LTC Insurance Executive Benefits: More Than Meets The Eye?
Corporate-paid long term care insurance executive benefit plans have more potential value than most people can imagine.
When looking at lifetime economic impact of long term care events, employer-paid plans create a compelling window of opportunity that could disappear.
In a properly designed LTC insurance benefit plan, premium is fully deductible to the employer, while premium value and future benefits are not taxable to the executive. The executive is owner and beneficiary of the policy. Owners of pass-through entities are less favorably treated but also may have substantial tax benefits.
The scenarios depicted in Chart I illustrate an executive plan with an after-tax corporate cost of approximately $120,000 paid over 10 years.
The LTC insurance plan covering an executive and spouse creates a lifetime potential multimillion-dollar tax-free wealth preservation value.
If the executive or spouse requires 3 years of care, the lifetime value is about three-quarters of a million dollars. If Alzheimers occurs (or some other long-duration event) and runs for, say 9 years, the LTC insurance value to the estate is $2.3 million. These figures do not include the added value of tax-free premiums paid by the corporation.