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Long-Term Care Annuity: How Do LTC Riders Work?

Stan Haithcock
November 6, 2023
Long-Term Care Annuity: How Do LTC Riders Work?

Hey, hey, hey. We're going to talk about a really motivational topic today: long-term care. Old age is tough; old age is terrible. I always tell people with long-term care when they can't do two of the six daily functions in life when they qualify for it, which is feed themselves, clothe themselves, and bathe themselves; I mean, life stinks. Am I right? Does life stink when you can't do that? It stinks, and you're going to live an average of three years and a maximum of seven more years, according to the intelligent people who are locked in the closet called actuaries. That's what they say. But what we're going to talk about today is how those riders work for long-term care, also called confinement care, and how those enhanced benefits work.

‌You go to the bad chicken dinner seminar, and they serve you the chicken, or if you go to the steak dinner seminar, they serve you the steak. You're like, wait a minute, how much are those commissions? They're serving me a steak dinner. The person's up there, and they'll say you get free long-term care, and you get a free bonus, you get free, free, free, free, free, and you're going, that doesn't sound right. What's the real truth about that free long-term care this person's telling me about? I'm getting ready to tell you now.

‌Quicker When You Get Sicker

‌Here's the bottom line about long-term care, and I'm from the south originally, North Carolina. Yes, I can twang with the best of them. I might just do a video in a Southern accent, like Foghorn Leghorn. No, I'm not going to do that, but I could.

‌What I tell people with long-term care is annuity companies or long-term care companies or whoever, when you get sicker, you get your money back quicker.

‌What you're doing when you qualify for long-term care, or you qualify for enhanced benefit riders, or you qualify for confinement care riders is what you're telling the annuity company or that carrier is, I'm so sick, I'm not doing as well, so my life expectancy is less, so you're going to pay me more because I've proven to you. After all, my doctor signed off on it, that my life expectancy is less. It's really that simple. It's kind of sad, actually, but that's what you're doing. You're getting your money back quicker when you get sicker. Now, we need to stop you. We're getting ready to talk about these confinement care enhanced benefit care riders attached typically to Indexed Annuities at the bad chicken dinner seminar pitch, or someone will pitch you this, but listen closely. Put the pen down right now. Put it down.

‌Never ever, ever, ever let an agent talk you out of your current traditional long-term care policy to buy a confinement care enhancement for a care rider. Never let them say this one's as good as what you have. If you have traditional long-term care and no, I do not sell traditional long-term care, but if you have traditional long-term care, that's the best coverage. I don't sell it; it's the best coverage. Long-term care is a health insurance product. If you've qualified for it, you've been paying into it all these years, keep it.

‌Don't Get Rid of It

‌Great story. My parents, frugal Southerners, don't like to spend anything. I mean, they will coupon you to death. In fact, I'm not sure they can eat without a coupon. I don't even think they can swallow food unless there's a coupon involved. But the bottom line is they have long-term care, and they've had long-term care forever. Of course, I didn't sell it to them because I don't sell long-term care. My father passed away, and they got some of the long-term care benefits; they hummed and hawed and didn't turn in the paperwork claim when I told them to, but they got some. But when my dad passed, and the long-term care premiums came in this year, the bill, my mom's like, "Should I continue with this long-term care and spend this money? It's like we're shooting it down a rabbit hole." I'm like, "Mom, of course you pay it. It's a transfer of risk. You pay your car insurance, you pay your home insurance, you pay your fire insurance, you pay your flood insurance, you pay your long-term care insurance. If you have it, continue it. Do not get rid of it. I know they're increasing the premiums," nod your head, "I know they're increasing the premiums, that's okay. It's still the best coverage."

‌Now, in a perfect world, when the unicorns chase the butterflies and the Democrats love the Republicans and everybody is happy, you will use these confinement care and enhanced benefit riders as secondary coverage. Not primary, secondary, but for all you players out there that get up every day and start drinking Jack Daniels from the start in your coffee and start smoking the Lucky Strikes without filters because you're a player and you're rolling the dice overhand with a running start, you're not going to get traditional long-term care, you're not going to qualify for it.

‌There's Hope for Coverage

‌So, your only hope in life for any coverage is these enhanced benefit riders and confinement care riders. And so, in essence, that's your only play. If the Index Annuity salesperson is saying, "Hey, I've got this free long-term care that you don't have to qualify for," and you're going, "Hey, that's good because I'm drinking Jack Daniels all day long, and I'm not going to qualify for it." Let me tell you how they work.

