Compare Annuity Care

You’ve heard the big news.  If you missed out, Annuity Care I and Indexed Annuity Care for “base-only” policies are now instant approval when the applicant can answer the 5 questions favorably.

Those questions are:

Here is an important thing to remember.  Once the policy is in place, the insured/annuitant has access to the benefits immediately.  There is no vesting period to be eligible for benefits.  Of course, when there is a claim, in insured/annuitant will be eligible for benefits once the waiting period (elimination period) is met.

As we explained in past Fridays with Fisher posts, the Pension Protection Act which was implemented in 2010 created the opportunity to transform tax-deferred accumulation inside of a nonqualified deferred annuity into tax-free LTC distributions.

With a non-PPA annuity, if our client was to utilize her annuity to pay for her care, every dollar of gain that is distributed would be taxed at the current rare (last-in first out taxation). 

Here is a quick comparison.

If she were to have $220,600 moved into Annuity Care I, on day 1 of the policy, she would have $80,000 annually ($6,667 monthly) available for long-term care.  In 10 years, the annual tax-free LTC benefit would have grown to $107,424 ($8,952 per month)

In order to producer a similar benefits from a non-PPA annuity, assuming a 20% income tax bracket, an annual taxable distribution would be $96,000 ($8,000 per month) until the gain is washed from the annuity.  And, to make the number work, the annuity would have to start with $288,000 of value.

Think about the leverage that simply moving to a PPA annuity can provide.

Don’t believe me?  Here is the illustration for Annuity Care I.

Learn more about base-only Annuity Care I & Indexed Annuity Care … give either my internal Justin Fox or me a call today!