Life Insurance Based LTC

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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.