Avoid worries about out-living withdrawals from your IRA by putting your nest egg to work for you. A Single Premium Immediate Annuity can convert a lump sum of your retirement funds (or life insurance payment) into a stream of monthly income guaranteed for as long as you live no matter what the stock market does.
Many carriers offer advance payments and liquidity options where you can access principal from your contract in case of unforeseen emergency needs. It is most common to sacrifice a small amount of monthly benefit in return for a certain period of (e.g. 10) years. Remaining guaranteed monthly payments would go to your designated surviving beneficiary(ies).
Long Term Care
Long Term Care Insurance (LTCi) can help pay for the cost of nursing home, assisted living, or home health care from a few months to several years. This type of custodial care is different from post-hospital rehabilitative skilled nursing care covered by Medicare health plans, even though some services may take place in the same facilities. As with life insurance, the younger and healthier you are at the time of application, the better your monthly premium and chance of acceptance.
Typically LTCi benefits begin once a licensed health care professional certifies that you have cognitive impairment or need substantial assistance with more than one of the Activities of Daily Living (ADL’s). Note that Alzheimer’s incidence increases from 1 in 5 at age 80, to nearly 1 in 2 at age 85.
Long Term Care Partnership policies in Georgia offer dollar-for-dollar asset protection from Medicaid spend-down rules. You may exclude most income-generating property, your home (up to $500,000), your car, and certain funeral/burial arrangements, but the cash value of any life insurance policies count towards the $2000 individual ($3000 couple) maximum assets for Medicaid assistance with nursing home costs. Partnership policies require inflation protection and premiums qualify for tax deductions.
Hybrid LTCi and Life Insurance
A single premium hybrid UL and LTCi policy is a way to have your cake and eat it too! Convert a lump sum into roughly twice as much in tax free income for your surviving beneficiary or nearly six times your investment in long term care benefits. If you don’t need the LTC benefits, your beneficiary receives the full death benefit, but a residual life insurance benefit remains even if you use up the larger LTC benefit amount for custodial care.
For example, a 59 year old female non-smoker qualified for preferred rates could turn $125,000 into over $750,000 LTC benefits (almost $6500/mo for six years) with $25,000 residual death benefit or $265,000 full death benefit is she doesn't need long term care.