Annuity Benefits: What Happens When You Become Ill?

Hi there. My name is Stan The Annuity Man. I'm America's annuity agent, licensed in all 50 states. I am the guy when it comes to annuities. I'm the top agent out here, and I'm decked out today. Full Adidas gear. Nike shoes, but Adidas gear. Are there any Adidas executives out there? You should just send me gear. I mean, think of all the promo I'm doing for you.

Annuity Benefits When You Get Sick

So, let's talk about annuity benefits and what happens when you become ill, sick, vomiting, not feeling good, and need help. We can address those issues with annuities—up to a point. There are specific annuities that cover those situations when you can't take care of yourself. Let's dive in.

What Are Long-Term Care Annuities?

All right, we’re talking about annuity benefits for when you’re not feeling good. There are such things as long-term care annuities or annuities that help when you need to be confined to a home or need enhanced benefits. This applies when you can’t perform two of the six daily functions of life.

If you don’t know what the six daily functions are, they include things like feeding yourself, clothing yourself, and bathing yourself. There’s more, and it gets worse. If you can’t do two of those six, you qualify for enhanced benefits.

The Reality of Long-Term Care Benefits

I always tell people: When you can’t do two of those six functions, life stinks—I get that. But annuity companies don’t give anything away. Typically, they enhance payments or benefits for a five-year time period. You might ask, "Why five years?" It’s because when you can’t do two of those six daily functions, you’re likely to live an average of three years and a maximum of seven. And let me tell you, those are not going to be fun years. You’re trying to get more money during that difficult period.

Customizing Annuities for Your Needs

Annuities are customizable. I always ask people two questions when they’re considering an annuity:

1. What do you want the money to contractually do?
2. When do you want those contractual guarantees to start?

To simplify things, we use an acronym called PILL:

• P: Principal Protection
• I: Income for Life
• L: Legacy
• L: Long-term care or confinement care

That last "L" is what we’re talking about right now.

Should Annuities Be Your Primary Coverage?

In my opinion, as the top agent out here, annuities should not be your primary coverage for long-term care or confinement care. Now, for some of you, it might be your only option because you can’t qualify for traditional long-term care insurance. Traditional long-term care is still the best coverage on the planet. My mom has it, and every year when the premium comes due, she asks me, "Stan, do I need to pay this premium again? It’s like throwing money down the trash hole." I say, "Yes, Mom. You need to keep it because it’s a transfer of risk."

The Importance of Traditional Long-Term Care

Traditional long-term care is the best coverage. Think of it like fire insurance, car insurance, or flood insurance. It’s health insurance, right? But for some reason, as Americans, we don’t like paying for things unless we can access the benefit.

For example, my father passed away two years ago, and my parents applied for long-term care a little late. They did get some benefits, but my mom—a Southerner who hates spending money—has a bad taste in her mouth. I always joke that she can’t swallow food without a coupon. Some of you probably get that.

Annuities as Secondary Coverage

In a perfect world, when unicorns chase butterflies and the planets align, annuities should be used as secondary coverage. However, if you can’t qualify for traditional long-term care, annuities might be your only option.

Simplified Issue vs. Guaranteed Issue Products

There are two types of annuity products for this purpose:

1. Simplified Issue Products: You have to get on the phone with the annuity company and answer 20-30 health questions. They then determine if they’ll issue the annuity with enhanced benefits.
2. Guaranteed Issue Products: These are popular now. If you’re the guy drinking Jim Bean, chasing it with Jack Daniels, and smoking cigarettes in between bites of Cheetos and Snickers, you won’t qualify for anything else—but you can qualify for guaranteed issue annuities.

With guaranteed issue products, the coverage isn’t as good, but it’s something. Essentially, you’re getting your money back quicker because you’re proving to the annuity company that you’re sick and your life expectancy is shorter.

How Annuity Benefits Work When You’re Ill

Bottom line: What are you doing when you get ill and want benefits paid out from an annuity? You’re proving to the annuity company that your life expectancy is less. You provide proof from doctors that you can’t perform two of the six daily functions, and the company pays out more money sooner.

Income Riders and Enhanced Benefits

I’ve written a book on Income Riders, which are attached benefits to deferred policies. Some Income Riders—not all—offer confinement care or enhanced benefits. There are probably fewer than 20 Income Riders that offer this guaranteed issue coverage.

Final Thoughts: Solutions for Every Situation

I don’t sell traditional long-term care or health-based annuities for long-term care. However, I work with a specialist who does. If you want his information, I can provide it.

The bottom line: There are solutions, regardless of your health status. Contact us at The Annuity Man, and you can schedule an appointment. We can work with your lawyers, CPAs, family members, spouse—whoever—to ensure you have the benefits needed to get through these tough times.

Thank you for joining me today, and I hope to see you next time.

Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.