Long Term Care Annuity Provides Income After Retirement

2007-11-09 05:11:17

( Insurance )



You may be thinking what type of life care planning is best for you as a retiree. You can actually generate retirement income while securing your long term care needs. Long term care annuity combines the principles of insurance and investment. It is investment as you pay money into it and it provides insurance once you start receiving payments from it. Long term care annuity's difference with insurance is that it protects you when you are retired, whereas insurance provides protection in case you die too soon.

Long term care annuity comes in two types: immediate annuity and deferred annuity. If you have accumulated sufficient amount of money and now want to get guaranteed monthly payments, you may opt to purchase an immediate long term care annuity. Immediate annuity allows you to purchase the plan in one lump-sum payment. Your insurer will begin making payments not later than a year after you buy.

In a deferred long term care annuity, you have to accumulate a set number of periodic payments to the insurer before payments will begin. During the period when you are paying premiums, the cash value of your deferred long term care annuity grows. Once the accumulation has elapsed, it will be the time when the insurer starts making payments to you.

Although long term care annuity is a good investment vehicle, you have to note that the annuity may not fully cover your expenses for long term care. Your future annuity depends on the size of the plan you buy today, however inflation may cause long term care expenses to increase beyond the level of annuity you have set. There are also complicated tax implications arising from long term care annuity payments. It is advisable to consult a tax professional before you even purchase long term care annuity.


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