To form an LTC annuity, the insurance company has built in a "long term care option." It is not a rider. There is no premium. It is simply an option you elect if long term care is ever needed. Sweet.

To qualify, a person only needs to lose two of six ADLs (activities of daily living). ADLs are insurance companies' method of determining the qualification for levels of care. They are eating, bathing, dressing, toileting, transferring (walking) and continence.

The person doesn't have to be in a nursing home. They simply need to have demonstrated the inability to perform two of the six ADLs to qualify to put the long term care option in their annuity in action.

An Example

If a male, age 60, places $200,000 into an LTC annuity, assuming a conservative interest rate, the policy would grow to $300,000 in ten years. If the $300,000 were converted into a life income, the person would receive $2,200 per month for the balance of their life. An 8.8% return. Not too bad, considering it is guaranteed no matter what.

If this person needs long term care at age 70 by virtue of losing two of six ADLs and elected the long term care option, the life income would jump to $4,500 a month.

Conclusion

These new products, long term care annuities, provide the option to receive long term care benefits only if they are needed. There is no separate long term care insurance policy, no premiums and generally little or no underwriting.

Now there are no excuses. Those who feel they will never need long term care will simply never exercise their LTC option. Those who find long term care too expensive have an alternative with no premiums. Moreover, those who have health issues can obtain long term care benefits, as underwriting is simplified or non-existent.

Page 2 of 2 :: First | Last :: Prev | 1 2 | Next