Life Insurance With Long Term Care Benefits-Asset-Based LTC Products - An Introduction

Long-Term Care Protection Using Life Insurance Or Annuities

The provisions of the Pension Protection Act (PPA) of 2006 provide new tax benefits for what are often referred to as long-term care combination plans. These new benefits apply for life insurance policies and annuity contracts. PPA permits tax-free distribution of life insurance or annuity cash value to pay for long-term care (both beginning in 2010).

As a result, you now have multiple ways to accomplish your long-term care planning. There is, of course, traditional long-term care insurance that you can buy on an individual basis or through your employer. These new products are also available on an individual basis or, increasingly, through a plan offered by your employer.

You may find the new options available more attractive. And, on these pages we will discuss:
The pros and cons of asset based plans
Who should consider these plans? What do buyers look like?
Tax considerations
Where to go to get information or comparison shop

This page has introductory information. Scroll down and click on the "Learn More About" boxes at the bottom for more detailed information on each option.

Why Are People Interested In These Options?

These combination products address one of the common objections of consumers to "stand-alone" long-term care insurance -- "wasting" the premiums if they never need long-term care. In fact, policies may offer a Return of Premium option (you could say a Money Back guarantee) that allows for a full refund of your premium at any time.

How To Get More Information

This information is intended to give you a pretty thorough overview of the topic. But, keep in mind that the American Association for Long-Term Care Insurance doesn't sell insurance. If you are interested in these forms of "asset based" protection connect with one of our members using our Find A Local LTC Professional online look-up or   click here to complete our simple online questionnaire. 

Life Insurance and Long-Term Care Benefits

You can obtain two forms of very valuable protection in one convenient policy. Some companies offer recurring premium policies which may be more attractive to middle-aged buyers. Others offer single-premium policies that can be attractive to older consumers with invested assets they have set aside to "self-insure" their health and long-term care needs in their retirement years.

Like all life insurance policies these policies pay a death benefit to your beneficiaries. What makes them special, however, is your ability to use as much of your death benefit as you need to pay for qualifying long-term care costs.

The second approach is the "optional rider" policy design. The base policy you buy is permanent life insurance (as opposed to term life) and the long-term care benefit protection is provided through an optional rider. Often these policies involve a recurring premium payment.

Some policies will provide multiples of long-term care benefit options. So, say you purchase $200,000 of life insurance; you could have access to $400,000 to pay for qualifying long-term care costs. Any portion of your death benefit not used for long-term care will go to your beneficiaries as a death benefit.

This is a brief look at these products. Scroll down and click on the "Learn More About" box to read more. Best of all, talk to an insurance or financial professional who can answer your questions.

Annuities and Long-Term Care Benefits

Currently, there are only a few insurance companies that make available an Annuity+LTC combination offering. But a number of companies have products on the drawing board a result of the Pension Protection Act of 2006 that allows for tax-qualified long-term care benefit payments from annuities beginning in 2010.


The American Association for Long-Term Care Insurance wishes to acknowledge the following leading experts: Gene Pastula, President of Westland Financial Services and Colonial Life for assistance in developing content for this section of our Website.

To obtain information on asset-based long-term care insurance for yourself or your business connect with one of our members using our Find A Local LTC Professional online look-up or  click here to complete our simple online questionnaire.