Long-Term Care Insurance Alternatives
By: Gary R. Polk, CLTC – Certified in Long Term Care
Traditional Long-Term Care Policy
► Reimbursement or Cash Benefit Plans
► Can use annuity distributions to pay long-term care premiums
on a tax advantaged basis (gains are taxed pro-rata not LIFO) - PPA 2006
► Premiums are subject to possible future price increases.
Asset Based Long-Term Care Policy (Live, Die or Quit)
► Transfer a one-time lump sum from existing assets; no further deposits
required – guaranteed. Provisions are similar to a traditional LTC policy.
► Can be funded with a tax free exchange from existing life policy – PPA 2006
► Pays benefits if never used for long-term care in the form of a tax free death benefit.
► Guarantees 100% return of premium if cancelled (no surrender charges).
Life Insurance Policy with Long-Term Care Rider
► Universal life insurance policy that provide access to the death benefit
to be used to pay long-term care expenses; benefits received reduce the face
amount dollar for dollar. Premiums can be guaranteed never to increase.
► Can be funded with a tax free exchange from an existing life insurance policy.
It is available on a reimbursement or indemnity basis.
Annuity with Long-Term Care Rider
► Fixed annuity that provides leverage to pay for long-term care expenses
► Can be exchanged (tax free) from existing annuities – PPA 2006
► Converts tax deferred income to tax free income if used to pay for qualified
long-term care expenses.
► Easier underwriting when more significant medical issues are of concern.
PPA 2006 – Pension Protection Act of 2006, effective Jan. 1st, 2010