Refuse need for LTC insurance? Combination Life/LTC coverage allows exchanging an aged life policy for a Life and LTC combination policy

1. Two Birds with One Stone
By Amy Rickman
Put the benefits of life insurance to work for your long term care insurance needs. Changes in federal
tax laws made that possible in 2010. Since Americans are living longer supported by ingenious
pharmaceuticals and medical technology, the chances of needing long term care is growing. While we
wish and many think Medicare will cover the costs, Medicare does not pay for non-medical expenses. A
65 year old couple planning to retire this year needs an additional $240,000 to cover out of pocket
expenses that Medicare does not cover. This is an increase of 4% from 2011. Increases in healthcare
have averaged 6% since 2002.
Today, life insurance polices are fast gaining popularity because they cover more than a death benefit.
They cover long term care. Certified Financial Planners state many whole life insurance policies today
are “over-funded” and feel the dollars (both premium and cash value) can be put to better use. This is
especially true once the protective reasons the policy was purchased originally have been satisfied.
Today, you can possibly take your aged whole life policy and exchange it for a life insurance/long term
care policy, and kill two birds with one stone. It is possible to do an exchange of the policy you have,
getting leverage for life insurance for your beneficiary with an even greater leverage for LTC expenses.
The federal government does not get involved in insurance law often, but they recognized the need to
tax incentivize the policies that relieve the state governments from paying for long term care, which
they do in Medicaid. Thus, distributions from life insurance policies are also tax free when used to pay
nursing home costs today.