Is anyone aware of a product similar to Lincoln's fixed LTC annuity that you can purchase with qualified funds? I know that there are carriers with enhanced income riders that fit the bill, I am looking for something similar to Lincolns triple leverage extension benefit.
Qualified Funds for LTC
- Thread starter Stephen
- Start date
Correct me if I am wrong but are there many annuities that don't accept qualified funds? I thought they all accepted qualified funds...
- Thread starter
- #3
I don't think that there are many that require NQ funds, but the Lincoln LTC fixed annuity is definitely one of them. It has a really nice LTC bucket that pays very well compared to similar products, 100k turns into a 300K benefit if confined, with a reduced benefit for home care.
You're going to have a tough time finding one. Most of those products, like Lincoln and Forethought, are structured to provide tax qualified distributions when used for LTC (meaning they are not taxed).
That would create an issue if you had a policy that allowed for qualified funds since if it was used for LTC, those funds would have never been taxed.
I think One America had something that allowed qualified funds but involved a spia and an annual tax bill to start. I don't remember how it worked but you may want to look into that...
Of course, you could always just buy a standard LTC policy...Tough to beat that leverage.
The One America accepts qualified funds, then does a 4 year conversion to, similar to a Roth conversion, to make the funds NQ and spread out the tax burden. I am told by my FMO that very little business is flowing into this produce, Annuity Care III is the name.
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seriously, who taught me to type!
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seriously, who taught me to type!
That sounds about right....Thanks for the info.
I'm not surprised that there isn't money flowing into that concept...have you ever tried to get a client to do a Roth conversion?
We even use a concept called "tax free Roth conversion" where you buy a GUL on the IRA owner to allow the surviving spouse to do a conversion, stopping rmds and allowing a tax free stretch to the beneficiaries. This is normally done with people of higher net worth or those with good pensions.
Less than half actually do the conversion still...they keep the life proceeds.
so the GUL is there to pay the conversion taxes; is that the concept? I am interested in this ...
That's basically it. Protective has some good materials on using GUL in conjuction with IRAs to create flexibility.
Another concept involves using RMDs to fund a GUL to allow a stretch to grandchildren without disinheriting the children. I normally spreadsheet the strategy using a variety of inputs to illustrate how it works.
If you want to PM me your email, I'll send some of the pieces to you.
