Bloink: This new provision will do little or no to encourage People to buy long-term care insurance coverage. First, it doesn’t grow to be efficient for one more three years. Second, People who can afford the price of protection most likely don’t want the inducement of a penalty-free withdrawal of $2,500 per 12 months.
Moreover, long-term care insurance coverage just isn’t well-liked. It tends to solely profit rich taxpayers who can each afford and qualify for the insurance coverage. This new legislation will do little or no to extend the recognition of the product and received’t do something to assist deliver down the prices of sky-high LTCI premiums.
Byrnes: This provision will encourage People to take management of their very own long-term care funding relatively than planning to depend on authorities assets for costly nursing care sooner or later. It would additionally draw consideration to the problem itself and generate extra gross sales throughout the LTCI market.
Bloink: The legislation itself appears obscure in that it solely permits penalty-free withdrawals for long-term care safety that gives significant monetary protection. The time period significant monetary protection has but to be outlined, leaving taxpayers to wonder if their precise protection might be thought of certified below the brand new legislation — and whether or not annuities or life insurance coverage that provide LTCI riders will qualify.
Byrnes: The underside line is that the federal government wanted to do one thing to encourage People to take one other take a look at buying a long-term care insurance coverage coverage. The excitement generated by this new legislation might give People an incentive to take a more in-depth take a look at the problem, their very own monetary circumstances and danger components.
Bloink: Certain, this new legislation might draw consideration to the problem, which might permit extra folks to appreciate that they really ought to handle the opportunity of the necessity for future care. Permitting the funds to be withdrawn tax-free would generate much more consideration, nevertheless. All taxpayers are going to see right here is that they’re nonetheless required to pay taxes on the funds and that this might find yourself costing them much more cash.
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