Long Term Care insurance combined with Annuity

Relative asks me to review proposal (sales pitch) from advisor. Deal is along these lines. She puts up $100k and gets in return (a) a 10-year fixed annuity earning 2.75% and (b) a LTC policy that pays up to $50k per year until benefits paid hit a maximum of $300k. The cost of the LTC coverage depends on her age and other underwriting characteristics, and is paid out of the 2.75% but cannot exceed the 2.75%. Any actual LTC benefits paid to or for her reduce her $100k, i.e., she'll get back the $100k (plus, if the LTC rider cost is less than 2.75%, whatever is left from that) in 10 years if she uses no LTC benefits, and it will be reduced by the amount of any LTC benefits.

How is all this taxed? As a 10-year fixed annuity and a separate LTC policy that qualifies as a medical expense, or just on some sort of net basis?

My recollection is that there was a provision in the 2006 pension act that allowed transfer from annuity to insurance.

Google LTC Hybrid. My experience is that there is a single premium annuity purchased with an LTC rider policy. A financial planner client of mine (who has one of these) says the annual medical expense deduction is based upon the annual rider policy premium charged against the earnings of the annuity. When taxpayer needs LTC, the payments come from the LTC contract to pay $XXX monthly for XXX months.

I think the premiums are lesser than the conventional/comparable LTC policy.

https://www.virtuewm.com/tax-break-ltc-hybrids/

Thanks, it's pretty well spelled out in the Tech Expl of the Act., pages 192-197.

I think the premiums are lesser than the conventional/comparable LTC policy.. The advisor also said that. Seems odd, and, to me, it must mean that the yield on the annuity is lower than one without a LTC rider.