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WLNG
March 29, 2006

Support Your Business With Long-term Care Insurance


Over the course of our lifetime, many of us work hard to not only earn a living, but to also save enough to maintain a comfortable lifestyle after retiring from the work force. In addition, we may plan to pass on some of our accumulated wealth to loved ones who may benefit from our efforts as well. But what would happen to our well-laid plans if we ever ended up needing long-term care for an unexpected illness?

Even basic nursing home care to handle the frailties of old age could put a damper on any savings plans. And if you're a business owner, the effects could have an impact on more than just your own pocketbook. Long-term care insurance can provide a way to help you maintain control over the care you receive. More importantly, though, this type of insurance can also help protect your savings and your business from the financial burden that may result.

Statistics have shown that more than half of all women and one-third of men who live to age 65 will likely spend time in a nursing home before they die.* Since nearly half of us could find ourselves in this situation, it's important to plan ahead and be prepared should the need arise. There are a few options for paying long-term care insurance premiums, and these policies offer several advantages for your business.

Long-term care insurance can be purchased as a benefit for a business owner and/or a select group of officers or key managers. Depending on how your business is structured, the premiums you pay may be fully or at least partially tax-deductible, so you'll want to consult your tax advisor on the specifics of providing this benefit to select employees. Long-term care is a serious financial risk, and older employees are probably well aware of it. Employer-provided long-term care benefits would be very valuable to them. Some carriers offer discounts when multiple policies are purchased through the business, and the employer can usually deduct the cost of premiums for non-owner employees.

To extend the benefits of long-term care coverage to all your employees, you can sponsor a group plan. These plans are typically designed in a way that all employees who want coverage must participate on a voluntary basis and pay premiums on their own with after-tax dollars. But employees may find it convenient and cost-effective to get long-term care insurance through their workplace, as carriers will again discount rates for group purchases.

To take this benefit even one step further, you could consider offering employees the opportunity to acquire long-term care insurance for their parents. When valuable employees miss work to care for elderly parents, your business loses productivity. By making it convenient for key employees to plan on providing for the possible needs of their loved ones, your business benefits. Carriers may offer premium discounts when multiple policies are purchased through the business.

The payments of long-term care insurance premiums for a parent, in most cases, will not be deductible by either the business or the employee/child. But it is still a benefit that employees can appreciate, and will add value to your overall compensation package.

In all of the situations outlined above, the benefits received from a qualified long-term care policy are income-tax-free. Taking care of yourself – and taking care of your employees – is a strategy that will pay dividends in the long run.

A.G. Edwards generally acts as a broker-dealer, but may act as an investment advisor on designated accounts, and the firm's obligations will vary with the role it plays. When working with clients the firm generally acts as a broker-dealer unless specifically indicated in writing. To better understand the differences between brokerage and advisory services, please consult Important Information About Your Relationship With A.G. Edwards on agedwards.com.

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