Transcript What`s Your Plan - The Long Term Care Consumer Guide

Protecting your most
important asset:
Your family
The agenda…
 Why a plan for long-term care must be
considered and what the consequences are if
you don’t
 Developing a plan to protect your family and
finances
 What will pay for that plan
My goals are to…
 Give you insight into the consequences your
needing care over a period of years could have,
not on you, but those you love
 Speak to the consequences an illness will have
on your best thought out retirement plan
 Discuss the options for protecting both your
family and finances should you need care over a
period of time
Living a long life could
well be in your future…
Planning for it is now a necessity
I believe that reasonable people…
 Understand they could live a long life
 Believe that it’s possible they could become
frail and need care if they age
 Are willing to consider taking action if they
understand that needing care could have
serious consequences to their family and
retirement portfolio
That said, I’ve had
clients tell me…
 “That’s true but…”
 “What if I don’t live a long life? Very few in my
family made it past their 70’s”
 Or…
 “Even if I do live a long life, what if I don’t need
care? Everyone in my family was healthy until
the day they died”
 To which I have responded…
 You very well may be right…
 The risk of dying at an early age may be high
and or…
 The risk of needing care may be low because
of your family history
But have you thought about
the consequences to those you love if
you ever did live a long life and
needed care over a period of years?
Not that it will happen
to you, but here’s what
causes the need for
extended care…
 A chronic debilitating medical condition
 Is an illness or illnesses that can be managed, not cured.
They compromise your ability to get through the most basic
daily functions
 A cognitive impairment
 Is a marked deterioration in your intellect making it difficult
if not impossible for you to safely interact with your
environment
 Both conditions require custodial, not medical, care
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…and here’s what they do to
the emotional and physical
wellbeing of your family…
 By definition, long-term care is a safety issue
which means that providing care or supervising
movement quickly becomes all consuming
 This 24 hour responsibility has a direct impact
on the caregiver’s emotional and physical
wellbeing which inevitably…
 Forces a child to step in causing her to reorientate her life
Put simply, if you ever
need care over a period of
years your life won’t end…
Someone else’s
life will likely end
A thought…
 Did you notice there was no mention about
nursing home care?
 That’s because the real damage to the family
begins not when a placement is made…
 But when the decision is made to keep the
person they love at home
Does anyone know why families
struggle, often against the odds, to
keep someone at home?
Because making a
placement breaks your heart
How a plan can
protect your family
The plan has 2 objectives
 The first is to allow you to remain in the community
without risking the emotional and physical
wellbeing of those who will provide your care
 The second is to preserve your retirement plan so
it can execute for the purposes you intended which
generally include
 Generating income to support your lifestyle
 Minimizing taxes
 Insuring the financial viability of your surviving
spouse
Paying for your plan…
How paying for care can
impact your retirement portfolio
During working years…
 A portfolio is created and funded that will
accomplish two critical goals…
 Help defray the cost of college
 And assure lifestyle during retirement
 During working years your ability to guarantee
there will be enough income to fund the portfolio
as well as meet normal expenses…
Is guaranteed by
an insurance portfolio
Asset Portfolio & Income
Protection Portfolio
Automobile

