lock-in provision at time of claim. Unfavorable investment performance cannot reduce benefit payments, for both annuity and LTC. Riders for deferred annuities may be packaged with other riders such as guaranteed minimum withdrawal benefits.

•	SIMPLIFIED PRODUCT STRUCTURE. Implementation is much simpler.

•	NO BENEFIT COMPROMISES. LTC Riders can provide the same benefits as standalone vehicles.

•	EASIER CLAIMS HANDLING. Claims can be easily handled by TPA. Potential vehicle for insurers without standalone portfolio. No need to build a large claims unit.

•	MARKET OPPORTUNITY. An opportunity to penetrate an unsaturated market segment.

•	EXTENDED BENEFIT COVERAGE. Riders are available that provide for additional payments in case the annuity policy is completely paid out. Such riders can significantly extend the coverage period.

•	AVAILABLE ON ALL PRODUCT CHASSIS. Considerable opportunities exist within immediate annuities to provide enhanced values upon the occurrence of chronic illness. Monies would be received income tax free.

Incorporating LTCI into an annuity product gives you the best of both worlds; retirement planning coupled catastrophic coverage should the need arise.