Tuesday, December 19, 2006

Medicaid annuities: Look before you buy

An annuity is a financial asset. It is a contract between the purchaser and the annuity company.

In exchange for the purchaser’s money, the annuity company agrees to pay the money back to the purchaser, with interest, over a period of time, sometimes for the purchaser’s life or the life of a named beneficiary.

Life insurance companies and annuity salespeople have begun aggressively marketing products they call Medicaid annuities or Medicaid-friendly annuities. Salespeople sometimes claim these annuities will shelter your assets from being used to pay for long-term care because they are not counted for Medicaid eligibility purposes.

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