Like millions of Americans, Ron cares about the future and protecting his family.  The New Yorker is one of the 60 percent of Americans who possess life insurance to benefit his family should he die during his working years.  Now that he’s getting closer to retirement and his children are grown, he’s taking advantage of a little known tax provision that protects against the risk of living a long life according the director of the American Association for Long-Term Care Insurance.

“Americans have billions of dollars of single purpose life insurance purchased in their 30s, 40s and 50s have protection that no longer really serves the intended objective,” explains Jesse Slome, director of the national long-term care insurance association.  “Now as they approach retirement, the real risk to their family and loved ones results from living a long life and the financial and care-giving consequences of needing long-term care.”

Slome was speaking to leading insurance professionals sharing a real example of just such a scenario.  “We received an inquiry from a husband who is 55 years old today (2018), who we’ll call Ron (name changed for privacy),” Slome shared.   ”Over the past 25 years he purchased four different whole life insurance policies as a way of protecting his family and accumulating some cash value for his eventual retirement.”

Presently, the combined value of Ron’s life insurance death benefit was $1.2 million and his total cash value was $320,000.  Each year he paid $9,900 in premiums to maintain the coverage.  He had no long-term care insurance plan for himself or his wife and wanted information.

“Today, there are significant reasons that individuals with significant life insurance policies should investigate the benefits of a 1035 exchange,” Slome shared before referring the individual to a specialist knowledgeable in 1035 exchanges.   ”The greatest benefit is exchanging from a single-purpose policy (one that pays only a death benefit) to a dual-purpose policy (one that can pay the death benefit as well as provide long-term care insurance benefits).   In addition because people are living longer, today you can typically get increased death benefits for the same premium cost.”

Utilizing the IRS-approved 1035 exchange strategy, Ron’s four policies were converted into a single new paid-in-full (paid-up) life insurance policy with a $1,850,000 death benefit (a 54 percent increase)  In addition, the $320,000 of cash value was enough to pay the premium for the rest of his life (no future $9,900 yearly payments).

The new dual-purpose life plus long-term care policy (also often referred to as a linked-benefit LTC policy) included a rider that allows $50,000 in monthly long-term care benefits should Ron need care prior to his death.   The monies paid out would reduce any future death benefit and would last as long as funds are available.  A separate new dual-policy was purchased for his wife.

“While the $50,000 seems high in terms of today’s care costs, there are two things to keep in mind,” Slome points out.  “If he needs care and monthly costs are less, the balance remains for his future benefit.  But, since it’s likely that care won’t be needed for another 30 or 35 years when monthly costs will surely be much higher so the larger amount is planning ahead.”

“Using a 1035-exchange for a new dual-purpose life policy achieved a 54 percent increased death benefit, the availability of a monthly long-term care benefit of as much as $50,000 plus the elimination of the $9,900 yearly premium cost,” Slome summarized.  Taking advantage of 1035 exchanges is smart planning strategy today for a real risk in the future.”

Access the Guide To 1035 Exchanges

Slome is the author of the Guide To Long-Term Care Planning Using 1035 Exchanges which can be accessed for free on the American Association for Long-Term Care Insurance’s website.

The American Association for Long-Term Care Insurance advocates for the importance of long-term care planning and helps consumers connect with knowledgeable professionals who are independent advisors.

Consumers looking for local long-term care insurance agents or cost comparisons should visit the Association’s website at www.aaltci.org or can call the organization’s national headquarters at 818-597-3227.

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“There are undoubtedly millions of Californians who have annuities or life insurance policies that really no longer fully serve their original intent or could be put to better use via a 1035 exchange,” shared Jesse Slome, director of the American Association for Long-Term Care Insurance.   ”The 1035 exchange is one of the best kept secrets in retirement planning strategies and our goal is to see more insurance agents and brokers made aware of how they can benefit consumers.”

Slome authored a feature article appearing in the current issue of California Broker magazine, the leading insurance publication for life and health insurance agents in California.   ”Congress approved 1035 exchanges that enable consumers to convert a current annuity for one that meets the provisions specified.  Annuity funds continue to grow but here’s the real benefit; if you need dollars to pay for long-term care, they can be paid out 100 percent tax free.”

Read The California Broker Magazine Feature

Insurance agents who wish to read the full feature in California Broker magazine can click the following link.

California Broker 1035 Exchanges

The national long-term care insurance trade group just published an informative Guide To 1035 Exchanges that can be accessed online.  “We want to make insurance agents and financial planners who work with seniors aware of this powerful retirement planning technique and to share the information with consumers,” Slome added.  The guide can be accessed at www.aaltci.org/1035-exchanges.

According to AALTCI, there is nearly $3 Trillion held by Americans in annuities  “We know that far too few Californians have undertaken any real plan for the risk of needing long-term care,” Slome mentioned.    ”A 1035 exchange from and existing annuity or life insurance policy to another that also provides LTC benefits could be most beneficial at this time.”

Consumers and insurance agents who want to learn more about long-term care insurance costs and planning options can call the American Association for Long-Term Care Insurance at 818-597-3227 or visit the organization’s website at www.aaltci.org to find and connect with local LTC insurance professionals.

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New 1035 Exchange Guide

Millions of Americans who have existing annuity or life insurance policies can benefit from reading a new guide explaining the benefits of a 1035 exchange.

“Few individuals are familiar with Section 1035 of the Internal Revenue Code that allows an individual to repurpose an existing annuity of life insurance policy to one that includes tax-advantaged long-term care benefits,” explains Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI). The national organization has just released the Guide To Long-Term Care Planning Using 1035 Exchanges.

