Suze Orman TwitterSuze Orman FacebookSuze Orman YouTubeSuze Orman LinkedIn
View Blog & News List

Funding Your Long Term Care Insurance

March 30, 2017 at 5:00 AM

It would be easy to say “yes” to long-term care insurance if you didn’t have to come up with new money to pay for it, wouldn’t it? Well, there might just be a way to pull that off by repositioning money you already have.

An important tax change was effective January 1, 2010* that has made it easier to combine long-term care insurance with either life insurance or annuities. Why would you want to do this anyway? Four reasons:

1) Some people are very concerned about paying premium for a number of years and dying without needing care. With a combination product, either the death benefit of the life insurance product or the annuity account value would go to your beneficiary if you didn’t need care or if you didn’t need enough to use up the entire account.

2) Some people may not have the resources to pay for long-term care insurance out of their cash flow, but they may have older life insurance or annuity products that they can exchange for one of the new combo products. This is particularly attractive with annuities as since 1/1/10, you can exchange an older non-qualified annuity with taxable gain for a combination annuity/long-term care insurance plan and take the gain out tax-free if you meet one of the two criteria that make you eligible to receive benefits on a traditional long-term care insurance policy. (You either have a severe cognitive impairment that makes you a threat to self or others or you are expected to need help with at least two of the six basic daily activities for at least 90 days; i.e. dressing, bathing, transferring from bed to chair, toileting, continence or eating.)

Benefits of the combination life/ltc policies have been tax-free since January 1, 1997, but the 1/1/10 legislation made the withdrawals from the cash value that are used to pay the annual premium for the long-term care insurance benefits tax-free.*

3) Some people have older long-term care insurance plans but need more coverage. Perhaps they didn’t buy inflation coverage or they want more home care benefits. It’s rarely a good idea to replace an older long-term care insurance policy. It costs much less than a new one today because you were younger when you bought it. So these people can buy a smaller combo product to supplement the traditional long-term care insurance plan they have.

Important: A great feature of many of these combo products are that you can get a much larger benefit for long-term care than the death benefit or annuity account value. This means that a true combo product will allow you to extend your coverage beyond what the amount based on the death benefit or annuity account value will pay. You can even get unlimited benefits with some combo products. But don’t make the mistake of just focusing on the larger benefit pool. Ask the insurance professional to show you what the monthly benefit will be in the future so that you won’t be disappointed when you have a claim. Many of the combo products have the ability to include an inflation benefit just like traditional long-term care insurance plans offer.

4) Premium is guaranteed to never increase. What you see is what you get. This one characteristic of combo plans are enough for some people who are very concerned about future budgeting with the uncertainty of LTC insurance rate increases hanging over their heads. Well-known combo products today are:

  • Guaranty Income Life’s AnnuiCare®
  • John Hancock’s Protection UL with Vitality
  • OneAmerica’s Asset-Care® and Annuity Care®
  • Lincoln Financial’s Moneyguard®
  • Massachusetts Mutual’s LTCAccess℠ Rider
  • Nationwide CareMatters*
  • Nationwide No-Lapse Guarantee UL with LTC Rider*
  • New York Life’s Asset Preserver®
  • Pacific Life’s PremierCare
  • Prudential’s BenefitAccess Rider* 

*cash benefits

Ask your agent or financial advisor if leveraging current savings into these types of products would be a good way for you to plan for long-term care. There are even a couple that accept “qualified” money; i.e. money on which you have not paid tax, such as 401(k), 403(b) and traditional IRAs. Some provide international benefits. If you don’t have a knowledgeable financial professional about planning for long-term care, Phyllis Shelton at has told me she will be glad to help you.

However You Plan for Long-Term Care, It’s All About Quality of Life and Taking Care of the Family. People should be able to enjoy the assets they have saved when they retire. Too often, the fear of a husband of wife getting sick causes older Americans to abandon their plans and not have the quality of life they anticipated in retirement. Long-term care insurance can give you the financial security to enjoy your retirement to the fullest. Younger people buy it to protect the growth of their savings and to insure themselves in the event of a long-term care need at a younger age.

