Many boomers realize that long term care is a big gap in their retirement planning. One of their biggest concerns is: How do you pay premiums after you retire?
Thats why 10-pay plans appeal to many clients in the boomer generation, producers say. These policies let them provide for future LTCI needs while they are still in their peak earning years.
Not everyone will be able to afford the 10-pay plan option, however. Because it can be tough to find the money to pay annual premiums of $2,000, $3,000 or more, many agents see 10-pay as a product most suitable for the business marketplace.
The private marketplace does not offer that many customers for 10-pay policies, says Walter J. Robinson, director-LTC sales at Cipco Booth Financial Associates Inc., Norwalk, Conn.
Still, he notes, many boomers have reached the point where they can afford it, if the agent is mindful 10-pay is appropriate only for the consumer who has a strong income stream.
For the most part, however, its the business market that offers the most promise.
“10-pay has seen a sales increase primarily with high-income, self-employed professionals,” agrees Kevin J. Johnson, president, New York Long Term Care Brokers Ltd., Clifton Park, N.Y.
The best prospects, Johnson finds, are business owners looking to maximize deductions, particularly C corporation owners.
Unlike sole proprietorships or other forms of business where business income is reported on the individuals personal income tax statement, C corporations allow the owner to take the money spent on LTC insurance out of the companys retained earnings.
Another big advantage: Policy owners lock in premiums for at least a good part of the 10-year period, Johnson points out.