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The biggest deterrent to purchasing long term care insurance is the expense. We buy auto insurance and homeowners insurance because we have to. Additionally, since these two types of insurance are mandatory, the government offers some help.

Another reason people are so hesitant to purchase nursing home insurance is the timing. Right when you are hoping to reduce expenses and retire, you are hit with huge premiums. Plus some of us still have children to put through college.

Many would be purchasers also wonder if they will ever actually need the insurance. Though with so many of us living longer than before, the probability that we will need longer term health care insurance is more likely.

The government and insurance companies have both made some changes to try to get reluctant consumers to purchase nursing home insurance. The government instituted the Pension Protection Act of 2006 which says that starting Jan. 1, 2010, you will no longer have to pay federal income tax on annuity proceeds if you use those proceeds to pay for long-term-care coverage.

Insurance companies have begun offering what they call a hybrid policy which is an insurance policy with a extended-care rider. An example would be if you put money ($50,000 is about the minimum) -- into an annuity. Other options are to use an annuity you already own or a whole or universal life insurance policy that you no longer need through what the IRS calls a 1035 exchange.

You pick the amount of extended-term care coverage you want, how long you want the coverage to last and if you want inflation coverage.

Here is a brief explanation of the pros and cons:

Long-term-care annuities have the advantage that if don't use it, you don't lose it. Don't' need the long term care? Use the money for something else.

Extended-care annuities let you build up money tax-deferred. Great if your income is in the upper brackets and you figure you will be in a lower bracket later.

If you are too sick to get a long-term-care insurance policy, you have a better chance with the annuity option because they ask you fewer insurability questions and there are no medical underwriting requirements

The big risk factor sitting out there with extended-care annuities is the length of coverage. If you don't put in enough money, you may out run your funds. Another risk is you will need that money for something else and penalties for early withdrawal are steep.

Another problem is you need a lot of money to even begin with. The annuity needs about $75,000 to $150,00 just to get started. For a conventional policy you make your payment monthly.

Long term care insurance policies and annuities are costly and the language used in writing the policies is complex. Educate yourself by reading a few articles on the topic so that you are familiar with some of the vocabulary and the basic concept. Then talk to an agent your trust and know. They can simplify the jargon and decipher the policy and help you figure out what is best for you.