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New tax breaks to buy long term care insurance

4-26-2010 - Changes to the tax code provide new incentives to purchase long-term care insurance. Starting in 2010, you may swap all or a portion of your policy or annuity to buy a separate long-term care policy, without tax penalties. Or you can exchange the entire policy for one of the new hybrid annuities or life insurance policies that allow you to make tax-free withdrawals so long as the withdrawn funds are used to cover long-term care expenses.You can take advantage of this new tax break only if the annuity was purchased with after-tax dollars -  in other words, if it is not a qualified plan.

When considering whether to exchange your annuity, find out what surrender charges may apply. Also keep in mind that you may be giving up a death benefit or other beneficial features if you swap your life insurance policy..

Read more here from Smart Money.

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