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Layin’ It on the Line: What are bundled annuities?

By Lyle Boss - Special to the Standard-Examiner | Apr 5, 2023

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Lyle Boss

Bundled annuities are a type of financial product that may combine a life insurance policy or a long-term care policy with an annuity contract. They are designed to provide investors with protection for their loved ones in the event of their death, a steady income stream during retirement and financial help for a long-term nursing home stay if needed.

The life insurance component of a bundled annuity is designed to pay a death benefit to the policyholder’s beneficiaries if the policyholder dies prematurely. On the other hand, the annuity component is designed to pay the policyholder a regular income for a set period or the rest of their life.

Bundled annuities can also offer benefits for long-term care planning. Long-term care refers to the type of care that individuals may need if they are unable to perform basic daily activities, such as bathing, dressing or eating, due to a chronic illness or disability. The cost of long-term care can be high, and many individuals may not be able to afford it without proper planning.

Some bundled annuities may include long-term care riders or benefits that can help investors pay for the cost of long-term care if needed. For example, some products may allow investors to access a portion of their annuity payments to pay for long-term care expenses. Others may offer a separate long-term care insurance policy that can be bundled with the annuity component.

The likelihood of needing nursing home care varies depending on a number of factors, including age, health status and gender. According to the U.S. Department of Health and Human Services, about 70% of people who reach age 65 will require some form of long-term care in their lifetime, and 20% will need care for five years or more.

Several factors can influence the likelihood of needing nursing home care: age, lifestyle, alcohol consumption, use of tobacco products, family history, gender and general health.

Most people share one specific concern: living too long and running out of money. Other concerns are financial instability, health care costs, quality of life, becoming a burden to others and lack of overall quality of life.

If any of these concerns are yours, a bundled annuity might be a solution. The funds are available to you as income, they can be a benefit paid to your heirs in the event of death, and funds from the bundle may help with long-term care expenses.

There are numerous options for bundled annuities; it is important that you fully understand the limits as well as the benefits of each part of the bundle.

Like they say, “the devil is in the details!”

Lyle Boss, a native Utahn, is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management. Boss Financial, 955 Chambers St., Suite 250, Ogden, UT 84403. Telephone: 801-475-9400.


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