Two important changes regarding Long Term Care Insurance have come into effect. Starting January 1, 2010: (a) Distributions from non-qualified annuities and life insurance which have a long-term care insurance rider are tax-free when used to pay long-term care costs; and (b) non-qualified annuities and life insurance can be exchanged tax-free via a so-called “1034 exchange” for a tax advantaged long-term care insurance policy.   There are a number of technical requirements that must be met to achieve the tax-free exchange status and as with any investment, exchanges may not be right for everyone.