While many financial planners have been as deft as their clients at ignoring the subject of long-term care (LTC) insurance, that's about to end. It's not the sexiest of topics, but LTC insurance is poised to go front and center, thanks to the fact that 20 million federal government employees and their families will be offered group-sponsored LTC policies starting this fall. The ensuing information blitz is expected to bring to the forefront a host of newsworthy LTC issues, including reasonable premiums, significant policy improvements, tax benefits and the economic reality of choosing to pay out of pocket to cover escalating care costs or gamble on Medicare.

Whether clients are employees of Uncle Sam or not, more people than ever before will want to know how LTC insurance works and how benefits can assist their planning, says Arthur Stein, a CFP and financial planner with Cassaday & Co., in McLean, Va., who specializes in LTC insurance.

What planners will discover may surprise them. Consumers who buy LTC policies are getting significantly wealthier and younger, according to a 2000 buyer's study from the Health Insurance Association of America (HIAA). In fact, more than one-third of LTC policies are purchased by people younger than age 65. The average income and asset level of buyers have increased significantly over the past decade. Not only are those buying policies wealthier than the average population, but they also are more likely to be married and college-educated, the HIAA found.

As interesting, clients don't view LTC as just another insurance policy. Increasingly, they see it as a crucial piece of their estate plans. In fact, one in three buyers say he or she buys coverage to protect and preserve assets and estates, according to the HIAA's 2000 Buyer's Survey.

Planners who have seen LTC insurance as ancillary to their business now may need to rethink that view. Buyers prefer to have this product coordinated and run through a trusted advisor, the HIAA finds. "This is still a product that must be sold," says Stein.

But clients are becoming more receptive. The economic reality of getting old is setting in for many Americans, who are either witnessing parents and family members pay for long-term care or are paying themselves to care for aging relatives. "The reality is, paying $50,000 or $75,000 in long-term care premiums over a lifetime can look pretty attractive when the alternative is paying $1 million or more for care," says Stein, a board member of the American Association for Long-Term Care Insurance (AALTCI), a Westlake Village, Calif.-based group that represents agents and brokers who specialize in LTC insurance. "More people, especially the affluent, are doing the math. It takes one year or less of claims to recoup a lifetime of premiums."

Real-life experience and the prospect of paying an estimated $90,000 annually for long-term care by 2010 have begun debunking the myth that long-term care insurance is unaffordable, says Jessie Slome, executive director or the AALTCI and president of www.ltcsales.com, which specializes in LTC marketing tools. While actual annual premiums can vary widely, depending on a policyholder's age and health, the average annual premium was $1,677 in 2000, up 11% since 1995, according to the HIAA.

Already the market is experiencing strong growth. Sales of long-term care policies increased 12% in 2000 and are expected to have increased more than 15% in 2001, according to the American Council of Life Insurance. Still, there are only just shy of 2.5 million individual policies on the books. That leaves a huge, untapped market as the population of Americans age 65 and over doubles to 70 million in the next 30 years.

Also changing? The state of care facilities. More and more traditional nursing homes are being replaced by luxurious digs being built and managed by the likes of the Marriott Corp. Where not long ago it was difficult to convince clients to buy a policy that would essentially pay for them to live at a place they didn't want to be, today's policies and facilities afford choice and rich lifestyles.

"As an industry, LTC insurance has evolved to address a much broader spectrum of buyers than it did before," says Peter Gelbwaks, president of Gelbwaks Insurance Services in Plantation, Fla. "Before, the oldest, sickest people came to the table, and many substandard carriers offered coverage. That's simply no longer the case."

Policy standardization and terms, as well as tax treatment, also have evolved to make long-term care insurance more attractive and an easier sale. Coverage is much more comprehensive today than just a few years ago. In fact, dual-coverage policies-those that cover both institutional and home care-account for 77% of the policy market, up from 37% in 1990, the HIAA says. The difference in the average daily nursing-home benefit has increased by 28%, outpacing inflation. At the same time, the once stark gap between the daily benefits paid for institutional care and those paid for home care has narrowed significantly. This gives clients far greater choice.

The Health Insurance Portability Act also gave LTC insurance a significant tax boost that marketers are just starting to maximize today. That improvement is the deduction C corporations can take when they buy LTC policies for employees, spouses, dependents and retirees and their spouses. And since there are no anti-discrimination rules, C corps can offer to pay premiums for a select group. As important, the benefits are tax-free.

This change has given birth to paid-up plans (also called limited-pay policies) that law firms, accounting firms and other C corps can buy tax-free for their principals, executives and their family members. "This is the hot market," says Slome.

"Companies can pay off policies for 55-year-olds and deduct the premiums as a business expense."

Paid-up policies also entice the wealthy, who like the idea of buying a lifetime of benefits for one to five years of premiums, Gelbwaks says.

Equally interesting, an above-the-line tax deduction for LTC policies for the masses is pending in Congress. The deduction has been sidetracked before, but its chances are getting better, thanks to the demographic shift in the U.S. population and the strain the graying of America is putting on Medicare and Medicaid, Gelbwaks says.

That doesn't mean that LTC insurance is an easy sale. "Clients are much more sophisticated than they were even five years ago," says Gelbwaks. But it does mean that there are wealthier and more attentive markets.

Of course, not every planner wants to offer LTC policies, but whether they want to bring the expertise in-house or partner with an existing expert, their choices are getting richer. That's thanks in part to the American Association for Long-Term Care Insurance, which will begin offering a new designation in long-term care insurance later this year. The program, which requires four courses and an extensive exam, is designed to give planners and agents expert knowledge on LTC issues and products, Slome says. The designation is being offered in conjunction with the HIAA.

It will take years, admits Stein, but the goal is to confer on holders of the LTC designation (which has yet to be named) a high degree of professionalism.

In the meantime, experts like Stein and Gelbwaks will continue to trumpet a fact that is hard to contest: There

probably will never be a period when policies are as affordable and favorable as they are today. Insurers just now are beginning to see the completion of the first cycle of actual policyholder experience, and as America ages, claims will increase.

"We think premiums will trend upward," Gelbwaks says. "At the same time, we think claims will, too, and we've already begun to see insurers begin to write managed-care elements into their policies. That protects insurers, but you'll have less choice. We think planners should advise clients to visit long-term-care insurance sooner than later," he adds. "Once you turn 60, every year you wait costs an 11% to 12% increase in premiums."

The Key To Marketing LTC Insurance

1) Know what you're talking about. Clients have done a lot of homework and ask a lot of questions. If you're unprepared, they'll know it.

2) Represent a lot of top companies (preferably ones that have not raised premiums significantly in the recent past). This will help you zero in on the best policy for a client and help to navigate underwriting and the huge differences regarding what health conditions insurers accept, says Tim Otto, president of M&O Marketing, an LTC insurance wholesaler in Dearborn, Mich.

3) Be prepared to meet a variety of objections. Typical client objections include: I can't afford a policy; I won't need a policy; My kids will take care of me; I'd rather die. "When you're 60, it's easy to say you don't want to live to be 100. Will you feel the same way when you're 99?" Virginia planner Arthur Stein asks clients.

4) Understand that with couples, males are the main objectors. "They won't say it, but what they think is that their wives will take care of them," Stein says.

5) Don't fall for the myth about the wealthy self-insuring. They don't self-insure their Mercedes, their homes, their health or their business liabilities, and they won't want to self-insure long-term care to the detriment of their estates.

6) Visit the leading care facilities in your locale to understand how they work and what they cost.