If you are over the age of 59-1/2, it may be possible for you to buy and “pay off” your long-term care insurance with funds from your IRA.

How it works.

This approach requires the use of a hybrid long-term care insurance policy.

Hybrid long-term care insurance is an alternative to traditional long-term care insurance that combines an underlying life insurance policy or annuity with riders to cover long-term care expenses.

• • Hybrid long-term care insurance protects against long-term care expenses while simultaneously protecting insureds from the burden of a lifetime of premiums.
  • If long-term care benefits are never needed, either the death benefit of the life insurance policy or the accumulated funds of the annuity can be left to heirs.

By contrast, with traditional long-term care insurance – premiums are due for life and if care is never needed, years of costly premiums paid into the policy are lost.

5 Easy Steps to Pay Off Your Long-Term Care Insurance.

At least one insurer has a program through which periodic annual premium withdrawals for hybrid long-term care insurance are coordinated through an IRA account.

Step 1. An individual or both spouses are covered by one policy.

Step 2. A portion of IRA account funds are “rolled over” tax-free into a qualified ten-year-certain deferred annuity.

Step 3. Each year for ten years, funds are dispersed from the annuity to pay the annual premium on a 10-year-pay hybrid long-term care policy.

Step 4. Annually, the policyholder receives notification of the reportable income amount for taxes.

Step 5. Once the ten years are up, the deferred annuity will be depleted, and no additional hybrid long-term care premiums will be due.

For older retirees, annual withdrawals used to pay premiums can help meet RMDs (Required Minimum Distributions).

Lower annual withdrawals spread out over ten years generally creates a reduced tax impact when compared to making a large, one-time withdrawal to fund a single-premium or lump-sum policy.

Learn more about hybrid long-term care insurance and how to “pay off” your long-term care policy in this FREE guide! 

Guide to Hybrid Long-Term Care Insurance*

*Direct link!  No email or phone number required and no salesperson will call.