OneAmerica State Life Annuity Care II Hybrid Annuity and Long Term Care Review – Long Term Care University
Long Term Care University – Question of the Month – 07/15/26
By Aaron Skloff, AIF, CFA, MBA
Q: We read the Long Term Care University article ‘Traditional Versus Hybrid Life and Long Term Care Insurance’ , ‘Hybrid Annuity and Long Term Care’ and ‘1035 Tax-Free Exchange‘. Can you please review the OneAmerica State Life Annuity Care II Hybrid Annuity and Long Term Care (LTC) policy?
Overview. Forethought Life Insurance Company is part of Global Atlantic, Life Insurance Company, an A.M. Best A rated, a wholly owned subsidiary of KKR founded in 2004. The Global Atlantic Forethought ForeCare policy is a Hybrid Annuity and Long Term Care Insurance (also called asset based) policy. With Traditional LTC policies, premiums can be increased and you may not receive any benefits if you do not need LTC. With Hybrid LTC policies the benefits and premiums are guaranteed. The insurance company either: 1) pays you if you need LTC, 2) pays your heirs if you do not need LTC, 3) pays you and your heirs if you need a modest amount of LTC or 4) pays you a refund if you cancel the policy.
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OneAmerica State Life Annity Care II is Unique Because It Has a 90 Day Elimination Period. An elimination period is the number of days you pay for your LTC costs out of your own pocket (like a deductible on a homeowners insurance policy). Annuity Care II begins paying for your care after 90 days of care.
OneAmerica State Life Annuity Care II Provides up to 8 or 8.5 Years of Tax-Free Long Term Care Expenses. For individual policy owners, the policy pays for up to 8 years of care for issue ages 40-69 or 8.5 years for issue ages 70+. For shared policies owners, the policy pays for up to 8.8 years of care for issue ages 40-69 or 5.5 years for issue ages 70+.
OneAmerica State Life Annuity Care II Policy Options. The policy options include: Benefit periods of 5 to 8.5 years with a Continuation of Benefits (COB), for an individual or shared policy, based on your age; Nonforfeiture and Inflation protection of none or 5%.
How OneAmerica State Life Annuity Care II Compares with Other Hybrid Annuity and LTC Policies. Let’s look at a husband and wife, Bill and Sue, who are each 70 years old and reside in Florida. They each pay a $100,000 one-time premium (or $200,000 combined) and are expected to need LTC in 10 years at the age of 80. They are comparing Hybrid Annuity and LTC policies that offer the largest LTC benefits, with at least five years of LTC benefits.
OneAmerica State Life Annuity Care II Outperforms Competitors with the Highest Non-Lifetime Monthly Long Term Care Benefit. Bill and Sue will each have $4,657 or $7,369 shared monthly and $279,460 or $486,374 shared total LTC benefits. Global Atlantic Forethought ForeCare is notable for its 0-day elimination period for home care. OneAmerica State Life Annuity Care is notable for its 7-day elimination period and unlimited lifetime benefits. OneAmerica State Life Indexed Annuity Care is notable for its highest lifetime individual and shared monthly LTC benefit, and that policy values are linked to major market indices.
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Conclusions. OneAmerica State Life Annuity Care II provides high individual and shared monthly LTC benefits. Since premiums vary greatly based on age, health and marital status, request individualized quotes.
Aaron Skloff, Accredited Investment Fiduciary (AIF), Chartered Financial Analyst (CFA) charter holder, Master of Business Administration (MBA), is the Chief Executive Officer of Skloff Financial Group, a Registered Investment Advisory firm. The firm specializes in financial planning and investment management services for high net worth individuals and benefits for small to middle sized companies. He can be contacted at www.skloff.com or 908-464-3060.
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Frequently Asked Questions
Q: What is OneAmerica State Life Annuity Care II, and how does it work?
