I Don’t Want to Buy LTC Insurance, I’ll Pay Out For My Care Out of Savings

That can work.  Currently nursing homes run about $8500 a month and assisted living type facilities run half of that.  You are fortunate to have savings sufficient to pay a bill like that for several years.  Hopefully you will not be withdrawing the money from an IRA or 401K and paying taxes in addition to the LTC costs.

Some people plan on this strategy because they think they cannot get the insurance.  Others simply don’t want to pay the premium for years and then not use it (disappointed that you don’t need LTC – really?).  I feel the same way about my car insurance, but I digress.

You may have noticed that interest rates are about as low as they have ever been.  Some rejoice at finding a .9% interest rate on a CD.  I have a savings account that pays 1%, and will also have a fringe benefit of giving you extra money for LTC.

It is an annuity, a savings account offered by insurance companies.  This one accepts your deposit and keeps two interest rate columns, one at 1% and a second column at 2%.  If you need funds, you can withdraw from the 1% column, but that is not the best strategy.  If you need LTC, you can withdraw from the 2% column, receiving your money back (tax free) over 24 months.

Once your account balance is zero, you continue to get the same monthly withdrawal out of the insurance company’s pocket for 36 more months.  Thus, two years of money now lasts for 5 years paying for LTC.

The money is always yours.  Want a boat or sports car?  Withdraw the money, but if you do then there is no LTC benefit anymore.  This should be money that will probably sit for life, just-in-case money.  At death it, or any unused portion goes to your named beneficiary.

If you have an existing annuity, one you started years ago, and which has increased significantly over the years, you probably understand that the gain will be taxable upon withdrawal or death.  If you transfer that existing annuity into this one, and use the money for LTC, there are no taxes paid on the interest you earned – ever.

So, if you would like to “take care” of future LTC needs with one check, and make 2 years of LTC money last for 5 years, and get your money back with interest if you don’t need LTC, then you need to call Romeo Raabe, TheLongTermCareGuy.com at (920) 884-3030 or (800) 219-9203 and investigate the annuity/LTC combo.

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1 Comment

  1. Holly Murs on October 29, 2013 at 1:29 am

    The best way to pay for long term care varies from person to person and your post provides a clear understanding on who should go for an annuity with long term care benefits. Great post, Romeo.

    By the way, we featured this article in LTC Options’ Weekly digest as it perfectly fits our theme for this week’s edition—long term care planning and financing. You can read the whole compilation here http://www.ltcoptions.com/weekly-digest-planning-for-long-term-care-long-term-care-insurance-and-annuities. Thanks and we’re looking forward to reading your future posts.