Did you buy some annuity product earlier this decade that allowed some provision for long term care insurance too? If you did, and weren’t really sure of the benefit, next year might be the year that you do. In 2010, you will be allow to withdraw money from a certain kind of annuity without paying taxes as long as you use it to pay for qualified long-term care coverage. All baby boomers, especially those in the highest tax bracket, can thank the Pension Protection Act of 2006 for this new, fortunate development
1. New popularity for an obscure annuity.
In the mid-2000s, a new kind of non-qualified deferred annuity emerged, the hybrid annuity, structured to provide either a long-term care benefit or a death benefit. It was designed as a less expensive alternative to a traditional long-term care policy. So far, these hybrid annuities with long-term care riders had been little publicized, but all that is about to change. Before 2010, you could make withdrawal from these hybrid annuities without facing penalty or surrender charges, but part of the withdrawal could be subject to tax. Starting in 2010, any withdrawal from such an annuity will be income tax-free if the money goes towards qualified long-term care. So in 2010, if $100,000 you initially put into hybrid annuity with long-term care rider has grown to $250,000, you can pull the entire $250,000 without a tax hit, if that $250,000 will be used to pay for qualified long-term care coverage. You wouldn’t even pay taxes on the $150,000 gain of the annuity. If you are simply withdrawing small amounts from the hybrid annuity to help pay for long-term care, those tax-free withdrawals will be taken from the principal of the hybrid annuity and not the gain of the annuity. That is the by-law under the new tax treatment.
2. Can You exchange a tax shelter into a hybrid annuity?
You sure can. The Pension Protection Act also allows you to make a 1035 exchange into a hybrid annuity starting in 2010. So you can exchange the annuities you have now for one with a long-term care rider that would permit you to withdraw entire value of the annuity to pay qualified long-term care costs, tax-free and penalty free. If you are looking to do an exchange with an existing policy, be sure to make sure that the current policy doesn’t have a death benefit or income guarantee that you might be giving up. This kind of goes without saying, too; but also make sure you don’t have a substantial surrender penalty.
3. 2010 is a time to learn more.
Could these hybrid annuities prove useful to you in paying long-term care costs? Are they suitable for your overall financial picture? You, and only you, are going to know the answer to that question. You definitely want to meet with an insurance or financial professional to take a closer look at your situation and find the potential tax break that could be offered to you.
For more information Contact Dane at LongTermCareInsurancePros
Monday, December 28, 2009
Thursday, December 17, 2009
Long-Term Care Insurance Is Not Expensive
One of the great misperceptions about long-term care insurance is that it's expensive. One argument goes, "it's expensive because I could pay for something I never use."
Would you say the same thing about your homeowner's insurance? "It's a waste if my house never burns down." Or your car insurance? "I'd better total that car so I get my premiums back." Of course you wouldn't make either of these statements. That's because you know that every day many people have bad car accidents and every day house fires happen. You count yourself quite lucky when they don't happen to you.
The same is true for long-term care insurance. Every day many people submit a claim on their long-term care insurance policy. According to the American Association for Long-Term Care Insurance some 180,000 individuals are receiving benefits from their insurance coverage yearly. Some $8.5 billion is paid out annually.Long-term care insurance is incredibly valuable protection to have should you need it. Consider yourself lucky if you live a long life and never need long-term care.
For those who are still not convinced, I'd like to share two real examples of individuals who purchased long-term care insurance. These are real people with the information provided to the Association by the nation's leading insurance companies at the beginning of 2009.
COMPANY A: Largest open claim: $1.2 million.
The individual (a woman) purchased long-term care insurance at age 43, paying an annual premium of $1,800. Three years later her claim began and has continued for almost 12 years ($1.2 million in benefits already paid).
COMPANY B: Largest open claim: $1.02 million.
The individual (also a woman) purchased long-term care insurance at age 72 paying an annual premium of $12,766. Three years later her claim began and has continued for almost 9 years ($1.02 million is benefits already paid) for her nursing home care.
Individuals between the ages of 55 and 59 paid between $700 and $6,950 for long-term care insurance according to a new report from the trade organization. People are taking advantage of readily available discounts to and policy design techniques to reduce the cost of coverage. You can too.
The cost for long-term care insurance coverage is based on a variety of factors. Some you have no control over such as your age and current health when you apply. Others are choices that can significantly impact what you pay. Understanding how to take advantage of applicable discounts and saving techniques can reduce the cost by 20-to-50 percent yearly.
