New Tax Change Makes Annuity Funded Long-term Care Policies Even Better

For some time, insurance buyers have been able to buy annuities or life insurance that included a long-term care insurance. Here is how the policies generally work. In many cases, some of the earnings from the cash value in the life policy or the cash value of the annuity are used to pay premiums for long-term care insurance protection.  A hypothetical example might look like this: Our hypothetical investor, a 65-year-old man, pays a premium of $50,000.  He obtains a life policy with a death benefit of $74,718.  He also gets long-term care insurance amounting to $149,436, to be used at a rate of $3,133 monthly, when the policy owner qualifies for long-term care benefits.  So far, this may look attractive because there are no annual out of pocket premiums—the only payment is the single payment of $50,000. Additionally, assuming that there are no prior withdrawals or payments for long term care insurance benefits, the insurance company will guarantee the $50,000 which can be withdrawn at any time . | The $50,000 cash value is credited with interest each year at a gross and guaranteed minimum rate of 4%.  But from the accumulated cash value, deductions are made to pay for [...]

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