            The purchase of long-term care insurance is not something you do just for yourself. You really do it for your family – your spouse/partner and your kids. The emotional trauma of long-term care is enough to deal with. Giving your family the financial support to deal with long-term care needs is one of the most meaningful things you will ever do for them.

* Health Insurance Portability and Accountability Act of 1996 (Public Law 104-191, Title III, Sections 331, 332) and Pension Protection Act of 2006 [Public Law 109-280, Sec. 844(b) and 6050U (g) (1) and (2)]

Tag Cloud

negotiate points with bank or sellerclosing feesbreakdown projected monthly housing costprofessional advisorzero rate transfer dealsSuze Orman's Money Warsmake saving a pleasureRetirement Savingsincreased auto insurance premium2016 adjust withholdingbuying car 2016powerfulMinor Children COLAcreate new truthis it true? car leasingno fee transferproperty taxultimate compounding giftdo not pay allowance for good behaviorsocial security never insolventlong term careadjust allocations PBS Specialdepreciating asset better termssuccessno negativityhigh credit score discountteens and moneyAARPloan big picture 20% down paymentteensfocus on needshigh down paymenthigh premiumsclosing disclosureone credit cardInfluential Celebrity3 step financial road maplowest cost fund optionno private loansPersonal Financehome loan credit score below 740 mobile applower rateSuze is my biggest mentormortgage interest tax deductionbuy down gift not loanplanescrowavoid burn outWall Streetadd teenignore 6 month grace period roth iraincrease emergency savingsprotect and provide for minor child teach importance of helping othersrising home pricesgift up to 14,000Prime Rate Increaselousy investmentConventional loan PMIreduce monthly paymentinsurance mistakerent vs buystaycation40% toward financial goalEric Dodge only offered while employed insurance yearly reviewno waiting periodFinancial Awarenessalways use all paid time off15-year refinance dealSelectQuote.comswitch to spouse coverageStudent Debt CrisisAmy LacyetFRAFICO credit score credit card mortgage20% equitycommunity bankAccuQuote.comcredit reportphysical healthbuy home!00% tuition paidcompare provider pricingMarlo Thomas2015 record year car salesFederal Reservepay interest while in schoolhighest possible benefitnew carbetter loan rateslow mileage discountrefunddon't charge a pennygift grandchild IRA contributioninterest on student loansback door Roth IRAretirement planwould you decline a bonusage appropriate chorestay positiveconsider roth 401(k)bill paying prioritiesannual cost of living adjustmentDurable Power of Attorney for Health Carecut monthly cellular billdoctor no longer in networkemergency fund get health insuranceconfidentChanging LivesForbesgraduationmortgage brokerPay Off Debt Before Retirementget credit cardretirementreal estate mistakesincentives for health care wellness screeningGay Couplesunsubsidized Stafford loanfinancial goal phraseStaffords this year have a fixed 6.8% interest rateCollege of Veterinary Medicineyours, mine & oursearn more on savingshome insuranceautomate student loan paymentscar buying mistakesmax employee matchcharges on credit cardsavings pleasurefile asapLTC shoppingRevocable Living Trustpay off debtget the most out of social security Fundshealthy aging can you afford itstore credit cardsEmployer Matched Contributionsmall changes Financial CliffHoliday Shoppingaccelerate dental workprovider of financial supportMoney-Savingsecured cardpercentage men widowed 75-84push yourself to save more for retirementexercise reguarlyHDHP car loanidentity theftcostly insurance mistakeincrease retirement savingscommitRoth 401(k)HDHP's are not badreduce interest ratedangerous retirement planstudentovercome financial fearseight month living expense television hosthealthy youStock InvestmentsUniversity of IllinoisLong Term Care Insurance fiduciarymarriage inequalityfinancing car women long term carepermanent life insurancefederal student loan deferment calculate dependents annual income needsmanage student loansbad retirement planningHSA tax savingshigh deductible