Starting January 1, 2010, there are two important tax changes regarding Long Term Care: 1) distributions from life insurance policies and annuities which have long-term care features are tax-free when used to pay long-term care costs, and 2) both life insurance and annuities can be exchanged tax-free for tax qualified long term care insurance.
Check out this article by Porfessor Katherine Pearson of Penn State Dickinson School of Law: Evaluating Long-Term Care Insurance in a Troubled Economy
Lots of people have old life insurance policies that get lost. Who gets the money? No one. The insurance company keeps it. (Actually I think they are supposed to escheat but how do they know the insured is dead if no claim is made? And wouldn't it be kind of scurvy to know the insured was dead and not do anything about it?)