What will we be covering in this annuity review?
In this review, we will be going over the details about the State Life Annuity Care product:
- Annuity type
- How this annuity works
- Benefits and potential drawbacks
- Charges and fees
- Where it may and may not fit
Annuities can be complex. That’s where having an Annuity Investigator who loves math comes in.
We make the complex, simple.
If you’ve in the midst of planning for retirement income, but you also want to make sure that you don’t lost assets if you have a costly long-term care need, the State Life Annuity Care plan could make sense for you.
With people living longer today, a wide variety of long-term care needs are becoming more common. These can range from daily, round-the-clock skilled nursing home care to intermittent assistance at home with daily living activities such as bathing and getting dressed.
In any case, though, this type of care can be expensive – and without some type of plan in place to help with paying for all, or even some, of these costs, a care need could essentially wipe away many years’ worth of savings from your portfolio.
One option for covering these costs is stand-alone long-term care insurance. Unfortunately, though, these plans can come with high premium requirements. Worse yet, if you never end up using the “use it or lose it” coverage, the many thousands of dollars that you paid into it will have gone to waste.
There is a potential solution, though, which entails using annuities to pay for at least some long-term care costs. And in this case, if care is never required, the money from the annuity can be used for other purposes.
But before you go out and purchase this type of plan, it is really important that you know how it works, and that you are also aware of various “tradeoffs” you might need to make in order to receive all of the benefits you need.
That’s where we come in!
Annuity and Retirement Income Planning Information You Can Trust
If this is the first time you have visited our AnnuityGator.com website, please allow us to personally welcome you here. We are a team of annuity and retirement income specialists who are focused specifically on offering very in-depth and unbiased annuity reviews. We have been at this for quite a number of years now – much longer than our competitors – and because of that, we’ve become a go-to source for annuity information.
If you have been in the process of compiling more information on an annuity that you’re considering purchasing, then you have more than likely come across a lot of conflicting information about these products online. This really is not surprising, though, as there is a myriad of details available about these products. There are also a wide range of opinions about them, too.
This is particularly true when you’re thinking about a “combination” product like the Annuity Care from State Life. These “hybrid” plans, as they are often referred, can at first appear to be a best of all worlds scenario – and that’s exactly what the insurance company that offers it wants you to think.
But what is oftentimes buried deep in the “fine print” is all of the “what if’s” and other conditions that first need to be met in order for you to take advantage of the policy’s benefits. With that in mind, it is essential for you to have a good understanding of what it is you’re buying.
Now just to be clear here, we don’t want it to sound like we’re all “doom and gloom.” In fact, just the contrary. We believe that annuities are really great financial vehicles – but only if they are used the right way.
That being said, this annuity review is here to help you understand more about the State Life Annuity Care plan underwritten through OneAmerica. So, if you’re ready to get started, let’s dive on in!
The State Life Annuity Care Policy at a Glance
|Product Name||Annuity Care|
|Issuer||The State Life Insurance Company (a OneAmerica company)|
|Type of Product||Single premium deferred fixed annuity|
|A.M. Best Rating (OneAmerica)||A+ (Superior)|
|Phone Number||(800) 275-5101|
Opening Thoughts About the Annuity Care Product from State Life Insurance Company
OneAmerica is made up of a family of companies that offers a wide range of insurance and annuities. The State Life Insurance Company, which is a OneAmerica company, provides asset-based long-term care products. In doing so, it utilizes life insurance, plus fixed interest deferred and immediate annuities – some that contain long-term care insurance riders.
For more than 140 years, OneAmerica has been serving its customers and policy holders – including through some rough financial times, like the Great Depression and the 2008 Great Recession.
As of year-end 2018, The State Life Insurance Company held roughly $8.5 billion in assets, and had nearly $13 billion of total life insurance in force. The company’s assets under management were in excess of $77 billion, with 2018 revenue of $2.2 billion.
For more details regarding The State Life Insurance Company, you can go HERE.
Due in large part to its financial stability and stellar claims-paying reputation, One America has received very high ratings from the insurance carrier rating agencies. These include an A+ from A.M. Best, and a AA- from Standard & Poor’s.
As life expectancy is much higher today than in years gone by, people are in need of protecting themselves from running out of income in retirement, as well as the high cost of long-term care. But, while annuities can take care of the lifetime income component, stand-alone long-term care insurance policies are quite expensive – and they can be even more so if someone pays a premium for many years, but ends up never needing the benefits.
That’s where the Annuity Care product from State Life Insurance Company / One America can help.
State Life / OneAmerica’s Annuity Care product features two options that take advantage of the 2006 Pension Protection Act, a tax law regarding annuities with long-term care benefits. This legislation allows policy holders to take tax-free distributions from life insurance and annuity policies to pay their long-term care insurance premiums. With that in mind, Annuity Care could provide a win-win situation.
But don’t get out your checkbook just yet!
Before we get into the gritty details, here is some legal disclosures…
This is an independent product review, not a recommendation to buy or sell an annuity. OneAmerica has not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This review is meant to be an independent review at the request of readers so that they may see our perspective when breaking down the positives and negatives of this particular annuity. Prior to purchasing any type of investment or insurance product, it is important that you do your own due diligence and that you consult a properly licensed professional if you should have any specific questions that relate to your individual circumstances. All names, marks, and materials that were used for this review are the property of their respective owners.
