More than a third of individuals who recently purchased long-term care insurance are paying less than $1,499 . . .Read more
Exchange an Old Annuity or Life Insurance for Long-Term Care Insurance
- March 26th, 2010
A new law makes the purchase of products that combine annuities or insurance policies with long-term care insurance more attractive. As ElderLawAnswers previously reported, these "hybrid" products are gaining in popularity due to a law that went into effect January 1, 2010, making distributions from life insurance and annuities tax-free when used to pay for long-term care. The same law also allows owners of annuities or life insurance policies to exchange their old policies for long-term care insurance or hybrid policies without being taxed.
Section 1035 of the U.S. tax code allows holders of annuity or life insurance contracts to move to another annuity or life insurance contract without being taxed on the move. The new law extends the benefits of section 1035 to individuals who want to exchange an old annuity or life insurance policy for a long-term care insurance policy or a hybrid policy. The law applies only to "non-qualified" annuities, which means annuities that were purchased with after-tax dollars.
Local Elder Law Attorneys in Ashburn, VA
Hammond and Associates, LLC, Elder Law, Estate Planning, Wills, Trusts, Probate
For Jeffrey Hammond, the practice of Elder Law is personal. Jeff’s many years of experience in law and in business did not prepare him for the crisis he faced in 2005 and 2006 when his father suffered a stroke and both of his parents suffered from dementia and other medical problems. At that time, Jeff began an i...
Hale Ball Carlson Baumgartner Murphy PLC
Jean Galloway Ball is certified in Elder Law by the National Elder Law Foundation. She is a 1977 honors graduate of the National Law Center, George Washington University, and she did her undergraduate work at the University of California at Berkeley, graduating Phi Beta Kappa in 1971. She is admitted to practice in Vir...
Felinton Elder Law & Estate Planning Centers
Mindy Felinton concentrates in the areas of Medicaid planning, Veterans' Benefits, asset protection, nursing home planning, elder law, wills, estate planning, trusts, living wills, powers of attorney, probate administration and trust administration and began her legal career 30 years ago as an Assistant State Attorney...
If you have an old annuity or life insurance policy and want long-term care insurance, you have several options. You can either partially or fully exchange the old policy and use the proceeds to purchase a stand-alone long-term care insurance policy. Or you can fully exchange the old policy for a new hybrid insurance or annuity contract that also includes a long-term care insurance policy. You will then be able to withdraw money from the annuity or life insurance contract tax-free as long as it is being used to pay for long-term care.
Exchanges may not be beneficial for everyone. Before exchanging any policies, you should make sure your current policy doesn't have a death benefit or another benefit that you don't want to give up. Also, there may be surrender charges for exchanging an old annuity. Talk with your elder law attorney to determine if an exchange is the right move for you.
Last Modified: 03/26/2010