Common Long-Term Care (LTC) Products

2026 · COMMON LONG-TERM CARE (LTC) PRODUCTS
TRADITIONAL LTC INSURANCELIFE & LTC INSURANCE HYBRIDLIFE INSURANCE WITH LTC RIDERANNUITY WITH LTC RIDERThis product primarily provides income benefits and/or accumulation features, but also has LTC benefitsThis product primarily provides a death benefit, but also has LTC benefitsThis product primarily provides LTC protection, but also has a death benefitThis product only provides LTC protectionNo1YesYesYesNo2YesYesNoNoNoNoYesYes1NoNoNoYes, via a joint annuityYes, via a 2nd-to-die policyYes, via a joint benefit/2nd-to-die policyYes, via a joint benefit policyYes, market/accumulation valueYes, cash valueYes, return of premiumand/or cash valueNoSingle pay or ad hocAnnual premiums to a specifiedage or limited pay (e.g., 5-pay,10-pay, etc.)Single pay or limited pay (e.g., 5-pay, 10-pay, paid to age 65, etc.)Annual premiums,paid indefinitelyWHAT DOES THISPRODUCT DO?Someone who wants to acquire LTC protection, but would otherwise be precluded from purchasing LTC-focused products due to poor health issues or pre-existing conditionsSomeone who wants to maximize their permanent death benefit while retaining some flexibility to access the death benefit early should an LTC need ariseSomeone who wants the flexibility to purchase LTC benefits outright using larger lump sums, and would like some value to be left over should they pass away or cancel their contractSomeone who wants LTC protection with the lowest annual premium, and is comfortable with paying their premiums indefinitely and the risk of their premium amounts increasing in the futureWHO MIGHT CONSIDERTHIS TYPE OF PRODUCT?IS MEDICAL UNDERWRITINGREQUIRED?CAN TWO SPOUSES SHARETHE LTC BENEFITS?DOES THIS PRODUCTHAVE A DEATH BENEFIT?DOES THIS PRODUCT TYPICALLYHAVE A MARKET VALUE, CASHVALUE, OR RETURN OF PREMIUMCOMPONENT?WHAT IS THE TYPICAL PREMIUMSCHEDULE WITH THIS TYPE OFPRODUCT?CAN THE INSURER DECIDETO INCREASE ONE’S PREMIUM?CAN ADDITIONAL CONTRIBUTIONSBE MADE WITHOUT UNDERWRITING?NoNoYes, but you will not be eligible to deduct your LTC premiumsYes, but you will not be eligible to deduct your LTC premiumsCAN PREMIUMS BE PAID (ORREIMBURSED) TAX-FREE USINGAN HSA OR HRA?
© fpPathfinder.com. Licensed for the sole use of Dejan Ilijevski, MBA, MS of SCM Investment Services. All rights reserved. Used with permission. Updated 12/15/2025.
2026 · COMMON LONG-TERM CARE (LTC) PRODUCTS
WHAT PRODUCTS CAN ONE1035 EXCHANGE INTO THISTYPE OF PRODUCT?TRADITIONAL LTC INSURANCELIFE & LTC INSURANCE HYBRIDLIFE INSURANCE WITH LTC RIDERANNUITY WITH LTC RIDEROther life insurance policiesor annuities Other life insurance policies onlyOther life insurance policies onlyOther life insurance policiesor annuitiesNoNoNoYesAcceleration of the income benefits or market valueAcceleration of thedeath benefitA dedicated LTC benefitpool is createdA dedicated LTC benefitpool is createdHOW IS THE LTC BENEFIT DERIVEDIN THIS TYPE OF PRODUCT?YesNoNoN/AIS THE DEATH BENEFIT SUBJECTTO FEDERAL INCOME TAX?Income benefits or market value can be accelerated and/or increased for a specified period of time or dollar amountTotal LTC benefits paid out cannot exceed the death benefitAn agreed-upon monthly amount to be paid for a specified number of yearsAn agreed-upon monthly amount to be paid for a specified number of yearsHOW MUCH IN LTC BENEFITS DOESTHIS PRODUCT PAY OUT?3NoNoYes, if self-employed, and subject to age-based limitationsYes, if self-employed, andsubject to age-based limitationsCAN THE PREMIUMS BE DEDUCTEDAS AN ABOVE-THE-LINE TAXDEDUCTION?6NoNoYes, subject to the 7.5% AGI floor and to age-based limitationsYes, subject to the 7.5% AGI floor and to age-based limitationsCAN THE PREMIUMS BE DEDUCTEDAS AN ITEMIZED DEDUCTION(I.E., ON SCHEDULE A)?6CAN THIS PRODUCT BE TREATEDAS A MEDICAID PARTNERSHIPLTC POLICY?No4No4Yes, via a COLA riderYes, via a COLA riderIS INFLATION PROTECTIONAVAILABLE?NoNoNoNoARE LTC BENEFITS SUBJECTTO FEDERAL INCOME TAX?51 Some annuities with LTC riders may have limited medical underwriting or require a phone call interview.2 While some annuities may have an additional death benefit rider, the residual market/accumulation value is typically what passes on to one's beneficiaries.3 Product-specific payment options (i.e., reimbursement or indemnity) will affect whether LTC benefit payments are fixed or variable, and whether receipt submissions are required.4 Some life insurance policies and annuity contracts may offer limited protection against inflation (e.g., using PUAs to increase the death benefit, LTC annuity rider benefit multipliers, etc.).5 LTC benefits are only tax-free if the product meets the IRS definition of a "tax-qualified LTC policy." For indemnity-style policies, benefit amounts in excess of the IRS per diem limit may be fully taxable.6 Regarding hybrid policies, the extent to which premiums are deductible is complex and generally depends on the amount of premium going specifically toward paying for LTC benefits.
© fpPathfinder.com. Licensed for the sole use of Dejan Ilijevski, MBA, MS of SCM Investment Services. All rights reserved. Used with permission. Updated 12/15/2025.
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 Dejan Ilijevski, MBA, MS

SCM Investment Services | Lake Elmo, MN | (612) 324-0629

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