Using Qualified Funds for Hybrid Long-Term Care Insurance
When you started your 401k, IRA, or 403b, you started it intending to fund your retirement. However, what if I told you that you can transfer these assets to fund a Hybrid Long-Term Care Insurance policy?
That’s right! You can use assets from your retirement accounts to fund your Hybrid Long-Term Care Insurance!
There are two ways to you can make this happen which I will explain:
- One way is using OneAmerica’s AssetCare. OneAmerica’s AssetCare is a Hybrid Long-Term Care policy that allows you to rollover a portion of your 401k, IRA, 0r 403b to an annuity that will make premium payments over 10 years.
- Another way is to use a multi-pay option such as Nationwide’s CareMatters multi-pay policy. A multi-pay option allows you to make smaller withdrawals from your 401k or IRA and make premium payments over time.
Please note, both options will require you to be over age 59 1/2 to avoid tax penalties. In addition, you will still be required to pay taxes on your 401k, IRA, 0r withdrawals. (This is not tax advice. Please consult your tax advisor for more information).
How To Qualify For OneAmerica’s Asset Care Using A 401k, IRA, or 403b
Like all Hybrid Long-Term Care Insurance policies, OneAmerica’s Asset Care provides the following:
- It pays for long-term care services if you need care
- If care is never needed and you pass away, the asset passes onto your heirs creating a legacy
- It offers the option to return your premium to you if you ever change your mind.
In addition, this policy also offers lifetime benefits! It can provide an Unlimited Long-Term Care Benefit pool for both spouses so you can never outlive your benefits!
Now in order to qualify for OneAmerica’s Asset Care using retirement accounts and qualified funds, you must be between the ages of 59 1/2 – 80.
First, an individual must apply and get approved for an Asset Care policy. Once approved, a lump sum of your 401k, IRA, or 403b assets will be rolled over into a deferred fixed-interest annuity with OneAmerica.
From there, OneAmerica will add a 20% premium bonus into the account. For example, if you rollover $150,000, OneAmerica will add $30,000 ($150,000 x 20%) giving you a total of $180,000 to apply towards your policy!
This annuity is then used by OneAmerica to pay the premium on your Hybrid Long-Term Care insurance.
Using annuity withdrawals from the annuity, OneAmerica will automatically pay your hybrid policy’s premiums over a period of 10 years.
All of this is accomplished using a one-time application and approval process!
Now, let’s look at an example of how this all works.
Example of Using a 401k, IRA or 403b to Fund OneAmerica’s Asset Care
For our example, we will use a married 61 year old male and 60 year old female applying for a joint policy.
This couple is looking to move $150,000 from their IRA to fund their Asset Care policy.
Below is an illustration. To make things easier, I highlighted the areas of importance –
First, you will see this is a OneAmerica “Asset Care Annuity Funding Whole Life.”
It has a single pay annuity premium of $150,000 and provides $5,287 in monthly LTC benefits per person. The Total LTC Benefit Balance is Unlimited and the policy has a Face Amount of $176,246.
Simply put, this means our couple will move $150,000 from their IRA into a OneAmerica annuity used to fund their Asset Care policy.
In return, they will each receive an unlimited $5,287 in monthly LTC benefits for qualified long-term care expenses!
In addition, if they pass away without needing long-term care, their loved ones can receive a death benefit of $176,246!
Both benefits offer the couple more than what they put into the policy!
Now let’s look at how the annuity pays the policy premiums once the policy is in-force:
Once the policy is in-force, annuity withdrawals will be used to pay annual premiums of $18,000 over 10 years.
Now mathematically, something does not sound correct. How can the couples $150,000 deposit pay $18,000 in premiums for the next 10 years?
Remember, OneAmerica adds a 20% bonus premium to your account once funds are received. Therefore, your $150,000 becomes $180,000 and can now cover the required premiums.
So what is the benefit of the premium being paid over 10 years? Well, this is done to help spread out taxes. Let’s briefly discuss the tax implications of using qualified funds and how OneAmerica works it out in your favor.
Now your 401k, IRA, and 403b are funded with “pre-tax” dollars. Therefore, once any withdrawals take place, whether it be to pay you in retirement or to pay hybrid LTC insurance premiums, you must pay taxes on this money.
Therefore, rather than create a large taxable event by paying your policy premium in one lump-sum payment, OneAmerica uses annuity withdrawals to pay your premium over 10 years.
By doing it this way, you avoid a large tax bill at the end of the year. Your taxes are spread over 10 years thus making the taxes due more manageable for you.
Using our example from earlier, instead of the couple paying taxes on $180,000 at one time (which may be catastrophic) they would pay taxes on $18,000 each year for the next 10 years.
Conclusion – 4o1k’s, IRA’s, & 403b’s With OneAmerica’s Asset Care Is The Perfect Match
OneAmerica’s AssetCare is the perfect product to move your qualified assets into in order to obtain a Hybrid Long-Term Care insurance product!
The necessary funds to fund Hybrid Long-Term Care insurance are not always available in a CD or savings account. In some cases, you may have more than enough assets in your 401k, IRA, or 403b to cover your retirement AND fund a Hybrid Long-Term Care Insurance policy.
This is where OneAmerica’s AssetCare policy comes in to play. If your assets are mostly in your retirement accounts & you want Hybrid Long-Term Care Insurance, than get OneAmerica’s Asset Care!
Call For A Free Quote Today!
For a free quote using 401k, IRA, or 403b funds with OneAmerica’s Asset Care, call today at 1(800) 498-3955 or schedule a call for a FREE quote below!