Can you gift a long-term care insurance policy?
Are you at a loss for ideas when it comes to what you're getting your parents or grandparents for the holidays? Don't worry, you're not alone. Nearly everyone has at least one or two people who are difficult to shop for. Those are the kind of gift recipients who make you think outside the box. And, in some cases, long-term care insurance could be the gift you're looking for.
Learn about your long-term care insurance options here.
Can you gift a long-term care insurance policy?
When you think of long-term care insurance, you likely think of something you buy for yourself. That may be true in most cases, but you can also purchase long-term care coverage as a gift.
Common gift recipients include parents and grandparents. Some people even purchase long-term care insurance for their children with disabilities to ensure they receive adequate care throughout their lives.
Find out how affordable long-term care insurance can be now.
How to gift a long-term care insurance policy
Follow these steps to give long-term care insurance as a gift:
- Compare your options: Not all long-term care policies are the same. It's important to compare your options to find the best deal.
- Purchase a policy: Next, purchase a policy in the name of the gift recipient. For example, if you purchase the policy as a gift for your parent, list his or her name as the beneficiary.
- Present the gift: Finally, present the gift to the recipient. Get creative to make this more fun. You could write a note on a business card and wrap it in a large box full of packing peanuts.
Why long-term care insurance could be a smart gift option
There are several reasons long-term care insurance makes a compelling gift, including:
It provides peace of mind
As you age, it can become difficult to care for yourself. And, many people are likely to need either a companion or a paid care provider at one point or another. Long-term care insurance helps your loved ones ensure they can afford the care they need.
"Gifting a long-term care insurance policy has its benefits. For starters, you would be helping to protect the recipient's assets and lifestyle for many years. They can breathe easier knowing they'll be able to afford professional care in their own home," Steve Azoury, ChFC® and owner of Azoury Financial, says.
It's something many people need but don't have
Long-term care insurance is a type of coverage that many people don't consider until they're over 55 years old. Even then, many people know they need this type of protection but don't have it.
That's the foundation of a great gift.
After all, you never want to give someone something they already have. Moreover, you want to make sure that the recipient needs, and will use, your gift. Long-term care insurance is something that can come in handy for most people.
Your premium is exempt from gift taxes
If you give larger gifts, you may be required to report your gift to the IRS or pay a tax on top of the cost of the gift. If you give long-term care insurance, the gift tax doesn't apply.
"if you're considering gifting a long-term care insurance policy this holiday season, you should know that the payments you make for this insurance on behalf of another person do qualify for a gift-tax exemption," Dr. Alison Riley, owner of Sunshine State Tax and Accounting Services, says.
However, there are some qualifying factors.
"The payments must be made directly to the insurance carrier to qualify, and the premiums must satisfy certain age-based limits," Riley says. And, because taxes are "complicated," you should consult a CPA when you file yours, according to Riley.
It also protects your wallet
Finally, the gift of long-term care insurance isn't just a gift for your recipient. It may be a gift for you as well.
"It could also help you protect your inheritance, especially if you're gifting to your parents. Helping loved ones cover out-of-pocket costs could be detrimental for your savings. Gifting long-term care insurance could help protect your money as well," Azoury says.
Give the gift of long-term care coverage today.
The bottom line
If you're trying to figure out the perfect present for your parents or grandparents, it may benefit you to consider long-term care insurance. Although this is an unorthodox gift, few other options can provide the peace of mind and tax benefits that come with the gift of long-term care coverage. Find out how affordable a long-term care policy can be today.
