Key employees. Employers always are looking for ways to retain key personnel. Packaging LTC (and a limited pay period) in conjunction with any type of pension or retirement plan can demonstrate that employers are doubling up on behalf of the employees future. Contributions being made by an employer to a 401(k) can help the employee build up money to live on later, while LTC can help protect these dollars from erosion and use them for the task they were intended. And its all tax-deductible to the employer.
Wealth accumulation. Young people today are more into investing and the market than the boomer generation was at the same age. This is a good thing. Yet typically overlooked is that with all this focus going into accumulating wealth for the future, there is an ongoing assumption that simply because the individual started early in the savings aspect of life, the persons financial future is assured. This ignores the vulnerability that any of us has to experiencing an extended illness or accident. Why should these forward-thinking people risk all the terrific financial starts by not protecting their ability to accumulate? Auto accidents and strokes are significant disablers for people under age 60. In that case, you could call LTC “401(k) protection.”
Life insurance clients. Life insurance is sold to protect assets and provide income. LTC insurance, coincidentally, is also asset protection and carries indemnity riders that can provide income. It should be relatively easy for the advisor, while discussing the subject of assets and income, to introduce LTC into the conversation.
Tax savings. There are opportunities for individuals to pay for LTC insurance on a tax-savings basis. Business owners, even those not in a C Corporation, get at least some “bounce” in their LTC premium from a tax break. In 2005, sole proprietors, partners and S-Corporation owners can write off up to the following annual premium amounts on their own personal coverage: age 40 and under, $270; ages 41-50, $510; ages 51-60, $1,020; ages 61-70, $2,720; and ages 70+, $3,400. This can help make a sale. Not long ago, a female S-Corporation owner bought LTC for herself at age 58 and her husband (age 64) primarily because of the write-off. She only could deduct part of her premium but all of his, the more expensive policy. This was more than enough motivation.
Health Savings Accounts (HSAs). Certainly, the creation of HSAs will lead to a swing in the type of health coverage purchased by individuals in the future. Many younger people will not likely need to access their accounts for medical expenses in any significant way for some time, letting money accumulate. These pretax dollars can be withdrawn to pay for LTC insurance premiums, giving the individual a tax-deductible way of paying for the coverage. HSAs can represent an easy tie-in with LTC, as noted above.
Florida is bouncing back, slowly but surely. Directing our LTC efforts at younger buyers in a multitude of ways is helping to erase the memories of the 2004 hurricane season. Heres to a successful and less weather-eventful 2005!
is the author of The Long-Term Care Handbook and How To Sell LTC Insurance, both published by The National Underwriter Company, Cincinnati, Ohio. He can be reached at [email protected].
Reproduced from National Underwriter Edition, January 20, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.