Asset Based Long-term Care

Asset Based LTC takes the form of an annuity. In this type of plan, a lump sum is deposited into an annuity that has the ability to grow in value over time. The amount invested is leveraged up to provide additional LTC benefits in addition to the annuity value itself. There is a cost for this rider that is built into the product. When the 2 of 6 ADL's are triggered, or cognitive impairment, these benefits are paid directly to the beneficiary as an indemnity benefit.
Depending on health and age, the leveraging factor can be from 125% to over 300% of the annuity value. This means a $50,000 investment can yield between $62,500 and $150,000 of benefits for LTC needs.

While these do not have tax deductibility or Partnership protection, they do not operate on the "Use it or Lose it" structure. If the benefits are not needed, they simply pass to the beneficiaries just like any other annuity would do.

This biggest drawback to these plans is that they must have a minimum amount of capital to establish them. The minimum annuity premium for this type of plan is $50,000 per individual. That is $100,000 of unneeded capital for a couple. Many times we suggest a higher amount of initial capital than the minimums due to the cost of LTC needs.

This type of planning is advantageous to those people who have accumulated enough assets to live comfortably in retirement, and have some excess that is not needed for income. While your health is a determining factor in how much your dollars will leverage for LTC benefits, some of these plans can still be implemented even if the individual is uninsurable with traditional products.