Repurpose a Deferred Annuity

If you haven’t figured it out, I am focusing on the opportunity that non-qualified deferred annuities offer in the long term care funding conversation.

All of this is in preparation for my April 9 webcast at 11 am (eastern) where I discuss how to transform tax-deferred accumulation inside non-qualified deferred annuities into tax-free long term care funding.

Last week, I shared statistics from a Gallup survey that indicated that 73% of nonqualified deferred annuity owners identified their annuity as a resource that they would tap in the event of a “catastrophic illness or nursing home stay.”

Here is a little background on how this came about.

A decade ago, the Pension Protection Act (PPA) created the opportunity where a 1035 exchange from life insurance or non-qualified deferred annuities proceeds moved into “qualified” long term care products like Asset-Care & Annuity Care.

Another part of the PPA requirement is that all levels of care (at home or in a facility) must be covered and that the qualifying criteria is either a cognitive impairment or loss of 2 of 6 Activities of Daily Living.  Effectively, the same criteria for stand-alone LTC policies applies to life insurance and annuity based solutions.

Let’s talk about how this works – tax-deferred accumulation into tax-free LTC.

Specifically, we are focusing on deferred annuities.  The following example will help you visualize the basics of how the PPA works (in this example, I am using Indexed Annuity Carebut the same principal applies for Annuity Care & Annuity Care II).

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Here is what you get from a 1035 exchange into an Annuity Care solution:

  • tax-free long term care distributions from the annuity
  • continued tax deferred accumulation in the annuity
  • access to funds
  • death benefit if not used for LTC
  • option to extend benefits beyond the value of the annuity by adding a continuation of benefit rider (this rider includes a lifetime option)
  • ability to include a spouse as an eligible person

Annuity Care is not about the crediting rate.  It is about the tax-free distributions when a long term care funding situation occurs.  It is about providing a long term care funding solution by maximizing the value of existing money.

To learn more, attend my webinar scheduled for Thursday, April 9 at 11 a.m. (eastern) to learn more about transforming taxable gain into tax-free LTC.

In the interim, should you have questions – please contact my internal Justin Fox via email at justinfox.isp@oneamerica.com or at (844) 658-3725.