As baby boomers age and face the rising cost of care, many may experience anxiety about how they will pay for their increased living expenses. According to a recent article in SeniorHomes.com, though high health care costs could be a big problem, an annuity properly used can help seniors fund their health care costs.

An FIA can provide the policyholder with the financial support they need to pay for unexpected health expenses. FIAs offer solutions to these problems by offering riders to policies that either are or may be added to an annuity to protect policyholders’ future long term and immediate health costs needs.  These riders can provide additional financial flexibility as unforeseen health costs confront the insured. This includes certain amendments that expand the purchased policy’s benefits.

Two riders are available for fixed indexed annuities to ensure consumer protection in extenuating health circumstances: Nursing-Home Riders and Terminal Illness Riders.

Nursing Home Riders: As life expectancy rises, the cost of late-life care is also increasing. In order to ensure that consumers can access their funds if long-term care is needed, either in-home care or in a nursing home, the industry put nursing home riders in place. By accessing the funds, seniors may be able to put more of their retirement income towards nursing home needs. The specifics of these riders can vary with each annuity product, but they can help increase the monthly income-for-life feature on your annuity or allow you to access more of the accumulated value of your annuity.

Terminal Illness Riders: Terminal illness riders are available for many fixed indexed annuities. If an insurance holder is diagnosed with a terminal illness, the insurance company will allow you to access a portion, up to the entire premium without having to pay early withdrawal fees or surrender penalties.

Ask your agent about what riders are included in your policy and what other amendments are offered. Also, be sure to visit our Smart Buyers Checklist to ensure you are asking the right questions when purchasing an annuity.