Long-Term Care Annuity: How Does it Work?
July 20, 2023 | Kari Mellone
A long-term care annuity is a traditional annuity with a rider designed to help individuals cover the expenses of long-term care services, such as nursing home care or in-home assistance. A long-term care (LTC) annuity can be a wise investment because this investment vehicle has tax advantages that can provide a source of income as well as protect against the potentially high costs of long-term care services.
Related Read: Mistakes to Avoid When Buying an Annuity
Here is how a LTC annuity works:
Choose the Right Product: Work with an experienced insurance agent to help you select a suitable long-term care annuity for you and your individual needs. They will be able to answer any of your questions and help you understand the contract benefits and any limitations.
Make Premium Payments: Once you select a long-term care annuity, you need to make
premium payments to the insurance company. The payments can be made in a lump sum.
Enter the Accumulation Phase: In the accumulation phase, your investment accrues and grows with interest over time. The growth rate will depend on the terms of the annuity.
Long-Term Care Benefit Trigger: Long-term care annuities will have criteria that must be met to activate the LTC benefit component. This is generally when the individual is no longer able to perform a certain number of activities of daily living (ADLs), such as eating, bathing, walking, or has a cognitive impairment.
Receive Benefit Payments: If the benefit qualifications are met, you can begin receiving regular payments from the annuity to cover long-term care expenses. The payment amount will depend on the terms of the annuity contract.
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A long-term care annuity can provide financial peace of mind to older adults and seniors. They can provide an income stream throughout retirement and cover expenses if long-term care is needed in the future. Consulting with an experienced insurance professional who specializes in long-term care annuities can help you determine if a long-term care annuity is suitable for you or a loved one.
Choosing the right annuity is important as it can have a significant impact on your retirement. It’s essential to take the time to explore all available options and select an annuity that best suits your individual needs and circumstances. At Twin City Underwriters, we know that individualized attention to a client’s personal situation and needs are especially important, which is why we take the time to understand you and your financial goals. Contact us to schedule an appointment with one of our experienced insurance agents.
Are you ready to have a meaningful discussion about your financial needs? Call or email TCU today to set up a free, no-obligation appointment with one of our dedicated agents.
Call Twin City Underwriters to learn more: 651-488-0172 or 800-507-6778.