‌You get these Income Riders attached to Indexed Annuities, and they also have confinement care or enhanced benefit care. So, let's talk about the confinement care one. What happens is if you go to a nursing home, confinement care, and you're typically, and all policies are different, but I'm just giving you a broad, 30,000-foot view. If you're in that nursing home for 60 to 90 days and then you send those forms and the doctor signs off, and we help you with all of that to the annuity company, what the annuity company does is they increase that Income Rider guaranteed payout. Why? Because you're sicker. You're going to get your money back quicker.

‌The enhanced benefit rider and you got to know the difference between the two; we can help you with that at The Annuity Man. But enhanced benefit riders are when you can't do those two of the six daily functions of life or something that you've got to prove to the annuity company that you're really, really sick; you can't feed yourself, the clothe yourself, the bathe yourself. Once again, once you prove that the annuity companies will enhance or increase the payout, many of the sales pitches out there call them income doublers.

‌Let's just say you go into the nursing home for 90 days and you qualify, or you can't do two of the six with the enhanced benefit riders, and you qualify, and your income stream was supposed to be $10,000 a month. What the annuity company will do is because you've qualified, they'll pay $20,000 a month. And you're saying, wow, that's fantastic. Remember, you'll get your money back quicker when you get sick; you're just getting your money back. And typically, those payouts, those enhanced doubler type payouts, are for five years with most policies. Why five? When you're in the nursing home for 90 days, or you can't do two of the six daily functions, you're going to live an average of three years and a maximum of seven, and that's the reason it's five.

‌So, after the five, what happens? Stay in the annuity, ma'am. Then, the income stream goes back to the original, say $10,000 level. So, you get that doubler for those five years. Hey, but if you can't qualify for true long-term care coverage, it's not a bad deal. You don't have to use it. Throwing the money down the rabbit hole Stan, like my mom says. You still have control of the asset, and you still have that confinement care. But understand that anytime you get an income stream from an annuity, whether from your lifetime income benefit rider income when you're healthy or the doubler enhanced when you're not healthy, they're subtracting that income amount from that total amount of money. Annuity companies have the big buildings for a reason. So, hang in there with me. I got a couple more things to say, and then we'll tie this thing up in a bow.

‌We discussed Income Riders a lot because that's attached to these confinement care and enhanced benefit payouts. I've done a video that you might want to look at as well that goes into the Income Riders and how they work, etc. Because if you're looking for these types of confinement care enhanced benefit payouts, you have to know about the Income Riders, right? Exactly.

‌Getting Quotes

‌So, currently, at the time of this blog, there are less than 20 carriers out there that offer these types of guaranteed issue coverage. Hopefully it's secondary coverage, but it might be primary for you if you can't qualify for the other, but less than 20. If you go to our website and you say, hey, I'm looking for this, we will quote all of those carriers for you, we will find the highest contractual guarantees for your specific situation, and we will explain to you whether it's enhanced benefit rider or confinement care rider, the difference between the two, and you can make an informed decision on your terms and your timeframe whether this fits as a transfer of risk strategy for you and your family.

‌We Have to Plan

‌I know long-term care is an ugly subject. I mean, who wants to talk about that? We all have friends and family, and we see them at the end of their lives, and you're like, "Man, that is just not good." But we have to plan for it. We have to put things in place contractually that will either lessen the blow financially or at least transfer some of that risk to the annuity company, so it doesn't cost you a ton of money as you transition to those final years of your life.

‌So, with that, do me a favor, hit the subscribe button on our YouTube Channel, and after you hit the subscribe button, we have the best annuity calculators on the planet. For instance, with this confinement care enhanced benefit care rider, we have a calculator that we would just run your specific situation through, and we'll find the best care that provides the highest contractual guarantee for your situation.

‌I've written books on Income Riders that you can get for free by clicking on this link. You can listen to my podcasts and see all my videos I create. I'm out here educating. And by the way, if you want to set a time to talk to me or one of my crack staff out there that know annuities backward and forward, you can book a call with us. No, they're not some agent in Poughkeepsie, nothing against Poughkeepsie; that doesn't work for The Annuity Man. These are employees of mine that I have filtered, and they are the best, and they understand these products backward and forward. So, with that, I will see you in the next blog.

Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.

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