Long-term care agents defend insurance
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Dear readers,
My rant on long-term
care insurance last week generated quite a bit of feedback --
mostly angry letters from the folks who sell long-term care insurance.
I will share a selection of them with you because they present sound
arguments and I think it's only fair to include their perspectives.
The issue is complicated and not one to be dismissed lightly. I'll
also include a few other letters that clarify or shed light on the
issue.
I also heard from a few consumers who are on the
fence about this insurance. If you're not sure about whether it's important for
you, I urge you to consult an unbiased financial planner, and don't give too much
weight to the musings of a journalist. I don't want to be responsible for your
decisions -- just my own!
Leslie Corcoran, a Certified Financial Planner of
Family First Financial Planning in Stuart, Fla., considers herself
a fan of long-term care insurance. She recommends the insurance
to most of her clients, except for those in the "low or top level
of assets." She encouraged both of her parents to get policies.
"My mom's mom lived to be 103, and we watched a million-dollar estate
evaporate -- and she was healthy."
Below is a selection of letters I received. Some are
edited for length. Thanks for writing.
Dear Barbara,
I have been
through the Pension Protection Act several times and don't see any language about
taking money out of an annuity to purchase long-term care. I see some language
about the LTC rider attached to an annuity will not be considered a part of gross
income. I see some language about a special group of government workers being
able to use up to $3,000 a year from their government pension to pay for long-term
care insurance premiums. But, no wording about the individual taxpayer. Is
there some other area that explains this loophole that is opening in 2010? I would
appreciate your direction to the section of the bill that spells this out. Thanks,
Barclay G. Sisk
Senior Care Concepts Brokerage Inc.
Greensboro, N.C. Dear
Barclay:
You're referring to the part of my column that as originally
published said: "The Pension Protection Act, signed into law
last August, uses a carrot approach to entice consumers to buy long-term care
insurance. Beginning in 2010, consumers can take money out of an annuity tax free
if they use the cash to purchase a long-term care policy. For those in the 35
percent tax bracket, this represents considerable tax savings."
It turns out that this is not entirely accurate and
has since been corrected. Michael Kitces, director of financial
planning at the Pinnacle Advisory Group in Columbia, Md., says,
"Congress really dropped the ball on this provision, because the
fine print actually makes it significantly less advantageous than
has been covered in the general media."
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