Many people are discouraged when it comes to the cost of long term care insurance. A great way to avoid spending a lot of money is to buy an insurance policy that carries a long term care rider.
The Pension Protection Act was signed into law in August of 2006. This law allows those individuals with annuity contracts to take advantage of long term care riders with special tax advantages. The cash value of the annuity contract can be used to pay the premiums for long term care contracts. This will reduce the cost basis of the annuity contract.
The Pension Protection Act will also allow for those individuals without long term care riders to exchange their current plans for those that do carry the long term care rider in a tax free transfer. This would be very beneficial to those that own annuities with a large cost basis and for those that are not in good health.
An advantage to this type of long term care insurance is that while you are healthy, your annuity will continue to earn interest. Once you need long term care, your plan would pay for in home care, assisted living, or skilled nursing care. If you do not use any of your long term care then your annuity money less any withdrawals would be given to your beneficiaries.
