Last week, I shared with you the idea of using inherited non-Roth qualified money (IRA, 401k, 403b) to fund an Asset Care policy.  I shared the example of a couple using $250,000 of an inherited IRA as a funding vehicle for their Asset Care policy.

A few questions were asked …

When a claim occurs, are the benefits from Asset Care taxed?

No, the long-term care benefits are not taxed when distributed regardless what year that claim occurs. 

What happens if a claim occurs in year 5 of a 10-pay strategy?

When a claim occurs, premiums are waived for the duration of the claim and the distribution will be paid to the IRA owner/annuitant.  Once the claim ends, if there are any years remaining to pay from the annuity, premiums will again be directed to the Asset Care premium. 

If an IRA is allowed to only be owned by one person, how is it possible to use to fund a joint policy?

First, refresh yourself on the strategy. The important thing to remember here is that the annual distribution used to fund the Asset Care premium is considered constructive receipt (thus the 1099 associated with it).  This means that it (the distribution) can be applied to whatever policy design – individual or joint that the IRA owner desires.  In this case, the premium for a joint Asset Care policy.

You mentioned that there are other premium modes (5-years, 10-years, 20-years), do they all offer a bonus for the rollover?

Each has its own bonus.  The 5-year funding is a 10.0% bonus; 10-years is 25%; and 20-years is 50%.  This is a one-time bonus that is applied when the IRA funds are rolled over to OneAmerica Financial. The Qualified Money Funding Guide shares examples of these 3 options.

Is the strategy Required Minimum Distribution (RMD) friendly?

It is provided that the client is RMD eligible.  The annual distribution (the amount that generates the 1099) may qualify for RMDs. Remember the age requirements have changed over the past couple years. 

If you have more questions about this strategy or anything to do with Asset Care or Annuity Care, please contact Kelley Hilliard at (844) 623-4251 or via email at kelleyhilliard.isp@oneamerica.com