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!
Monday, November 23, 2009
Long-Term Care Awareness Month is November
During Long-Term Care Awareness month which is always in November, it is wise to become aware that the younger you are, the healthier you are.
When it comes to long-term care insurance, a significant number of consumers cant' get what they want simply because insurance professional failed to share one significant fact with them: the need to health qualify for protection.
Each year, the American Association for Long-Term Care insurance surveys leading insurers to find out how many individuals apply for coverage but are declined for health reasons.
Qualifying with good health and even getting a "good health discount" is the important message you should take with you during Long-Term Care Awareness month.
It is important to begin the long-term care planning process while you are healthy and have all the planning options available to you.
Think about your next physical, how often does a 50-year-old leave their doctor's office without some sort of prescription in their hands or a new diagnosis. A health condition or single prescription may not preclude you from obtaining coverage, but it costs nothing to find out earlier than when it's too late.
It's never too early when it comes to long-term care planning. Find out what options are available to you while you have all the options available to you.
For more information and a free consultation: LongTermCareInsurancePros
When it comes to long-term care insurance, a significant number of consumers cant' get what they want simply because insurance professional failed to share one significant fact with them: the need to health qualify for protection.
Each year, the American Association for Long-Term Care insurance surveys leading insurers to find out how many individuals apply for coverage but are declined for health reasons.
Qualifying with good health and even getting a "good health discount" is the important message you should take with you during Long-Term Care Awareness month.
It is important to begin the long-term care planning process while you are healthy and have all the planning options available to you.
Think about your next physical, how often does a 50-year-old leave their doctor's office without some sort of prescription in their hands or a new diagnosis. A health condition or single prescription may not preclude you from obtaining coverage, but it costs nothing to find out earlier than when it's too late.
It's never too early when it comes to long-term care planning. Find out what options are available to you while you have all the options available to you.
For more information and a free consultation: LongTermCareInsurancePros
Tuesday, November 17, 2009
Long-Term Care Premiums Could Go Up, So Is It best not to purchase Long-Term Care Insurance?
There is a conception that you should not purchase long-term care insurance because the premiums could possibly increase in the future.
While none of us likes cost of living increases on any of the goods or services that we use and benefit from, we do not forgo the comfort or protection they provide simply because their cost could increase in the future.
Almost everything in life, necessities and non-necessities, increase in cost over time, but that certainly does not keep us from enjoying and benefiting from them.The media has emphasized all the "bad" regarding increases in the premiums of the long-term care insurance carriers.
Twenty years ago when long-term care insurance products were new, the actuaries (the experts who analyze and study the data) were incorrect in determining the correct premiums. They made assumptions that there would be greater lapses of the polices as well as what the claims were to be. So, twenty years later, adjustments were made to the premiums.
Today, there is better data and newer plans with better pricing too.It is also important to know that almost all long-term care insurance policies include a provision called "waiver of premium." this provision states that once a person is received benefits from their policy, the premium for the policy ceases or is waived. During the duration of their claim, they would no longer be responsible for paying the premium on the policy.
It could prove to be a very costly mistake to forgo the security and protection provided by long-term care insurance out of fear that the premium might possibly increase in the future.Many people will be receiving benefits from their policies while others will be paying for the cost of care out of pocket simply because they were concerned about something that may have never occurred.
Long-Term Care Awareness Month sends this message:
Don't let another year pass without taking a hard look at how you will pay for your lown long-term care.
Simplify Your Long-Term Care Planning with a Long-Term Care Specialist
While none of us likes cost of living increases on any of the goods or services that we use and benefit from, we do not forgo the comfort or protection they provide simply because their cost could increase in the future.
Almost everything in life, necessities and non-necessities, increase in cost over time, but that certainly does not keep us from enjoying and benefiting from them.The media has emphasized all the "bad" regarding increases in the premiums of the long-term care insurance carriers.