Auto insurance
Family

Life & health insurance
Wealth

More life insurance
House

Home owners insurance
Salary

Disability income
The question at
retirement becomes…
What is protecting your
retirement portfolio which will
be generating income?
Alan & Camille are 43 years
old. They have 2 children…
 Their combined income is $200,000 per year
 The house is worth $850,000. It has a mortgage of
$200,000
 Their retirement portfolio is just under $500,000
 One child is in private school, the other in college
 In addition they belong to a club, have modest
credit card debt and purchase a car every 5 years
Alan dies suddenly
of a heart attack
What has been allocated from the
retirement portfolio and/or equity in
the house to pay for the continuing
obligations his wife will face?
Nothing…
 Alan purchased life insurance
 Alan didn’t think he would die during working
years. In fact, statistically he was correct
 He knew, however, that even though the risk
might be low, the consequences would be
catastrophic to his family
 Alan purchased life insurance for the same
reason everyone purchases life insurance…
He loved his family
The couple make it to 78…
 Their house is paid off and worth $1,500,000. Their
portfolio, worth $1,500,000, generates $75,000.
When added to their social security they gross
$100,000 per year
 His passion is golf. Camille rides horses. Both love
to travel and they have a house in Florida
 They have a child who has not made the best
decisions and are helping to pay for their
grandchildren’s education
Camille is diagnosed
with Alzheimer’s
What has been allocated from
the retirement portfolio and their
income to pay for her care over the
next 8 to 10 years?
All of it
Where else can the
funds come from?
Alan is now faced with how to
pay for his wife’s custodial care.
He looks into…
 Medicare, but finds it won't pay for custodial care
 The VA, but again is told it’s not an option given
his assets and income
 Medicaid and this time he learns it will pay for
custodial care, but almost exclusively in a
nursing home. Alan promises himself it’s the last
option but wants to know what would happen if
he needed the program. He finds out…
 That to qualify for benefits he would have to
give his assets away
 The problem is that they consist of low cost
based investments and qualified funds the
gifting of which would create substantial
taxes. In other words…
 Medicaid is not free
 In an effort to preserve his income and assets he
provides the care himself creating an unintended
consequence that will end up devastating his
children…
 His heath starts to fail to the point where a child has
no choice but to step in and assist
 What does that do to her health and the relationship
with siblings who do not help out?
Camille has Alzheimer’s…
Her husband and
children suffer from it
Finding the right solution:
Looking at long-term care
insurance as an essential tool
which protects your family and
retirement portfolio
How many believe the product
protects them if they need care over
a period of years?
It doesn’t
It protects your family…
 It allows your spouse to maintain her relationship
with you as a spouse who supervises rather than
provides care
 And by doing so…
 It allows your children to maintain their lives which
has the added benefit of…
 Keeping them close by keeping them apart
…and it makes this possible not
by protecting assets, but rather
by providing a stream of income
which pays for that care
And that creates…
The Cascade Effect
 By paying for care…

 Your primary source of income generated
by your retirement portfolio is guaranteed
which means…

 Your ability to support your lifestyle which
includes commitments to your family and
community is guaranteed
 Since care is covered it guarantees that investments
which were not allocated to pay for care remain in
place. This has two desired results…

 It eliminates unnecessary taxes and…

 Preserves your estate for your surviving spouse
and children who may depend on an inheritance
“But I’ve been told I have
enough assets to pay for the
cost of long-term care”
From this point, I would like
you to consider that income,
not assets pay for care
 $1,000,000 =
$50,000
 $1,500,000 =
$75,000
 $2,000,000 =
$100,000
 $2,500,000 =
$125,000
And most if not all of that
income is committed to lifestyle
Take a sheet of paper…
 Draw a line down the middle…
 On the left write:
“Estimated Income”
 On the right:
“Estimated Expenses”
 Your income is $85,000
 What do you think your expenses are?
Where is the income going to
come from to pay for care?
One more thought about
using assets to pay for care…
 Taxes on liquidating low cost based assets and
qualified funds
 What if the market is down when assets have to be
sold?
 How much of your portfolio is liquid
 What happens to income if assets have to be
used?
“Maybe, but I’ve been told that if I
need care I won’t have much of a
lifestyle, so the money saved can
be used to pay for care”
It stopped being your
lifestyle, the day you got
married and had children
Some final thoughts…
 Successful people who love someone, purchase
life insurance not because they think they are going
to die during working years
 They buy it because of the consequences to
those they love if they ever did
 Successful people who love someone purchase
long-term care insurance not because they expect
to need care…
They buy it because of the
consequences to those they
love if they ever did