One America/State Life offers "hybrid" Long-Term Care Insurance plans that combine life insurance or an annuity with a qualified rider for long-term care.
There are variations between the policy language and benefits between the many companies that offer Long-Term Care Insurance; however, the primary features and benefit choices are comparable from company to company. Premiums and underwriting criteria vary dramatically between insurance companies.
When comparing long-term care insurance, you should recognize the differences between One America/State Life and other companies.
One America's history (which includes State Life) goes back over 140 years. They are among the top 8% of all U.S. life insurers.
One America/State Life offers both a life insurance death benefit along with long-term care benefits and an annuity with long-term care benefits.
If you are looking for a hybrid, experts recommend you limit your review to those that meet the federal regulations for Long-Term Care Insurance.
Federal Regulation and Consumer Protections
There are two types of these policies. A qualified Long-Term Care Insurance contract is defined under IRS regulations § 7702B(b)(1) as any insurance contract that meets the guidelines set by the Internal Revenue Service. All insurance products that meet these federal guidelines contain consumer protections and regulated benefit triggers, in addition to tax advantages.
The guidelines provide several consumer protections, tax benefits, and standardized ways to trigger the long-term care benefit. By law, only a policy that meets the guidelines under Section 7702(b) can call itself Long-Term Care Insurance.
The One America/State Life plans are considered 7702(b) policies. An insurance contract that falls under Section 101(g) cannot call itself 'Long-Term Care Insurance' and generally should be avoided as a long-term care solution. Federal law prohibits insurance companies from marketing these policies as "long-term care" policies.
One America has two primary products – Asset Care and Annuity Care. Both provide comprehensive coverage for long-term health care, and Asset Care is a life insurance policy with a rider for full long-term care coverage.
Annuity Care is an annuity that includes a rider for long-term health care.
With "hybrid" policies, you have guaranteed benefits for long-term care, death, or both. You have access to your money as well in three ways:
- You require long-term care services. You receive tax-free benefits to pay for all levels and types of long-term care, either at home or in a facility of your choice. The traditional trigger for benefits is the same as any traditional Long-Term Care Insurance policy. Because this is a true Long-Term Care policy, you do not need to have a permanent or "terminal" health condition to trigger the benefit, in addition to your need for extended care. Nor does the long-term care benefit expire at a specific age.
- You die. Like any life insurance policy, when you die, you get a tax-free death benefit.
- You change your mind. If for any reason, you need money, you can receive the cash surrender value. While very few people will ever consider doing that, it gives many people additional peace-of-mind, knowing you have access to the money in the policy.
One America's Asset Care combines a life insurance policy with comprehensive benefits for long-term care services and supports. The premium is paid with either a single premium, or you can pay in 5 years, 10 years, 20 years, or guaranteed annual premiums to age 95 that can NEVER increase.
One America/State Life's Asset Care Features and Benefits:
- Choice of unlimited comprehensive lifetime long term care benefits or an initial benefit account
- Monthly long-term care benefits
- Inflation options available ( 3% and 5% compound)
- Couples have one policy with individual long-term care benefits with a second to die death benefit
- Tax-Free long-term care benefits. Tax-Free death benefit
- Case management
- Bed reservation
- Caregiver training
There is a significant tax benefit with Asset Care. Since the insurance company breaks down the premium individually for "life" and "long-term care," it gives the policyholder the ability to deduct the long-term care portion of the premium for tax purposes (as allowed by law) or for reimbursement in qualified Health Savings Accounts.
One America/State Life's Annuity Care is a very unique policy and provides similar comprehensive long-term care benefits. However, don't think of this as an annuity as you would never utilize this policy in that way.
When you deposit money in this policy with a single premium, it automatically creates a much larger sum of tax-free long-term care benefits.
You can use both non-qualified or qualified money. In addition, one plan (Indexed Annuity Care) allows you to pay ongoing premiums – or deposits – in addition to the original first premium. Just like Asset Care, you can receive money from the policy in three ways:
- You need long-term care services, and benefits come out tax-free.
- You die - Your beneficiaries will receive the policy's accumulated value, minus any long-term care benefit that may have been paid. On a joint policy, it would be the second person to die.
- You change your mind – If for any reason you need money, you can receive the cash surrender value. While very few people will ever consider doing that, it gives many people additional peace-of-mind, knowing you have access to the money in the policy.
Annuity Care grows in two ways. First, with "interest." The policy provides a guaranteed interest rate, which could never drop below that amount guaranteed. The interest rates could be higher, but they could never drop below that rate.
Annuity Care also offers Indexed Annuity Care that grows the benefits based on an interest rate calculated on the market index.
In addition, you can add an additional inflation rider. This can especially be important if you are younger or have strong longevity in your family.
1035 tax-free exchanges are allowed - meaning you can roll money from another annuity into this policy, including qualified funds.
One key difference between Annuity Care is its underwriting criteria. They are less stringent than typical long-term care policies, and a Long-Term Care Insurance specialist can assist you in this area.
Those who are older may also find this an appropriate way to address future long-term care costs.
Both products also feature international benefits.
Since these policies from One America are hybrid policies and not a traditional long-term care policy, they will not qualify as a partnership policy under state and federal law.
Find State-Specific Information
You can learn more about the federal/state partnership program by going to the LTC NEWS Cost of Calculator. Each state has a state-specific page that includes the current and future cost of long-term care services, available tax incentives, information on care providers, and other important information - Cost of Care Calculator - Choose Your State | LTC News.
Shopping for Long-Term Care Insurance?
When shopping for Long-Term Care Insurance coverage, keep in mind, numerous state and federal regulations impact Long-Term Care Insurance. Each state's department of insurance regulates products and premiums. Because of regulation, an insurance agent, agency, or financial advisor cannot give a consumer a special discount that is not available otherwise.
Be sure to use all the tools and resources available on LTC NEWS to help you in your research - Resources for Long-Term Care Planning | LTC News.
If you own a One America/State Life policy and seek help submitting a claim, LTC NEWS offers free - no-obligation assistance - including help finding quality caregivers and facilities. Since most agents have little or no experience in this area, this assistance can be beneficial for the entire family - Filing a Long-Term Care Insurance Claim | LTC News
There are more similarities than differences when it comes to features and benefits. However, options and benefits vary from company to company, and premiums can vary between companies by over 100% when comparing equal benefits.
Be sure to seek the assistance of a qualified Long-Term Care Specialist to compare the features, benefits, and costs of each policy. You can find a trusted and qualified specialist that represents the major insurance companies that offer these products - Work With a Specialist | LTC News.
Since your health is a primary consideration in determining your eligibility for coverage, it is always best to start planning before retirement when health is usually better. An experienced Long-Term Care Insurance specialist will ask you several questions about your health to provide you with accurate quotes and professional recommendations.
Please note: Since every company has different underwriting rules, you could be eligible for coverage with one company and not another.
Because Long-Term Care Insurance is custom-designed, you can design the plan to fit your specific needs, concerns, and budget. A specialist will help you develop your plan to address your concerns. Generally, you can design a plan to meet some or all of these common goals:
- Safeguard income and savings
- Protect the lifestyle of your spouse/partner
- Provide options for quality care
- Reduce the stress and burdens otherwise placed on family members
- Give your adult children time to be family
- Provide a legacy for loved ones
State variations may apply.