health care planInfluentialsAlarm Clockhigh FICO scoredental insurance grandchild summer job IRA contributiondebt freefinancial concernidentity fraudrefinanceWashingtonautomatic withdraw to savings mental healthbig results eliminate credit card debtHigh Credit Scorecredit utilization rateFinancial EducatorFederal Stafford loanchildren's book10 year repayment plan age appropriate goalsdream schoolMass Mutualdon't ignore open enrollmentwaive home inspection bidpeace of mindFiscal Responsibility3% debt transferred no retirement funds for down paymentdon't cover cosmetic dentistrymaintain standard of livingpay credit debt ASAPapproved medical 100% tax-freesocial security not going brokeoverspend on nights outknow before you oweitemized deductiontraditional vs roth 401(k)budgetAmericans don't use all paid vacation timeallowance taskdeath benefit needs for familydon't buy wantsGoodbye2017 TaxesWill2016 adjust estimated taxCommencementtaxesface your financial fearsocial workbad decisionsfocus on new truth Money Marketone annual feetoo expensive schoollet them have 50% controlBankruptcyInteresthealthy teethprotect your familyhigher monthly paymentSandy Hook Promisecompare monthly expensesmarriage financial responsibilityhome ownershipemergency fund savingsadult childrenuniversal college accesstake actionCD'sschedule vacationpercentage of women widowed 75-84credit cardDeath Benefithousing marketpositivesummer job match income no private loanGay Rightskids schedule paymentsOne Wallet At A Timeloan is gift15 year mortgageGraceNewtownLong Term Care shoppingAshley SpringerSave Us Moneycollege graduatemax benefit coveredraise your deductibledon't use allowance as bribeMost Influential Celebrities Listincrease retirement contribution rateNew York Lifecollege studentkeep a schedulemonthly dental insurance premiumwomen longer life spananticipated salaryARM Cautionwrite new goalprescription tiercomparison shoppinghealthy gumsCiti Simplicity Card 8 month emergency fundLegal GuardianSpendingsidelinedretain separate credit cardsfamily save at least $100 monthlyspecial saving accountdon't blow tax refundFinancial Power of Attorneysecure creditPrime Rate Rise 2015couple financesdangerous money seasonlive below your means6 month waiting period30 year mortgage Urbana-Champaignaffordable premiumCredit Card Interest Ratesave moneysame sex marriage band end FloridaFree Debt Eliminator50 over 50four steps to retirement savings employer funding HSAmoney vowspoint cost offset by savingscostly legal cost of capitalization calculatorborrow each year, capitalization is going to pile up Civil Rightsbetter loan dealsburn out10% donate to charityno life insurance financially irresponsibleFinancial SystemLifestyleHoliday SeasonARMGiftsjanuary billsdental discount planoverspend on giftshome buying mistakesschool standard deduction file taxes quicklymultiple lendersshort term goal engaged in financesmoney-aware childsame-sex marriageIRA contribution gifted moneyvalentines dayraising mortgage rates student loan repayment estimatorterm insuranceFederal Funds Rateonly refinance if it paysSelfishHeartFixed Rate Mortgagerolloverfinancial argumentsfinancial fearsheartachemortgage disclosuredon't extend mortgage overspend on dining outAuto Savings Suze changed my lifeshop online guaranteed level term policystudent loan debtat worst still pay 75% benefitpurely financial standpointSuze Orman spouse Kathy Travisget over life insurance phobiaspeak new goal4 Must Have Documents Communication Skills no sneaking in feesRevocable Trustlong term goalpay down student loan debtcommunity collegeMortgage Credit Availability IndexaffordabilityBaby BoomersETF'spay more than minimumlife insurance name trust as beneficiarywives should be involved in retirementinterest capitalizationSuze Orman ScholarshipHigh FICO Score = Better Ratepay high rate off firstPost-Divorce20 to 25 times annual incomecredit managementCredit scorepublic service career student loan repayment emotional stakesFederal PLUS loanlow down paymentMoneynon conventional routederailed planpay down car loanbecome member doctors in networkretirment savingslower overall drug