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Deferred Annuity and Immediate Annuity

The deferred annuity has two funds:

1. A long-term care fund that can directly pay for long-term care services or pay for long-term care insurance. This fund may grow at a high interest rate.
2. A regular cash fund that grows at a guaranteed rate of three percent.

To be eligible for this annuity you have to be under age 85 and answer a few questions about your current health condition. There are some conditions when you can’t get this type of annuity (for example, if you have dementia or Parkinson’s disease). If you are eligible, your long-term care coverage can start after the seven-day waiting period.

The monthly long-term care benefit payout depends on the deferred annuity value. Most deferred annuities provide coverage for up to 36 months. You may be able to buy additional months of coverage for an extra cost.

Listed below are some opportunities and requirements/limits for deferred annuities:

Deferred Annuities Opportunities:	Deferred Annuities Requirements/Limits:
It may be easier to qualify for a deferred annuity rather than for a long-term care insurance policy.	Deferred annuities are non-tax qualified long-term care policies and may subject you to certain tax liabilities. For more information, you should check this out with your financial advisor and/or the Internal Revenue Service (IRS).
This is a separate fund and you can use the money right away to pay for your long-term care needs or to buy a long-term care insurance policy.	If the annuity doesn’t include inflation (future price increases), you might not have enough money to pay for your long-term care needs.
You might be allowed to buy prescription drugs.	The benefit amounts might not be enough to pay for your long-term care needs.
If you don’t use the entire long-term care annuity, you can leave something to your heirs (family or friends).	Usually provides coverage for up to 36 months. You may be able to pay for more months of coverage.

An immediate annuity is for people who can’t get insurance because of health conditions (for example, dementia or Parkinson’s disease). You can also get an immediate annuity if you are already getting long-term care.

Usually with this type of annuity, medical underwriting is used. You usually must answer medical questions on an application. You need to fill out this application carefully and completely or your annuity could be invalid. Some insurance companies may want to review your medical record before they give you this type of annuity. The insurance company can use this information to decide how much to charge you (your premium) and what the payout schedule will be for this type of annuity.

If you qualify, a single premium payment is converted (changed) to a guaranteed monthly income. You will get this monthly income for the rest of your life.

Listed below are some opportunities and requirements/limits for immediate annuities:

Immediate Annuities Opportunities:	Immediate Annuities Requirements/Limits:
You can use the money to pay for your long-term care needs.	If you don’t know the type or cost of the long-term care you need, the income you get might not be enough to pay for your long-term care needs.
If you are already getting long-term care, you can still get this type of annuity.	If the annuity doesn’t include inflation (future price increases), you might not have enough money to pay for your long-term care needs.
You might be able to leave something to your heirs (family or friends).	You may or may not have to pay taxes on this annuity. For more information, you should check this out with the Internal Revenue Service (IRS).