For more information on how to compare annuities in order to determine which one may be right for you, click here to obtain our free annuity report.
How OneAmerica / State Life Insurance Company Describes the Annuity Care Plan
OneAmerica / The State Life Insurance Company describe the Annuity Care product as a way to use annuities to help with the cost of long-term care, if needed. If long-term care services – either at home or in a facility – are not required, though, the annuity can be used for retirement income purposes.
The annuity’s accumulated value grows at a guaranteed interest rate. When you withdraw money for long-term care expenses, your funds can get credited at an even higher interest rate. The policy can be purchased either for a single individual, or for two people, which can allow benefits for both.
You may also obtain an optional coverage extension if you opt for the Annuity Care ll product. You can read the review for Annuity Care ll HERE.
Access to the long-term care benefits through the Annuity Care product can be income tax-free. So, you can use 100% of the money for your needs, regardless of the deferred gain.
In addition, the accumulated value of the policy can go to a named beneficiary (or more than one beneficiary) if there are funds remaining at your death. Because these funds go directly to the beneficiary(ies), they can bypass the probate process.
In order to trigger the long-term care benefits, you must not be able to perform at least two basic daily living activities, such as:
Alternatively, you must be diagnosed with a cognitive impairment.
The funds from the Annuity Care plan can be used for a wide range of care services, including a skilled nursing home, an assisted care facility, an adult day care center, or even at your own home.
Covered care can also include qualifying hospice care and respite care, as well as care giver training, and supportive equipment.
For more details on the Annuity Care plan from The State Life Insurance Company, go HERE.
How an Insurance or Financial Advisor Might “Pitch” this Product to You
If you have been presented the Annuity Care product by your current insurance or financial advisor, it is likely that they have highlighted the key benefits, such as flexibility, and a good alternative to a “use it or lose it” stand-alone long-term care insurance plan.
But there are a few things that you need to be aware of before you make a long term commitment to this plan. First, there are some pretty stringent qualifying criteria. In this case, in order to be eligible for benefits, you must be diagnosed as chronically ill – either physically or cognitively – and you must have qualified long-term care services that are provided to you pursuant to a plan of care that is prescribed to you by a licensed health care practitioner.
In addition, unlike individual annuities, the Annuity Care product will require you to pass medical underwriting. So, if you have certain pre-existing health conditions, there is a chance that you may not qualify for the Annuity Care option.
Fees on the Annuity Care from State Life Insurance Company
In addition to the underwriting limitations with Annuity Care, you may also find that there are some fees incurred if you purchase this type of policy. For instance, if you own this plan and you decided to take your money out of it early (i.e., during the surrender period), then you will not only face a penalty (surrender fees), but the funds you receive could also be subject to income tax.
Plus, if you make such a withdrawal before you have turned age 59 ½, you could also incur an additional 10% “early withdrawal” penalty from the IRS. With that in mind, it is really important that you only fund the Annuity Care plan with money that you won’t need later on for an emergency or other financial obligation.
The Annuity Gator’s End Take on Annuity Care from State Life
Where it works the best:
There are some nice features offered on the Annuity Care from The State Life Insurance Company. Given that, this product could fit well into your overall financial plan if you:
- Aren’t sure you’ll need long-term care, but don’t want to risk having to pay the cost.
- Have a long life expectancy and feel that you’ll need costly long-term care services in the future.
- Don’t want to purchase a “use it or lose it” stand-alone long-term care insurance policy.
Where it works the worst:
Annuity Care isn’t for everyone, though. For instance, this plan may not work well if you:
- May need the money for other obligations within the policy’s surrender charge period.
- Have a shorter life expectancy.
- Already have a health condition that could disqualify you from the underwriting process.
Nobody knows what will happen in the future. But you can reduce a great deal of stress by being prepared for some of life’s biggest expenses. This can include retirement income needs, as well as the cost of long-term care services.
The AnnuityCare product from OneAmerica / The State Life Insurance Company can provide you with a good way to cover more than one need with just one single product. Plus, if you never require long-term care, the benefits in this product won’t go to waste.
That being said, the only way to know for sure if Annuity Care is right for you is to have it tested. At Annuity Gator, we can help you to compare this product side-by-side with other annuities and annuity-related vehicles and see which – if any – may be best for you.
If you’d like to “test drive” the AnnuityCare – of for that matter, any annuity product – just contact us and we’ll get one of our trained annuity “geeks” on it right away!
Still Have Questions? Interested in Seeing Other Annuity Products Reviewed?
We realize that this annuity review may have run a bit long. But quite frankly, we would much rather know that you have “too much” information on this product than not have enough. So, if you found this annuity review to be beneficial, please feel free to pass it on and to share it with other people who could also find value in it. (And, if you found it to be confusing, please also let us know that, too.)
In addition, we are aware that information regarding annuities can, and often does, change. So, if you happened to notice anything in this review that should be updated or revised, let us know and we will be happy to make the necessary edits.
Any other annuities that you would like to learn more about?
If so, just give us a shout and let us know, and our team will get to working on them right away.
The Annuity Gator.
P.S If you would like to read more of our OneAmerica annuity reviews here are some links to check out: