Everything You Need to Know About Long-Term Care Annuity

Everything You Need to Know About Long-Term Care Annuity

Long-term care annuities are the best option for those who want to save money for their future while receiving some additional benefits. However, if you are a first-timer, you might wonder whether it will be useful to everyone, when it makes sense, how much it costs, etc.

Below we have discussed everything about long-term care annuities to help you make an informed decision.

What Is Long-Term Care Annuity?

Long-term care annuities are deferred annuities available to people up to 85 years old. With these annuities, you need to pay an insurance company a single-premium payment to use it in the future, either as your medical expenses or retirement funds. However, you will begin to receive payouts (either in monthly installments or a lump sum) after some months or years, depending on your annuity’s tenure. You must wait until the stipulated date in your contract to access the funds. If you unexpectedly pass away, the funds will be handed to your heirs.

What Will Be the Annuity’s Monthly Payouts?

Your monthly payouts from the annuity will usually be a multiple of your monthly income stream. However, sometimes riders can double or triple your monthly payout for some period. For example, a $200,000 worth annuity may pay out $300,000 or $400,000 worth of long-term care benefits for five years.

Some More Options You Can Consider

You can buy a long-term care rider with an indexed or fixed annuity. However, there may be limitations in the number of years of care the rider benefits will cover. You can also buy an annuity contract that allows withdrawing more funds from your initial payment if you need long-term care.

An immediate annuity is also better for those needing instant funds. Like other annuities, you will pay a lump sum to the insurance company, and they will start paying the benefits just one month after you buy the annuity. You can buy this annuity despite your age or health condition, or you already receive long-term care. However, the payout from this annuity depends on your age and investment amount.

Is a Long-Term Care Annuity Worth-Buying?

A long-term care annuity will be worth your money if you want long-term coverage but don’t want to pay monthly premiums for an extended-term care insurance policy. With a long-term care annuity, you can receive guaranteed incremental (as your investment will grow over time) monthly payouts for your lifetime.

Long-Term Care Insurance Vs. Long-Term Care Annuity

Both coverages are designed to cover custodial and personal care for a long period but in different ways. With a long-term care insurance policy, you need to pay monthly premiums throughout your policy period, and your premiums may increase during the renewal.

However, with annuity coverage, you won’t face such consequences. You will buy annuities with a lump sum and can decide the upfront amount according to your requirements and affordability.

Traditional long-term care policies may provide more comprehensive reimbursements than annuities but may cost more. Nevertheless, annuities worth your money and even riders include less stringent medical underwriting than long-term care insurance.

Get the Best Long-Term Care Annuity from Long Term Care Insurance Advisors

If you are looking for a long-term care annuity plan with the best returns and benefits, contact us at Long Term Care Insurance Advisors. We look forward to helping you choose the right annuity for your requirements.