Annuity / long-term care
Turn idle savings
into a care fund.
An annuity with long-term care benefits can multiply your money for care, and still leave it to your family if you never need it.
How the leverage works
Your money first, then the insurer's
- 1
You fund it
With CDs, savings or a 1035 exchange from an old annuity.
- 2
It grows
At a fixed, guaranteed rate, tax-deferred.
- 3
You need care
Your account value pays first, monthly.
- 4
The insurer adds more
An additional LTC pool, often bringing the total to 2–3x your account.
Leverage, rates and benefit periods vary by carrier, age and design. Hypothetical description; not a quote.
Why people choose it
Built for money you've already saved
- Simplified underwriting compared with life insurance
- Tax-free long-term care benefits under the Pension Protection Act
- A 1035 exchange can move an old annuity in without tax on the gain
- If you never need care, the account value is yours or your heirs'
Annuity/LTC vs hybrid life/LTC
| Annuity / LTC | Hybrid life / LTC | |
|---|---|---|
| Typical funding | Single deposit | Single, 5–10 pay, or ongoing |
| Underwriting | Usually simpler | Full or simplified life underwriting |
| Leverage for care | Often 2–3x the account | Often several times the premium |
| If you never need care | Account value to you or heirs | Death benefit to heirs |
| Tax on LTC benefits | Generally tax-free (PPA) | Generally tax-free (§7702B) |
| Best fit | Older savers, health concerns, old annuities | Healthier buyers who also want a death benefit |
Annuity/LTC questions
How does an annuity with long-term care work?
You fund a fixed annuity with a long-term care benefit. If you need qualified care, the annuity pays from its own account value first, then from an additional long-term care pool provided by the insurer, often bringing the total to two or three times the account value.
Are annuity long-term care benefits taxable?
Under the Pension Protection Act, effective since 2010, long-term care benefits paid from a qualified annuity/LTC contract can be received income-tax-free, even when they come from the annuity's gain. Consult your tax professional.
Can I move my old annuity into one of these?
Often yes. A 1035 exchange can move a non-qualified annuity into an annuity/LTC contract without triggering tax on the gain, so a dormant annuity can become a long-term care fund. Watch for surrender charges on the old contract.
Is it easier to qualify for than life/LTC?
Often. Annuity/LTC underwriting is usually simpler than life insurance underwriting, which can make it an option for people who don't qualify for a hybrid life policy.
Your next step
See your numbers before you decide anything.
A free, no-pressure review. We'll compare asset-based long-term care options from top-rated carriers side by side, including what happens if you never need care.