Tax Free Exchange of Annuities for Long-Term Care Policies Allowed Starting in 2010

The Pension Protection Act of 2006 created tax incentives for the creation of hybrid long-term care insurance policies.

The Act also provides the basis for a tax free exchange of a life insurance or annuity contract for a long-term care policy.

The exchange would be conducted through a Section 1035 exchange.  Consumers and their financial advisors will be able to conduct such exchanges beginning in 2010.

The details are complicated, but there is a good, in-depth article referenced below that discusses various aspects of the issue.

Source: Bank Investment Consultant

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