Innovation Excellence Awards Spotlight - Challenger Care Annuity

Challenger Care Annuity

Challenger Life Company Limited is helping older Australians to retain more of their retirement nest egg with an innovative new lifetime annuity that pays a current interest rate of 4.35%, provides social security and aged care facility financial assessment benefits and can be voluntarily withdrawn for 100% of value at year 10 or on death at any time in the first decade.

Called the Challenger Care Annuity, the product is aimed at those who may be moving into residential aged care and who wish to both maximize their social security entitlements and minimize their income tested aged care fees, within a conservative investment framework. According to Challenger, the Care Annuity has received strong support from financial planners from over 40 dealer groups, with average weekly inflows of over $1 million per week since the product was launched.

The Challenger Care Annuity is available to all investors 18 or older with a valid Aged Care Assessment Team (or Aged Care Assessment Services in Victoria) approval.

Challenger Bank

What are the main features?

The Challenger Care Annuity is an immediate lifetime annuity with a 10-year commutation period. The Care Annuity:

  • Provides a fixed competitive earnings rate for the life of the annuitant.
  • Can reduce or eliminate income-tested aged care fees (which can be up to $24,469 p.a.)
  • Is treated beneficially for Social Security purposes through favourable income and assets test treatment.
  • Enables the annuitant to effectively manage their taxation affairs.
  • Provides 100% money back upon death within the first 10 years.
  • Can be withdrawn at any time during the first 10 years.
  • Has a voluntary withdrawal value equal to 100% of the amount invested at the end of year 10 (alternatively the client may continue the annuity and receive payments for life – however the annuitant cannot withdraw after the end of year 10).
  • Can assist people to get the Commonwealth Seniors Health card if they are not already eligible.

Canstar’s Verdict

When integrated as part of a financial plan, the care annuity can provide an immediate financial benefit to persons subject to income tested aged care fees, helping to provide both an effective source of income and peace of mind.

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