Eldercare Financial Planning

Life Resource Planners of the Treasure Coast 

‚ÄčLong Term Care Linked Life & Annuities

The provisions of the Pension Protection Act (PPA) of 2006 permits tax-free distribution of life insurance or annuity cash value to pay for long-term care.  With Long Term Care Linked Life Insurance & Annuities, the consumer maintains asset control, receives more long term care benefit for their dollar, and retains benefits whether or not they use their LTC benefit.


Annuity based LTC:

A Long Term Care Linked Annuity functions just as a fixed annuity would - the policyholder earns a fixed rate of return, earns tax-deferred growth, and can be converted to a source of income or passed to a beneficiary.

If an LTC benefit is needed, the company would use the initial deposit amount to fund the Long Term Care for one to two years. After that, the built-in multiplier of about 200% or 300% of the aggregated policy value would continue to pay the remaining years of the policy.  The month benefits are received tax-free.


In the example below a client has an existing annuity valued at $100,000 (although it could easily been a $100K CD) but with a low basis of $25,000. Using a tax free IRC 1035 exchange, the client transfers the annuity value to a new annuity that is compliant under IRC 7702(b). If the client is in need of long term care, he can receive up to 300% of the annuity value completely tax-free!

Annuity Based LTC

Life Resource Planners of the Treasure Coast
1717 Indian River Blvd Ste 301
Vero Beach, FL 32960
772-567-7970 ext.101