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5 long term care salespitches to beware of

Salespitch 1: You should buy a long-term care policy because it's a write-off!

While that statement may be true, many people who buy a long-term care insurance policy won't be able to take advantage of the tax write-off. First of all, you must itemize deductions before you're able to use premiums paid on a tax-qualified long-term care insurance policy to reduce your tax burden. Many buyers of long-term care policies are older and no longer itemize deductions on their tax return. Often, they take the standard deduction, so the tax write-off means nothing.

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Even if you itemize your deductions, the write-off for medical and dental expenses is limited. You can only deduct the total amount of your medical and dental expenses that is more than 7.5 percent of your adjusted gross income. Therefore, if your adjusted gross income is $50,000, you would have to have more than $3,750 in unreimbursed medical and dental expenses before the long-term care insurance premium does you a lick of good.

If you're paying $4,000 a year or more for a long-term care policy, it might appear at first that you're going to exceed the cap right away and get some sort of deduction. The problem is that you can't include the full premium paid for a tax-qualified long-term care policy in your deduction for medical and dental expenses.

See 2010 LTC tax deduction levels.

Even if you're in the age group that's entitled to a $3,290 allowance for buying a long-term care policy, it won't mean anything until you exceed the IRS threshold for taking a medical deduction. Until your medical and dental expenses (including long term care premiums) surpass 7.5 percent of your adjusted gross income, your tax bill won't be a dime lower.

Even if the premium paid for a tax-qualified policy helps your tax situation, don't assume you have to buy a new policy to get the deduction. You may be able to deduct the premium on your current policy — if you have one. Check with your agent for the current tax guidelines, since these change as the government updates the tax code.

No. 1: You should buy a long-term care policy because it's a write-off! (this page)

No. 2: The state insurance department approved this policy!

No. 3: With the policy you have now, you're going to be really sorry someday!

No. 4: If you buy now, you'll lock in the price forever!

No. 5: Don't worry about the financial rating of the company!

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