Long-term-care insurance does double duty

Long-term care with an annuity

In March, Genworth Financial Inc. in Richmond, Va., launched its Total Living Coverage Annuity. "It's a single-premium annuity, with a long-term-care insurance rider," says Genworth spokeswoman Deborah Pont.

Here's the way it works: You make a lump-sum payment to purchase an annuity. If you never need care, then your annuity continues to accumulate in value. However, if you need care, those dollars are available to cover the long-term-care costs at up to three times the amount of your original premium.

Similarly, OneAmerica's State Life has a plan called Annuity Care, which also works like a single-premium annuity. For those purchasers who don't need long-term care, the money grows at an interest rate of at least 3 percent and comes back to them in regular monthly annuity payments during the specified period. Moon says if a buyer of this plan does need care, he or she will receive monthly payments to help cover those costs instead, and the interest rate on their investment will be at a higher rate (currently 4.05 percent).

Another benefit: Thanks to changes resulting from the Pension Protection Act of 2010, these annuity plans pay out long-term-care benefits tax-free as of Jan. 1, 2010.

Getting more for your money

"More and more, people who are interested in LTC financing really want some asset-based approach -- something they can get a report on and see that their money is growing and has some value even if they walk away from it," says Moon.

Rogers says the new approach to long-term-care insurance offers greater options to consumers. "The advantage to having hybrid plans as well as traditional is not necessarily that one is better than another," Roger says. "It's just that people have different needs. This should be evaluated by a financial adviser as part of the total picture."

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