Mark Fitzgerald, national sales manager for Saybrus Partners, Phoenix's distribution subsidiary, explained in a release detailing the survey results that while lifetime income remains a top priority for consumers and advisors alike, other preferences, such as accumulation and chronic-care benefits, are taking precedence as well, leading to the prediction that combination annuity
products stand to increase in value.
For example, notes Scanlon, provisions enacted in 2010 make distributions from qualified combination life (and combination annuity
) contracts tax-free when used to cover the cost of long-term care.
Enter the combination annuity
. The annuity-LTCI combo is an up-and-comer that some observers contend could quickly gain a strong foothold in the marketplace.
Effective January 1, 2010, this applies to new combination annuity
contracts as well as older contracts that are exchanged into new combination annuities with long term care.
More and more, consumers are looking to meet other needs, notably accumulation and chronic care benefits, and would like the ease of a combination annuity
product that does it all."
With that in mind, it might be worth steering clients toward a so-called combination annuity
. For clients who already have an annuity and whose LTC coverage is lacking, it may be worth executing a 1035 exchange into a combination product to tap the LTC tax benefit.
Under the combination annuity
, the insured covers a material percentage, varying from 20% to 33%, of the LTC benefit via the annuity values.
Note: This rule applies to stand-alone and combination annuity
contracts as well.
The Pension Protection Act of 2006 includes soiree key provisions that address for the first time the taxation of combination annuity
plans featuring LTC, insurance.
FOR THE COMBINATION annuity
and long term care marketplace, 2009 will be a momentous year.
WITHOUT DOUBT, the passage of the Pension Protection Act of 2006, which extends the Health Insurance Portability and Accountability Act's favorable treatment of combination life and long term care policies to combination annuity
and LTC contracts, has been one of the most dramatic events affecting the insurance industry in years.
THE FOCUS OF insurance company combination annuity
and long term care activities since passage of the Pension Protection Act in August 2006 has focused on deferred annuity vehicles of all manner and shape.