The Possibility of Tax-Free Long-Term Care Benefits

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In retirement, there’s more to consider than just what activities, hobbies, or traveling you’re going to enjoy with your nest egg.

Statistics show that 3 out of 4 retirees will require some sort of long-term care in retirement, and the cost of that care has been increasing exponentially.

Below, Lou Aarons describes another reason why the LIRP, or Life Insurance Retirement Plan (IRS Code 702J) can be of some assistance when planning out your care in retirement.  In conjunction with a well-structured, “multi-bucket” approach to retirement investing, this plan has helped so many of our clients, and could be something you consider for your strategy as well.

Transcript:

Hi, it’s Lou Aarons. I’m one of the partners here at Secure Retirement Strategies, and I want to talk to you about another benefit of the LIRP, the life insurance retirement plan, another living benefit.

We talked earlier about using it for income in retirement. You can also use the LIRP for long-term care benefits, tax-free long-term care benefits.

And one of the big advantages of the LIRP is that you’re not utilizing the cash in the account for long-term care, you’re utilizing the death benefit, that much higher number.

And if you have a situation where you can’t perform two of six activities of daily living, or you have a chronic illness, something like dementia, like rheumatoid arthritis, something that is debilitating to you, your doctors certifies it, and the life insurance company pays a portion of the death benefit.

Generally somewhere around 2% per month, to you, for you to use the way you see fit. You don’t have to submit bills. You don’t have to submit invoices. You don’t have to pay the provider. You qualify for the benefit, you get to control the money.

So the LIRP, while it provides income to you in retirement, it provides a tax-free legacy to your family, it also gives you access to that death benefit for long-term care. I hope you never need it, but statistics say three out of four of us will. And so having a tax-free option that doesn’t make you spend other dollars can be very, very advantageous.