While nobody likes to think about it, the need for healthcare-related services increases over time. In fact, according to U.S. government data, approximately 70% of people who are age 65 and older will need at least some form of long-term care, and 50% will require extensive services – and this care can be expensive. But many people don’t realize that rather than spending down savings and other assets that are earmarked for other things, it is possible to use annuities in care planning.
How to Plan for Long-Term Care Costs with an Annuity
There are actually a couple of options available that could help you with paying for potential care costs using an annuity. These can include:
- Adding a long-term care rider to an annuity
- Obtaining a deferred long-term care annuity
- Purchasing a “combination” annuity / long-term care plan
A long-term care rider is an optional benefit that may be added to some annuities. Depending on the annuity, you may even be allowed to access the benefit right away. Plus, if you do not ever end up needing care services, the benefit may be passed on to a beneficiary.
Deferred long-term care annuities are generally available to people up to age 85. With these financial vehicles, a single premium contribution is made into the annuity in return for a regular monthly income.
These payouts can continue for a pre-selected period of time, such as two or three years. Here, a separate fund is established for care expenses, and there is also a cash fund that may be used for other purposes.
Alternatively, a combination plan “links”, or combines, long-term care benefits with another type of insurance – in this case, an annuity. These plans have a “benefit pool” of dollars that is available for paying long-term care expenses. Yet, if care is not ever required, then one or more named beneficiaries can receive the cash from the annuity contract.
It is important to note that, even with the many ways that annuities can assist with long-term care costs, these financial vehicles are not an apples-to-apples substitute for owning a stand-alone long-term care insurance policy. With that in mind, it is absolutely essential that you coordinate all of the investments and assets in your overall portfolio in a way that best fits your specific situation and objectives.
How to Find the Right Annuity for Your Needs
Although there are many benefits that come with owning an annuity, it is important to understand that there are literally thousands of these financial vehicles available in the marketplace today – and they are not all exactly alike. In fact, not even close.
That’s why it is highly recommended that before you make a long-term commitment to purchase an annuity, you first discuss your short- and longer-term financial objectives and needs with an annuity specialist. That’s where Annuity Gator comes in!
At Annuity Gator, our company was built under the premise of educating consumers and financial professionals alike about how annuities work, and what type of annuity – if any – is the right solution for various needs.
So, if you have any questions about how annuities may be a viable part of your overall portfolio, feel free to contact us and chat with one of our annuity experts. We can be reached by phone at (888) 440-2468 or via email by going to our secure online contact form. We look forward to helping you secure your portfolio against the high cost of a future potential long-term care need.