OneAmerica State Life Annuity Care II is a hybrid annuity and long-term care (LTC) insurance policy designed for individuals who want to reposition existing savings into an asset that can help pay for future care expenses. Unlike traditional long-term care insurance, which requires ongoing premiums and may never pay benefits, Annuity Care II is funded with a single premium. The annuity earns interest over time, and if you need qualified long-term care, the policy can provide enhanced tax-free LTC benefits, including an optional continuation of benefits period after the annuity value is exhausted. If you never require long-term care, any remaining account value generally passes to your beneficiaries, making it an attractive alternative for people who dislike “use-it-or-lose-it” insurance.
Q: Who is the ideal candidate for a hybrid annuity and long-term care policy?
Hybrid annuity and long-term care policies are generally best suited for retirees or pre-retirees who have accumulated assets in CDs, savings accounts, money market accounts, or non-qualified annuities that they are unlikely to spend for retirement income. These individuals often want to protect their portfolio from the potentially devastating cost of long-term care while preserving an inheritance for their heirs if care is never needed. People who prefer guaranteed premiums, dislike the uncertainty of traditional LTC insurance rate increases, or have after-tax assets they can reposition into a tax-efficient solution may also find this type of policy appealing. However, the product is not appropriate for assets that may be needed for short-term liquidity or emergency expenses.
Q: What long-term care expenses does Annuity Care II typically help cover?
If you qualify for benefits, Annuity Care II can help pay for many of the same services covered by traditional long-term care insurance. Covered expenses generally include home health care, assisted living facilities, adult day care, hospice care, respite care, and skilled nursing facility care, provided the services meet the policy’s requirements. Benefits are typically triggered when a licensed health care professional certifies that you cannot perform at least two of the six Activities of Daily Living—such as bathing, dressing, or eating—or when you suffer from a severe cognitive impairment like Alzheimer’s disease. This flexibility allows many policyholders to receive care in the setting they prefer, including their own home.
Q: What are the advantages of a hybrid annuity compared with traditional long-term care insurance?
One of the biggest advantages is certainty. Traditional long-term care insurance policies may experience premium increases over time, while hybrid annuity policies funded with a single premium eliminate future premium payment obligations. Additionally, policyholders avoid the possibility of paying premiums for decades and never receiving benefits because unused assets generally remain available to beneficiaries. Hybrid annuities can also provide favorable tax treatment, allowing qualifying long-term care withdrawals to be received income tax-free under current federal law. Although the initial investment is typically larger than annual LTC insurance premiums, many consumers appreciate knowing their money will provide value whether they need long-term care or not.
Q: Can I use an existing annuity or other assets to purchase OneAmerica Annuity Care II?
Yes. Many people purchase Annuity Care II by repositioning assets that are already earmarked for retirement or future health care expenses. Existing bank savings, certificates of deposit, brokerage assets, and certain non-qualified annuities may be used to fund the policy. In many cases, a tax-free Section 1035 exchange allows an existing non-qualified annuity to be transferred into the new contract without immediate taxation, preserving tax deferral while adding long-term care protection. Before making any transfer, it’s important to review surrender charges, tax implications, and how the new policy fits into your broader retirement income and estate planning strategy.
Q: Should I choose a hybrid annuity, hybrid life insurance policy, traditional long-term care insurance, or self-insure?
The best solution depends on your health, age, available assets, income needs, and estate planning objectives. Traditional long-term care insurance may provide the greatest leverage for healthy applicants seeking maximum coverage with ongoing premiums. Hybrid life insurance policies are often attractive to individuals who also want to leave a death benefit to heirs. Hybrid annuity products such as OneAmerica Annuity Care II can be an excellent fit for those with existing assets they want to reposition while gaining tax-efficient long-term care protection and avoiding future premium increases. Individuals with substantial liquid assets may choose to self-insure, although doing so exposes their retirement portfolio to potentially significant long-term care expenses. Working with a financial professional who can compare multiple carriers and funding strategies is often the best way to determine which approach aligns with your financial goals.