Spouses as well as partners residing together can take advantage of the most significant discount available today when both parties purchase coverage. The discount can be as much as 40 percent applied to both policies. A number of insurers will even offer the discount when only one individual purchases coverage or can health qualify.
If you would like more information, please call Dane Petchul, LTCP, CLTC at 949-854-3001. Visit my website Long Term Care Insurance Pros for more information. I can help make this important protection more affordable than you might think.
Would you say the same thing about your homeowner's insurance? "It's a waste if my house never burns down." Or your car insurance? "I'd better total that car so I get my premiums back." Of course you wouldn't make either of these statements. That's because you know that every day many people have bad car accidents and every day house fires happen. You count yourself quite lucky when they don't happen to you.
The same is true for long-term care insurance. Every day many people submit a claim on their long-term care insurance policy. According to the American Association for Long-Term Care Insurance some 180,000 individuals are receiving benefits from their insurance coverage yearly. Some $8.5 billion is paid out annually.Long-term care insurance is incredibly valuable protection to have should you need it. Consider yourself lucky if you live a long life and never need long-term care.
For those who are still not convinced, I'd like to share two real examples of individuals who purchased long-term care insurance. These are real people with the information provided to the Association by the nation's leading insurance companies at the beginning of 2009.
COMPANY A: Largest open claim: $1.2 million.
The individual (a woman) purchased long-term care insurance at age 43, paying an annual premium of $1,800. Three years later her claim began and has continued for almost 12 years ($1.2 million in benefits already paid).
COMPANY B: Largest open claim: $1.02 million.
The individual (also a woman) purchased long-term care insurance at age 72 paying an annual premium of $12,766. Three years later her claim began and has continued for almost 9 years ($1.02 million is benefits already paid) for her nursing home care.
Individuals between the ages of 55 and 59 paid between $700 and $6,950 for long-term care insurance according to a new report from the trade organization. People are taking advantage of readily available discounts to and policy design techniques to reduce the cost of coverage. You can too.
The cost for long-term care insurance coverage is based on a variety of factors. Some you have no control over such as your age and current health when you apply. Others are choices that can significantly impact what you pay. Understanding how to take advantage of applicable discounts and saving techniques can reduce the cost by 20-to-50 percent yearly.
Spouses as well as partners residing together can take advantage of the most significant discount available today when both parties purchase coverage. The discount can be as much as 40 percent applied to both policies. A number of insurers will even offer the discount when only one individual purchases coverage or can health qualify.
If you would like more information, please call Dane Petchul, LTCP, CLTC at 949-854-3001. Visit my website Long Term Care Insurance Pros for more information. I can help make this important protection more affordable than you might think.
Tuesday, December 1, 2009
Health Care Costs Can Lower Your Tax Bill
This may be the year to take a tax deduction for medical expenses. This write-off has long been one of the least useful for most taxpayers because medical costs have to be a significant percentage of income to be deductible.
With health-care costs rising, the medical deduction is worth looking into with your accountant. The medical deduction covers a wide range of expenses.
For complete details see Internal Revenue Service Publication.
Here are some basics:
To be deductible, a medical expense must be paid with after-tax, out-of pocket dollars.
Insurance premiums paid with pretax dollars aren't deductible and neither are medical expenses that are reimbursed by insurance, flexible spending plans or health savings accounts.
The Internal Revenue Service has announced the 2010 limitations on the deductibility of long-term care insurance premiums from taxes. For the first, the maxiumum deductible limit for an individual exceeds $4000.
For complete details see: 2010 Tax Deductions
Simplify Your Long-Term Care Planning with a Long-Term Care Specialist!
With health-care costs rising, the medical deduction is worth looking into with your accountant. The medical deduction covers a wide range of expenses.
For complete details see Internal Revenue Service Publication.
Here are some basics:
To be deductible, a medical expense must be paid with after-tax, out-of pocket dollars.
Insurance premiums paid with pretax dollars aren't deductible and neither are medical expenses that are reimbursed by insurance, flexible spending plans or health savings accounts.
The Internal Revenue Service has announced the 2010 limitations on the deductibility of long-term care insurance premiums from taxes. For the first, the maxiumum deductible limit for an individual exceeds $4000.
For complete details see: 2010 Tax Deductions
Simplify Your Long-Term Care Planning with a Long-Term Care Specialist!
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