How To Use Annuities For Long Term Care
The Annuity Man
When annuities were first introduced during the Roman Times as a lifetime income stream reward for the dutiful Roman soldiers and their families, I'm assuming that long term care coverage was not on anyone's radar screen. Times change, and now long term care type coverage is an ongoing concern for the 10,000 baby boomers reaching retirement age ever single day.
Annuities primarily solve for 4 different goals. I use the easy to remember acronym P.I.L.L. to describe those goals. P stands for principal protection. I stands for income for life. L stands for legacy. And the other L stands for long term care. If you don't need to contractually solve for one or more of those items, you do NOT need an annuity of any type. Always buy annuities for their contractual guarantees. Never make your buying decision based on hypothetical, theoretical, projected, back-tested, and hopeful agent return scenarios.
When it comes to Long Term Care (LTC), annuities should be used as secondary coverage. Traditional (non-annuity) LTC is still the best coverage, if you can qualify for it. If you can't pass the underwriting standards for the Traditional LTC product, then annuity transfer of risk strategies might be your only option. You can also use Single Premium Immediate Annuity (SPIA) income stream to fund Traditional LTC premiums.
The bottom line is that all annuity strategies can be customized to address your specific situation. That rule definitely applies for annuities that address long term care.
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