For almost 2 years now, my friend and colleague Michael Florio and I have produced our LTC Coffee Break webcast. We drop a new episode every Tuesday at 10 am at LTCcoffeebreak.com. Lately, we’ve decided to jump into our mailbag and answer questions from our viewers.
This week’s question was – can qualified money be used to fund an Annuity Care policy.
The simple answer is yes. However, there are limitations.
For one, only Annuity Care I and Indexed Annuity Care can accept qualified money. Annuity Care II is not an option.
The next thing to remember is that the Pension Protection Act does not create the same opportunity for qualified money that it does for nonqualified deferred annuities. (For more on this, give me a call.)
Finally, the value of using qualified money in Annuity Care is found in the Continuation of Benefits Rider (COB). If the client cannot qualify for Annuity Care with the COB, then qualified money as a funding option is attractive. (Check out this weeks LTC Coffee Break episode where I explain how this works.)
One last point, Asset Care (the life insurance based long term care product) offers the only turn-key solution for using qualified money. Moreover, it does provide more leverage.
So, you ask – when would you suggest using Annuity Care with qualified money?
There are two instance. First, if there is an underwriting issue where Asset Care cannot provide a viable solution. The next is for someone who is inclined to “self-fund” their long term care risk. Using the Annuity Care solution, the client can self-fund using their base policy (distributions will be taxed as ordinary income) and layer in a “stop-loss” point (when the base annuity is exhausted) secure tax free LTC benefits from that point forward.
And, remember, Annuity Care can insure both the annuitant and their spouse AND a lifetime Continuation of Benefits Rider may be available.
To learn more about this solution or to answer any questions, I can be reached via email at kevin.fisher@oneamerica.com or call me at (678) 512-9627.
Remember, join Michael Florio and me on our weekly webcast LTC Coffee Break where we share new ideas with you every Tuesday morning at 10 am at LTCcoffeebreak.com.
For product questions and illustration assistance – call Justin Fox at (844) 658-3725 or email at justinfox.isp@oneamerica.com
Fridays with Fisher 