If you decide to work with a consultant, make sure he has experience dealing with affluent clients and their specific issues, and truly understands the LTC insurance marketplace and current product offerings. Most affluent clients, for example, want the best care available and they want it delivered in their homes. This type of service-it typically includes 24-hour home care in two shifts per day-can cost considerably more than conventional coverage that calls for nursing home care.

Doing The Math
Generally speaking, regardless of the age of the client or the plan design, it will only take three to 18 months of receiving benefits from an LTC insurance policy to recoup an entire lifetime of premiums.  

For example, a 65-year-old married healthy person buys coverage with benefits of $200 a day or roughly $6,000 a month. We've assumed a 20-year life expectancy, so $3,335 per year in premiums would total $66,700, assuming no claims are paid before age 85. The $6,000 benefit doubles with a simple 5% inflation rider built into the plan, which means the policy pays $12,000 per month at claim time. After six months, the benefits will exceed the total premiums paid.

As advisors look for a plan and a carrier that fits their clients' needs, they should note that the affluent are used to having the best, and LTC policies are no exception. They are generally brand conscious and want to work with a company that has excellent ratings and a good track record in LTC insurance. They may choose to add expensive options that more
cost-conscious buyers forgo.

Flexible payment options are very attractive in the affluent market as they enable the policyholder to pay the full cost of the premiums within a specified time period. Most companies offer two types of limited pay options. The first is "10-pay" in which the premiums are paid in ten individual payments. The second is a "paid-up at age 65" option that enables those under age 55 to pay all premiums before turning 65, to avoid payments during their retirement years. Among the advantages of these options is that they expose clients to less risk of a future rate increase. They are also attractive to business owners, allowing them to provide a paid-up LTC insurance policy before an executive or employee retires. If an executive or employee retires early or terminates his employment before the LTC insurance premiums, he can still retain the coverage at his own expense.

LTC insurance has become a sophisticated planning tool in financial planning for the affluent. There are well-designed plans for businesses, for example, that offer both underwriting concessions and premium discounts.

A business owner, for example, can buy coverage through a "C" corporation and decide who participates, deduct the full premiums paid, and receive benefits on a completely tax-free basis. Other than "C" corporations, the other types of businesses that can benefit from special tax considerations are those that operate as self-employed, or partnership/S corporation/limited liability companies.

A Planning Tool
Given the availability and flexibility of today's products, it's hard to argue against making LTC insurance a part of an affluent client's financial plan. Take the case of a wealthy client with more than $50 million in assets who purchased LTC insurance for himself and his spouse. He insures a $10 million home, a $2 million boat, $1 million in jewelry, $1 million in art and $500,000 in cars. He came to the conclusion that the potential need for long-term care was another risk that merited coverage. In fact, out of all his insurance policies, he believes he is most likely to use the benefits of his LTC policy.

Affluent clients have little patience for inefficiency and are exacting in their follow-through. Truly helping them-in this case with a possible life situation that even money can't prevent-is a rewarding experience that can open quite a few doors for your own business.    

Peter Gelbwaks is chairman of Gelbwaks Insurance Services Inc. of Plantation, Fla., and immediate past chairman of the National LTC Network, the largest LTC insurance marketing firm in the nation. He can be reached at [email protected] or at 800-826-1686.