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First Long Term Care Insurance Study Examines Life Insurance +LTC Policies

The first comprehensive national study of life insurance policies that include long term care insurance protection reveals ages of buyers and amounts of coverage purchased.


Los Angeles, CA -- The Internal Revenue Service (IRS) announced increased deductibility levels for long term care insurance policies purchased in 2011.

“For taxable years beginning in 2011, the limitations have been increased,” explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance, the industry’s trade association. “Tax advantaged long-term care insurance remains one of the few remaining significant tax-savings benefits especially meaningful for small business owners.”

Long term care insurance tax deductions are one of the best kept secrets Slome, one of the natioon’s leading long term care insurance experts adds. “The ability to take the entire cost as a tax deduction is a real benefit available to some small businesses,” he explains. "In addition, it may be possible to have the business pay for spouses and even certain designated executives.”

The deductible limits under Section 213(d)(10) for eligible long-term care premiums includable in the term ‘medical care’ are as follows:

The sale of asset-based long term care insurance protection grew significantly according to research by the American Association for Long-Term Care Insurance the national trade organization. According to data gathered from the industry’s leading insurers, premium in 2010 increased 79 percent compared to the prior year. The number of covered lives increased 83 percent.

“Asset based or linked life insurance and long term care insurance products are experiencing growth as they are highly suitable for a very specific consumer,” states Jesse Slome, the Association’s executive director and one of the nation’s leading long term care insurance experts. ”Financial planners and investment professionals who may not like the more complex nature of traditional long-term care insurance policies especially find them easier to sell.”

According to the Association’s annual study of new policy sales, more than half (55.7% Female - 51.5% Male) of new life+LTC policies were purchased by individuals age 65 or older. Just over a third (34.0% Female - 37.1% Male) were purchased by individuals between ages 55 and 64.

“One of the features of linked products that consumers find attractive is the principle that premiums are not ’lost’ if the individual never has a qualifying long-term care need,” Slome explains. ”To make coverage meaningful however one needs to make a significant single premium contribution for each covered life.” For 2010, the initial single premium face amount of policies purchased was $100,000 or greater for two thirds (66.2%) of new policies.

The Association study found that the vast majority (95.3%) of new Life+LTC policies issued did not include a benefit increase option that bumped up available benefits to keep pace with inflationary growth of costs. By comparison, the Association’s study of 2010 traditional individual long term care insurance policy sales, found that 94.5 percent included some form of growth option.

The complete findings are contained in the Association’s 2011 Long-Term Care Insurance Sourcebook. Founded in 1998, the American Association for Long-Term Care Insurance is the national trade organization established to educate both consumers and financial professionals about the importance of long term care planning.


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