Twenty years ago when long-term care insurance products were new, the actuaries (the experts who analyze and study the data) were incorrect in determining the correct premiums. They made assumptions that there would be greater lapses of the polices as well as what the claims were to be. So, twenty years later, adjustments were made to the premiums.
Today, there is better data and newer plans with better pricing too.It is also important to know that almost all long-term care insurance policies include a provision called "waiver of premium." this provision states that once a person is received benefits from their policy, the premium for the policy ceases or is waived. During the duration of their claim, they would no longer be responsible for paying the premium on the policy.
It could prove to be a very costly mistake to forgo the security and protection provided by long-term care insurance out of fear that the premium might possibly increase in the future.Many people will be receiving benefits from their policies while others will be paying for the cost of care out of pocket simply because they were concerned about something that may have never occurred.
Long-Term Care Awareness Month sends this message:
Don't let another year pass without taking a hard look at how you will pay for your lown long-term care.
Simplify Your Long-Term Care Planning with a Long-Term Care Specialist
Friday, October 30, 2009
You Can Only Make Two Mistakes with Long-Term Care Planning
There can be many reasons preventing someone from putting long-term care insurance in their retirement portfolio...conflicting priorities (would rather have that special vacation than pay the premiums), recent negative press (the bad is always stressed in the media, not the good), failure to realize the value of owning long-term care insurance and in denial that "I will never need it."
There are really only two potential mistakes that can be made:
Buying a policy, but never needing care
or
Not buying a policy, but needing care.
Based on the averages, you may be paying premiums for 20-30 years. Your out of pocket expenses would be roughly $34K- $51K. After 20 years without the purchase of a Long-Term Care insurance policy, if you needed to be placed in an assisted living facility the cost for one year of care could be over $160K. It is important to keep in mind that the average stay is three years. This would bring the total cost to $480K.
So the bottom line is: Which mistake would you rather make?
You can either make the mistake of buying a policy and never need the benefits
Or
You can choose to not buy a policy and spend far more out of pocket in a fraction of the time.
Consumer Library Resources for Long-Term Care Planning
There are really only two potential mistakes that can be made:
Buying a policy, but never needing care
or
Not buying a policy, but needing care.
Based on the averages, you may be paying premiums for 20-30 years. Your out of pocket expenses would be roughly $34K- $51K. After 20 years without the purchase of a Long-Term Care insurance policy, if you needed to be placed in an assisted living facility the cost for one year of care could be over $160K. It is important to keep in mind that the average stay is three years. This would bring the total cost to $480K.
So the bottom line is: Which mistake would you rather make?
You can either make the mistake of buying a policy and never need the benefits
Or
You can choose to not buy a policy and spend far more out of pocket in a fraction of the time.
Consumer Library Resources for Long-Term Care Planning
Tuesday, October 27, 2009
Will My Children Take Care of Me If I Need Long-Term Care?
Many people believe that their children or even close family members will take care of them if they need long-term care. This is usually thought of without considering all of the consequences involved.
After all, if you have children you may feel that "we took care of them, now it's their turn." You really need to ask yourself if you would want to be a burden to your children and due to poor or no planning, have your problems and misfortunes become their problems.
Many children may lovingly and naively say that they will always take care of their parents, but is it even fair to put someone who you love in such a difficult situation.
The parent and the adult child typically does not fully understand all of the issues involved and how uncomfortable certain personal situations can be for both of them.
The stresses and demands associated with care giving are enormous in even the best of circumstances.
Important questions to ask yourself are:
- Do your children have jobs that will allow for the necessary flexibility for care giving?
- Do your children have families of their own?
- Do your children live close by?
- Will you need to relocate?
Believing that your children will take care of you may initially seem like a reasonable idea. However, when the time comes to start rearranging everyone's lives and facing the reality of all the issues involved, many people end up having serious second thoughts.
Simplify Your Long-Term Care Planning with a Specialist!
Consumer Library Resources are available here.
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