LTC Insurance For The Affluent

March 3, 2009

LTC Insurance For The Affluent - By David Bidwell , Peter Gelbwaks - 03/5/2009

Affluent clients can typically absorb the cost of all their health care needs, so they aren't normally considered for long-term care insurance.

LTC insurance, however, can indeed be a cost-effective tool for the affluent.

Preparing for the possibility of a long-term illness should be an important component of every client's financial plan, including the affluent. It's also important to note that affluent clients will not qualify for Medicaid, as states impose stricter income and asset limits, and Medicare only pays for short periods of care.

There are an increasing number of alternative products for long-term care, including life insurance or annuities with long-term care riders. These products, however, usually do not deliver the robust benefits or tax advantages of a traditional long-term care insurance policy.

Solutions For The Affluent
LTC insurance, in our experience, can be attractive to affluent clients and their advisors on a number of levels.

Wealthy clients, for example, are typically open to the idea of using LTC insurance as a way to transfer the financial risk and responsibility for hands-on health care. The insurance also ensures that these responsibilities won't fall into the lap of family members and that policyholders will have access to top-notch health care providers.

Once the math is done, affluent clients usually recognize that LTC insurance makes sense. This is particularly true of business owners, who can reap many advantages from long-term care coverage. These benefits include the ability to provide enriched employee benefits packages, which can improve worker productivity and provide for better retirement planning.

Business owners can also reap tax advantages from LTC insurance, including the ability to deduct premiums as a business expense, receive state tax credits or deductions or exclude premiums from an employee's gross income.

There's an even more basic reason why financial advisors should be familiar with LTC insurance: As baby boomers age and life spans lengthen, the burden of caring for the elderly is becoming a more prevalent issue. While advisors may not think LTC coverage is important, clients may feel differently-to the point of doubting advisors who fail to mention the issue.

Many agents specialize in working with advisors-including attorneys, CPAs, financial advisors and trust officers-on delivering coverage best suited for the needs of their clients. Some agents also specialize in LTC insurance.

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