Often times, I am asked for my advice on what product to use and when. My initial response is always going to be “that all depends”.
The OneAmerica Care Solutions portfolio is NOT cookie cutter or one size fits all. It is dynamic and capable of providing a LTC funding solution based upon the unique needs, wants, and characteristics of the clients.
Let’s discuss a scenario that I have discussed more frequently this past 3 months than at any time in my seven years with OneAmerica. The need is producing a long term care solution that is as revenue-neutral as possible.
Simply, we are working to develop a solution that will produce the smallest (if any) impact the current flow of income.
To some, remaining revenue neutral will be an impossibility. The income producing assets my be insufficient or the asset mix may not allow for a true revenue neutral strategy. In these instances, the best that we can do is to look for a funding strategy that is the least intrusive on income producing assets, aligns with the client’s other goals, and minimizes the impact on their tax liability.
In order to achieve the optimum result, all assets and cash flow must be known. For some, this is business as usual – for others, this requires some heavy duty conversations and fact finding. Regardless, it is imperative that a total financial picture be revealed so that the best solution can be presented.
Once we have that picture, we can assess what opportunities exist from a LTC funding perspective.
Often (too often in my opinion), monies are liquidated and taxable events are created when they could be avoided. In some instances, a taxable event is unavoidable – using qualified money as a funding source for example. In other instances, repositioning “idle” assets is the best solution particularly nonqualified deferred annuities.
This strategy has been shared for nearly 2 decades. Yet, many people opt to liquidate the nonqualified deferred annuity, pay taxes on the gain, and use those proceeds to fund a LTC policy.
WHY? This is not revenue neutral!
The best solution is to utilize the 1035 exchange from a nonqualifed deferred annuity into one of the Annuity Care products. It is a tax free exchange that transforms tax deferred accumulation into tax free LTC benefits!
This is the best strategy to remain revenue neutral. With billions of dollars in nonqualified deferred annuities that are out of surrender that will not be utilized for income on the books, this the least revenue neutral solution available!