One of the main reasons that most of my clients don't purchase long term care insurance, despite my insistence that it's a much better alternative to Medicaid planning, is the cost. Well, help is coming in January 2010 thanks to the Pension Protection Act (PPA) which was signed into law in 2006.
The PPA will allow people who have built up equity in a life insurance policy or annuity to trade in those policies for long term care insurance. This is perfect if you have life insurance and feel like you don't need it anymore (maybe the kids are old enough now to take care of themselves if you pass away).
There is also a big tax advantage since cashing out a life insurance policy or getting payments from an annuity triggers income tax liability. There would be no such tax issue if you converted your life insurance or annuity to long term care insurance in accordance with the PPA.
Keep an eye out for new long term care insurance programs from insurance companies in light of the pension law.
Click here for the full story at MainStreet.com.