Fixed Annuities that Convert to Long Term Care
The 2006 Pension Protection Act has provisions that offer favorable tax treatment for insurance and annuity products that provide long-term care benefits. Since they are qualified plans, the Long Term Care benefits are received tax free. They provide a guaranteed rate of interest and tax-deferred growth. They pay the owner if they need long-term care and pay them if they don't.
These hybrid annuities are more suitable for people who have assets in the range of $300,000 to $2,500,000. By repositioning a portion of assets into the annuity/Long Term Care plan, retirement savings are protected from the ravages of long-term care costs.
Some plans can pay up to three times the value of the fixed annuities for Long Term Care and cover up to six years of long-term care while protecting a spouse and/or family members from the emotional, physical, and financial toll of care giving. Most people prefer to receive care at home as long as possible, and for this reason these plans are very attractive because they cover a wide range of care as follows:
Fixed annuities that convert to Long Term Care help protect retirement savings from the risk of needing long-term care. If Long Term Care is not needed, the principal can be accessed through partial withdrawals or lifetime income options. And it provides a death benefit to the beneficiary equal to the fixed annuities value without probate in most cases.