As an alternative to long term care insurance, LTC annuities are becoming increasingly popular. This information comes from the AdvisorOne article “An Annuity Alternative to LTC Insurance,” by Robert Bloink and William H. Byrnes. LTC insurance helps to pay for long term care should you need it, but it can be difficult for some people to qualify for and is a tough sell since there is a good chance that you’ll never use it. LTC annuities, however, function like a typical deferred annuity which can last a certain number of years or over your entire lifetime. They also offer a payout usually 200-300% higher than the annuity’s face value. If you compare annuities with LTC insurance, they seem to be a better alternative for many people now.
Due to medical condition or age, there are many denials for those applying for LTC insurance. Requirements for LTC annuities are not as strict, allowing more people to use them as a form of protection against the high costs of long term care. With LTC insurance, you may never need a payment from the policy and you will not be able to pass the money onto your heirs. But LTC annuities pass death benefits onto your beneficiaries in an amount based upon whether or not you used any money for LTC care. While the payout for an LTC annuity can be much less than that for a traditional annuity, LTC annuities have significant tax advantages. There is a newer option for a joint LTC annuity that is a good idea for couples to look into as well.
Written by Rachel Summit
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