costdebtsuitablebest interest of investorForbes Top 10low-cost index mutual funddear suzeloan no longer than 36monthsadvice for college graduatespremiumborrowing plan shorter payback perioddon't do five year car loansave debit cardloved ones dependent on incomeFinancial Advicenot gender specific protect loved ones Lovepay 100% cashunder 18 financial giftFinancialFinal Goodbyebalance transfer Telepicturesno late fee FICO at least 720is it necessaryFinancial Awareness Video Festivalreal estate marketenjoy saving responsible with moneyearn allowancekid borrow firstreferrals Inflation Benefitfraudulent returnEasy Life Insurance is it kind?best interest ratesback-to-school budgetUS Tax Code401Kstudent loan repayment plan401(k) Contributionsno apologyEmergency Savingsmax employer matched 401(k) contributionthree year car loanAdequate Auto and Home InsuranceInvest for savings growthletter to suzeHDHP/HSAno splurge employer offered life insuranceSandy Hook Elementary SchoolSatisfyingSuze approvedretirement accountsstandard rateverify retirement plan with HR or plan sponsorJose Rodriguez3 bucket approachHDHP's are good for youtax refund fraudHolidayStudent Loancontribute household expenses Phyllis Shelton expert long-term carefinancial independencehealthy retirement blood pressureAARP Social security calculatorrequired disclosurelower premiumcredit unionForeclosureMotherMust Have Documentsno tax on withdrawlswomen outlive menbe true to yourselfbe good examplerequire chore in exchange for allowanceraise insurance deductible3 savings buckets home budget after tax costpublic service loan forgiveness programhome buying seasoncnbc alarm clockbe kind to yourselfno interestpresident ObamaThe Suze Orman Showrepay student loansYoung Adult spring summer Credit Card Rate Increasedo you need life insurancesetup automatic savings withdrawopen enrollment review value moneyNew american Dream low credit score20% down payment avoid feesSwap Older Annuities or Life Insurance FHA loan feeslower mortgage interesthigher insurance deductibledon't defer interest paymentsCory BookerLTChome buying budgetallowancepaid in fullGiftFICO Scorewomen live longerLong Term Care premiumsteach your child good money habitspreexisting condition not coveredreduce withholdingstrained relationshipHow To Build Creditterm life insuranceverify wellness screening and programsbest loan deal stretch out haircut appointmentsprotect dependent student loan repaymentExhibitionfull retirement age8 Rules2015 financial roadmapCombo Insurance Productsleave a legacyinitial tax break 740 credit scoreHDHP'sworkaholicconfident of solutioncontribution replace permanent life insurance with termBeautyTeachlife insurancepaid vacationalternative FICO scorebuy home you can affordSchool of Social Workholiday spendinglower interest rateclosing costs 2% of loanquick closinghome related tax break bonus meet monthly near historic lowsBanksavingsraising interest rateslong-term care premiumsWarner Bros Television GroupCNBCswitch to roth 401(k)worst financial mistakeorigination feescut monthly cable billchildren under 18long-term care Retirement Incomeloan necessityhealthy retirement weightRichnot enough life insurancepaying for collegeVeterinary Schoolfinancial aiddeath benefit 20 to 25 times annual incomeunexpected expenseiffy incometitle insuranceSuze OrmanCPI-Wgrandparent IRA contribution insurance8 month safety netFinancial Gift Cliffdon't spend co-sign Bill and Pennybuying a carlearn good financial choicesVital DocumentsUniversity of Floridaresponsibleautomatic paymentgay marriage ban end Florida raise deductiblesritual schedule19 years cash flow problemjuggle multiple financial goalstax ID theftis it necessary?social securitymonthly benefit don't derail retirement savingsStudent DebtcommissionsOverspendingdental savings plan20 year level term Financial Solutions For YoumortgageLTCi ASAP

View Blog & News List
People First. Then Money. Then Things.
Connect with me on Facebook Connect with me on YouTube Connect with me on Twitter
© 2017 Suze Orman Media Inc. All rights reserved.
 |  Search  |  Sitemap  |  Privacy  |  Terms
Sign Up For E-mail Offers
Open Panel
Close Panel