The 24-page guide, accessible online, explores the basics of how 1035 exchanges can benefit individuals and includes several real-life scenarios depicting the advantages of converting existing annuities or life insurance policies. “The Pension Protection Act (PPA) enacted by Congress encourages individuals to plan for the very real risk of needing long-term care (LTC), and Section 1035 exchanges are one of today’s significant planning opportunities available,” Slome shares.

“The PPA provides meaningful tax- and long-term care planning advantages to consumers,” Slome notes. “Funds withdrawn from a traditional nonqualified annuity can be used to pay for long-term care expenses, but there will likely be tax consequences. A simple 1035 exchange to a PPA-approved linked-benefit annuity can provide 100-percent income tax-free withdrawals to pay for LTC costs.”

One of the leading providers of linked-benefit annuity and life insurance long-term care protection says many people aren’t aware of the tax implications of their current strategies.

“Americans have nearly $3 trillion in fixed and variable annuities set aside as part of their retirement planning strategy,” reports Chris Coudret, vice president and chief distribution officer at OneAmerica^®. “Many of these individuals could benefit by taking advantage of a 1035 exchange, which could offer tax benefits as well as provide long-term care benefits, should they be needed. This new guide can be a tremendous help to financial professionals looking for information and resources for their client conversations.”

OneAmerica will make copies of the guide available to insurance and financial professionals.

Free Access to Read The 1035 Exchange Guide Online

“If you are 50 or older and you have an annuity or a life insurance policy, a 1035 exchange could be the ideal way to plan for a future long-term care need,” Slome suggests. “You maintain the benefits you currently have while adding some tax advantages.  For couples, there is even the possibility of using one policy to provide tax-free long-term care benefits for both spouses.”

To read the 1035 exchange guide online visit the American Association for Long-Term Care Insurance’s website at www.aaltci.org/1035-exchanges.

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Established in 1998, the American Association for Long-Term Care Insurance advocates for the importance of LTC planning and supports insurance professionals nationwide.  Jesse Slome, founder and executive director of the organization, is a leading consumer advocate and author of numerous consumer and professional guides focused on retirement and insurance planning that have been published by governmental agencies and private organizations.

OneAmerica^® is the marketing name for the companies of OneAmerica. AALTCI is not an affiliate of the companies of OneAmerica. Provided content is for overview and informational purposes only and is not intended as tax, legal, fiduciary, or investment advice. Before replacing existing life insurance or annuities all factors should be weighed to determine suitability.

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New 1035 Exchange Guide

A new guide published by the American Association for Long-Term Care Insurance (AALTCI) kicks off a national campaign to heighten awareness for the use of 1035 exchanges for effective and tax-advantaged LTC planning.

The AALTCI Guide To Long-Term Care Planning Using Using IRS Approved Exchanges formally launches the national consumer and insurance-focused campaign.

“Section 1035 exchanges are one of least known planning strategies,” declares Jesse Slome, executive director of AALTCI. “Every insurance agent and financial professional who has prospects or clients in their 50s, 60s and 70s are going to need to familiarize themselves with the significant advantages they provide.”

“Americans have $2.8 trillion in fixed and variable annuities and we know far too few older adults have a financial strategy to deal with the real risk of needing long-term care,” Slome reports. “Many of these individuals could benefit by taking advantage of a 1035 exchange; repurposing an existing annuity into one that continues to accrue but also can provide.”

To access the new guide online visit the American Association for Long-Term Care Insurance’s website at www.aaltci.org/1035-exchanges.

MESSAGE TO CONSUMERS:  The Association has made this informational guide available online.  You can read it from any device and NO SIGN-IN information is required to access and read the guide.  If you find the information of value we encourage you to discuss with your current insurance or financial professional.  Or, if you prefer, complete the online form (also on the web page) and we will connect you with one knowledgeable independent professional familiar with how these exchanges work as a benefit for consumers.

MESSAGE TO INSURANCE AND FINANCIAL PROFESSIONALS:   You may also access and read the guide online.  It can also be downloaded.   As the Association moves forward on it’s awareness efforts we will decide next steps.  Watch the Association’s website for more details.

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1035 exchange for long-term care insurance planning

To help create awareness for the tax benefits of using 1035 exchanges as part of long-term care insurance planning, a national educational campaign is being planned by the American Association for Long-Term Care Insurance.

“There are millions of Americans with trillions of dollars of life insurance that could be better used to pay for the very real risk of needing long-term care,” states Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI).   The Association director shared plans to create an awareness and educational effort focused on using 1035 exchanges for the purpose of turning unneeded policies into valuable long-term care insurance funding vehicles.

“I think 1035 exchanges for long term care insurance could be one of the best kept financial planning secrets today for the millions of aging Americans who bought life insurance when they had children to protect,” Slome shared.  “The kids have grown and are now gainfully employed.  Now mom and dad need to consider long-term care planning so they don’t turn their adult children into unpaid caregivers.”

The Association director plans to undertake a multi-year educational campaign targeting both consumers and insurance professionals.  “The goal is to familiarize consumers with what 1035 exchanges are and how they work and can provide a significant tax-advantaged benefit,” Slome adds.  “We’ll obviously be educating insurance agents as part of the effort as we are looking for seasoned pros who can serve as resources when interested consumers call.”

As an initial step in the process, the Association established a new 1035 exchange information website at www.1035exchangeinfo.com.   “Consumers already have made the American Association’s website the number-one resource for long-term care insurance costs and information,” Slome acknowledged.  “We wanted a dedicated site where people could find specific information just on this topic.”

The American Association for Long-Term Care Insurance website offers comprehensive consumer information and no-cost access to obtain long-term care insurance costs from leading independent insurance specialists.   To learn more about long term care planning go to www.aaltci.org or call 818-597-3227.

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