The provisions of the Pension Protection Act (PPA) of 2006 permits tax-free distribution of life insurance or annuity cash value to pay for long-term care. With Long Term Care Linked Life Insurance & Annuities, the consumer maintains asset control, receives more long term care benefit for their dollar, and retains benefits whether or not they use their LTC benefit.
LTC Linked Life Insurance: A Long Term Care Linked Life Insurance policy acts just as a typical life insurance policy would, only with two added Long Term Care riders. If the policyholder doesn't have a Long Term Care event, the death benefit is paid out to the beneficiaries. However, if a Long Term Care event does happen, the first rider kicks in and starts paying a percentage (typically 2%) of the death benefit every month to cover Long Term Care costs. For example a $200,000 Death Benefit policy that qualifies under IRC7720(b) or IRC101(g) would provide up to 50 months of tax-free LTC benefits of $4,000 per month. In tour Example, to the right, a 75 year old woman with a single premium of $250K purchases a paid up policy of $500,000. this will provide 2% a month or $10,000 per month of tax-free LTC benefitshey are.
The information found on this website is gleaned from readily available public sources and is for educational purposes only. It is NOT to be considered financial or legal advice. Consult with an appropriate professional before making important financial or legal decisions .
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