Why Should I Get Long-Term Care Insurance?
This much is certain:
- We are living longer
- As we grow older, the need for assistance becomes greater
- Odds are significant that at some point you will need long-term care
- Long-term care is expensive.
What are your options?
Generally, these are the most common choices:
- Do nothing and rely upon government programs such as Medicare or Medicaid
- Traditional Long-Term Care Insurance
Let’s review each of these options:
Do nothing and rely upon government programs such as Medicare or Medicaid.
Medicare will only cover up to 100 days in a nursing home following a 3 day hospital stay.
- Medicare paid only 20.4% of the total national long-term care cost in 2005.
Medicaid qualifications and coverage vary from state to state, but it is usually for those who have little or no personal assets.
- Medicaid paid 48.9% of the total national long-term care cost in 2005.
- In general, the cost of Medicaid is poverty.
- Medicaid deductible = all your assets
- Medicaid premium = all your income
Medicaid has other disadvantages:
- Loss of options
- Loss of independence
- Not portable from state to state
Genworth 2014 Cost Of Care Survey
Traditional Long-Term Care Insurance
- Transfers financial risk
- Insures your estate (protects assets)
- Helps avoid last minute planning
- Can help keep you out of a nursing home
- Difficult to qualify
Use current assets
- No premiums to pay
- No underwriting
- All your assets are exposed to long-term care risk
Generally, you can use assets such as these to pay for your long-term care needs:
- Money market
- Retirement funds
- Mutual funds
There is a way to self-insure long-term care so that your money is safe, free from market risk, liquid, grows tax-deferred, and worth three times its value for long-term care needs. All you need to do is change the way you save. GILICO can help you with their innovative product: AnnuiCare®.
Why Should I Purchase an AnnuiCare® Policy?
It has been shown that a majority of people self-insure their long-term care insurance. With AnnuiCare®, you can enjoy the advantages of self-insurance while protecting your assets from risk. Your money accumulates tax-deferred, less monthly charges for the long-term care benefit.
For example, if you have an emergency fund set aside, moving a portion of it into AnnuiCare® can provide you up to three times that amount for long-term care. This allows you to free up the remainder of your assets to reward yourself today. You still maintain control of your funds, but now you have much more financial flexibility.
How Will an AnnuiCare® Policy Impact My Taxes?
During the accumulation phase of your annuity, interest earnings are tax-deferred. Withdrawals for your LTC premium deductions and benefits are not taxable.
Am I Eligible for AnnuiCare®?
Financial Suitability Standards
Net Worth: You must have at least $100,000 of available assets exclusive of home and vehicles.
Cash Flow: You must have ample funds to invest in AnnuiCare®. If you depend on these funds and/or the interest from these funds for routine living expenses, AnnuiCare® may not be suitable.
What is the AnnuiCare® Benefit Limit and how is it paid?
The Benefit Limit is three times the Annuity Value when benefits begin, and it is paid on the basis of Daily Maximums.
What is the AnnuiCare® Daily Maximum?
The Daily maximum is the Annuity Value divided by 730. This is the number of days in two years (365 X 2 = 730). i.e. $100,000 AV = $136.99 Daily Maximum
What is the Deductible Period?
The Deductible Period is a 90 day waiting period during which time benefit conditions are met.
Can the Deductible Period be satisfied with non-consecutive, or intermittent days of care?
Yes. It is satisfied by 90 days of covered services occurring within a 270-day period.
Are any benefits not subject to the Deductible Period?
Yes. Care Planning, Caregiver Training, and Respite Care Benefits are immediately available.
Must the Deductible Period be satisfied each time benefits are claimed?
No. The Deductible Period need be satisfied ONLY ONCE during the lifetime of the Insured. If the insured recovers from a chronic illness after meeting the 90-day Deductible Period and no longer needs care, the Deductible Period does not apply to any future benefits, regardless of the nature of the illness or the length of time since benefits were last paid.
Waiver of Premium
When are Premiums for Long-Term Care waived?
AnnuiCare® has two Waiver of Premium features:
- Premiums are waived on a month-to-month basis after 180 consecutive days of benefits are payable for Nursing Home Care or Assisted Living Facility Care. Waiver of Premiums ends when no benefit for these services is payable for 30 consecutive days.
- Premiums are permanently waived once the Accumulation Value of the annuity is fully depleted directly as a result of deductions for rider premiums or benefits.
Ownership and Funding
May a parent or child of the insured own the policy?
No. AnnuiCare® is an annuity with LTC benefits. If the non-insured owner (other than the spouse) were to die, federal law requires that the cash value be paid to the beneficiary, which would terminate LTC benefits.
May qualified funds, such as an IRA, be used to fund AnnuiCare®?
Not without special arrangement. Contact your agent or the company for details. Qualified plans have mandated distributions, and will require the owner to reduce the value of the policy, and thus benefits, at what may be an inopportune time.
How do partial withdrawals affect AnnuiCare® coverage?
The owner/insured may withdraw 100% of annuity interest earned without surrender charges and principal may be withdrawn subject to policy penalties, or a 10% Free Withdrawal is available after the first contract year on all AnnuiCare® policies issued on or after July 18, 2005. NOTE: Extreme caution should be exercised when making withdrawals because policyowner withdrawals reduce the AnnuiCare® Benefit Limit by three times the amount withdrawn.
Notice of Claims and Questions Regarding Benefits
Notify us as soon as possible when covered care or services are needed. We will determine if Benefit Conditions have been met. Care Advisors are available to assist in the development of a Plan of Care. Visit our Contact Us page and get in touch with one of Care Advisors.
How is the Annuity affected by claims paid?
According to the Pension Protection Act of 2006, benefits paid from your AnnuiCare® annuity beginning January 1, 2010 are not taxable. Benefits are first paid from withdrawals from your Cost Basis, then from your gain. All Accumulation Value remaining in your annuity will continue to earn tax-deferred interest.
What happens if the insured no longer needs care?
If the insured recovers from the benefit condition, and there is any remaining Annuity Value, withdrawals for LTC premiums are resumed. If all Annuity Value has been fully depleted, the unused benefit remains in force as fully paid up LTC coverage for the full remaining benefit.
What happens if all annuity value has been used and the insured no longer needs care, but the Benefit Limit has not been fully paid?
If all Annuity Value has been fully depleted, the unused benefit remains in force for the life of the insured, or until needed as fully paid up LTC coverage for the full remaining benefit.
What is Inflation Protection?
Inflation Protection is the Policyowner’s guaranteed right to increase LTC benefits up to 5% annually to keep up with the increasing cost of LTC.
How does Inflation Protection work?
As the Annuity earns interest and increases in value each year, the AnnuiCare® Daily Maximum and Benefit Limit increase in proportion. The Inflation Protection feature in AnnuiCare® guarantees the insured the right, without evidence of insurability, to make additional annuity premium payments within 30 days after policy anniversaries, such that the AnnuiCare® benefits are at least 5% greater than on the previous anniversary.