Using Life Insurance to Finance Long Term Care
If, after receiving $250,000 of LTC benefits, she passes, the remaining death benefit ($250K) is payable, tax-free, the the beneficiaries.
Life Resource Planners of the Treasure Coast
1717 Indian River Blvd. Ste. 301
Vero Beach, FL 32960
In the Example below a 75 year old woman with a single premium of $250K purchases a paid up policy of $500,000. this will provide 2% a month or $10,000 per month of tax-free LTC benefits
Long 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.
LTC Linked Life Insurance
A Long Term Care Linked Life Insurance policy acts just as a typical life insurance policy would, only with two added Long Term Care riders.
If the policyholder doesn't have a Long Term Care event, the death benefit is paid out to the beneficiaries. However, if a Long Term Care event does happen, the first rider kicks in and starts paying a percentage (typically 2%) of the death benefit every month to cover Long Term Care costs. For example a $200,000 Death Benefit policy that qualifies under IRC7720(b) or IRC101(g) would provide up to 50 months of tax-free LTC benefits of $4,000 per month.