Is an Annuity Hybrid Right for You?
On January 1, 2010, a new law will make annuity and life insurance distributions tax-free if they are used for the cost of a nursing home. Robert Powell of Fox Business online wrote about this in “New Products May Ease Bite of Long-term-care Costs.” In anticipation of this law, insurance companies have created hybrid products that mesh annuity and life insurance products and long-term-care insurance. United of Omaha, Genworth Life, Bankers Life, and OneAmerica are leading the charge with many other products expected to emerge later this year.
Although all of the products are different, they share the following main points. A fixed deferred annuity is purchased with non-qualified money. There is a long-term-care rider attached to the annuity which releases funds two or three times the beginning investment, for a certain number of years, or for the recipient’s lifetime. These hybrids can possibly lower the burden of long-term-care costs significantly, but they have their own fees associated with them. You should thoroughly consider an expert’s advice and weigh the pros and cons of any annuity before making a purchase, especially a new hybrid product.
