Linked Benefit Annuity/LTCi

Similar to a linked-benefit life insurance policy, the linked-benefit annuity combines a deferred annuity with a long-term care rider to leverage the same dollars for two different purposes. The policyholder can allow the cash value to grow on a tax-deferred basis, just like a traditional annuity, while funding a rider that provides long-term care benefits.

This is ideal for someone who already has a tax-deferred gain in a non-qualified annuity. That gain is ordinarily taxable either to the owner at the time of withdrawal, or to the beneficiary at withdrawal after the policyholder has died. However, if the policyholder rolls the cash value over to a linked-benefit annuity and accesses the gain for the purpose of paying LTC expenses, they pay no income tax on those qualifying payments.