FREE Long Term Care Benefit Now in Annuities and Life Insurance Products

Dec. 21, 2011 - PRLog -- One of the scariest questions asked by retirees is "What happens if I become chronically ill?" Most do not even want to think about it and wait to deal with it should an event occur.

For the few who pro-actively plan for this possibility, long term care insurance has traditionally been the go to product. Long term care insurance is not cheap. The average retiree living on the budget provided to them by Social Security Benefit and pensions cannot afford this coverage. Another aversion to this product is the notion that the retiree is paying for something they may not need. Finally, the track record of rate increases over time, with nearly all carriers, is leaving a bad taste in the mouths of those that made the purchase.

Recently, however, there has been an explosion of products designed to include long term care benefit within a traditional product chasis - at no additional cost.

In 2010, multiple carriers introduced limited and single pay whole life insurance polices where the death benefit is accessible for long term care benefit should a sickness occur. This benefit includes coverage for home care, assisted living and nursing home and is triggered by the insured requiring assistance with 2 of 6 activities of daily living - the same as long term care insurance.

These products are also designed to provide high liquidity of the insured's cash, tax deferred growth and tax free death benefit should the insured not need care. Whether the insured gets sick or dies, a benefit is received.

These products were introduced to take advantage of a provision in the Pension Protection Act of 2006 that went into effect in 2010. Basically the change allowed for the purchase of long term care insurance with pre-tax dollars. An element of the act allowed tax free long term care benefit to be accessed within a tax deferred life insurance policy.

In 2011, multiple insurance carriers began offering fixed indexed annuities with riders that included both guaranteed income and long term care features. These income riders are designed to provide a lifetime income stream when triggered. Should the owner need assistance with 2 of 6 activities of daily living, the income guarantee is increased automatically. Some products will double the income guarantee for as long as five years should a chronic illness event occur.

There are a many different products and features available but having the basic financial need of a secure income source enhanced by the addtional long term care coverage is a welcome product additon.  

There should continue to be developments in products with features in long term care coverage. The marketplace is hungry for alternatives to long term care insurance. Stay tuned.

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Seeman Holtz is a national leader in comprehensive post-retirement financial planning. We incorporate a formal client service platform that is centered on the main financial concerns of retirees.