Meet Mary | Widow | Age 82

  1. Mary has two children, Bob 62 and Sarah 59.
  2. Mary recently experienced a fall. She uses a walker and needs assistance bathing and dressing. She also has some memory issues and a prior heart condition.
  3. Bob lives hours away, so Sarah has been taking care of Mary. Sarah realizes that she is no longer able to give her mother the attention and care she truly needs.
  4. With the help of her children, Mary decides upon alternate living arrangements where she can receive the long-term care that she needs. Mary's cost of long-term care is $72,000 per year ($6,000 per month).
  5. Mary’s income from Social Security and other sources is $3,500 per month. She has a home, valued at $500,000, and her assets include a $300,000 non-tax-qualified variable annuity (of which $150,000 is taxable gains). If Mary uses her variable annuity to pay for long-term care expenses, she will pay taxes on the gains in the contract when she takes a withdrawal.
  6. She is concerned about drawing from her assets with no end in sight and would prefer to save a portion of her assets to leave a legacy to her children.
  7. Mary reviews her options with Sarah, Bob, and her insurance professional, and they decide to use her $300,000 variable annuity to purchase a Reliable Living Plan policy. Mary receives a lifetime monthly benefit payment of $4,722,* which can be used to help pay for care services.

$300,000 VARIABLE ANNUITY CASH SURRENDER VALUE

1035 EXCHANGE TRANSFER TO THE RELIABLE LIVING PLAN**

THE RELIABLE LIVING PLAN PAYS $4,722 A MONTH TO HELP COVER CARE COSTS*

This is a hypothetical example illustrating the advantages of the Reliable Living Plan. Each case is different. Actual results will vary. Example assumes continued eligibility for benefits, receipt of qualified long-term care services, and annual certification of chronic illness. Actual monthly benefit amounts will vary based on overall health status and amount of premium paid at the time of policy issue.

* Under current IRS rules, benefit amounts that are in excess of the greater of (1) the stated per diem dollar amount allowable under section 7702B or (2) the actual dollar amount of qualified long-term care expenses, are taxable.

** Under IRC Section 7702B, annuity or cash value life insurance can be transferred into a qualifying long-term care insurance policy through a 1035 Exchange.

ICC17-600-WEB-AD-3 (10/17)
17-603-3