Transcript Document 7919740

Establishing and
Creating
the Plan for Care
John V. Fontana
CLTC
The Goal of the
Planning Process
Is to teach you …
 How to ask the right questions.
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How to establish a discussion
with a client based on
reasonable beliefs.
The Fact Finder
Accomplishes
a Number of Objectives
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Establishes credibility by focusing on a
plan not the sale of a product.
Helps to qualify your clients both
financially and physically.
Asking the right questions...
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Helps you understand the clients
concerns, emotions and feelings.
Establishes your clients motives for
purchasing LTCi as part of their
plan.
KEY POINT:
Your clients want to be heard.
Your clients will
exchange
a check for a feeling.
A recent survey
by the USA Today...
Asked 3,500 top CEO’s from a
cross section of industries how
they assess the professionalism
and knowledge of a financial
advisors.
Without exception...
“The kind of questions
that they ask ”
Fact-finding questions...
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Is it important for you to stay at
home without placing a burden
on your family?
Are you concerned that a
chronic illness will threaten your
commitment to continue to
provide for your spouse and
family?
Fact-finding questions...
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Is it important to control the
quality of care that you receive
and where it is delivered?
Is it important to preserve your
assets and income?
Will you have a continuing
financial obligation to any of
your children or grandchildren
during retirement years?
Fact-finding questions...
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Is it important to distribute your
assets to your children according
to your will or prenuptial
agreement?
Before I got here you probably
had a conversation on long-term
care, would you share your
thoughts with me?
When you hear the words longterm care what do you think of ?
Key point...
After asking these questions repeat
any of the motives that your
client has for considering LTCi.
These are your clients concerns
and it is your responsibility to
find a solution to them.
Let them know that you are
listening.
Fact-finding questions...
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Have you had any prior
experience with someone who
needed LTC?
What happened?
How long did the illness last?
What impact did it have on the
caregiver?
What impact did it have on the
family’s finances?
Fact-finding questions...
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Was any income allocated to pay
for care?
What impact did reallocating
income have on the family’s
ability to keep prior financial
commitments?
Did it lead to an unintended
invasion of their retirement
portfolio?
Fact-finding questions...
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What did it do to the financial
viability of the surviving
spouse/children/family?
Did he/she understand the
consequences not having a plan
would have on his family’s
physical, emotional and financial
wellbeing?
“What does your money
mean to you?”
Security/Lifestyle
Happiness/Piece of Mind
Comfort/Freedom
Fact-finding questions...
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What’s important to you?
What’s important to you in
retirement?
What responsibilities do you
anticipate taking into
retirement?
Will you have a continuing
financial obligation to any of
your children or grandchildren
during retirement years?
New definition …
Long-term care is not a place …
… it’s an event
Post-retirement disability
Functional disability
“Functional disability”
Physical
 Activities of Daily Living (ADLs)
 Bathing, dressing, transferring,
eating, toileting, continence
 “Stand-by” help with 2
OR
 Mental
 Cognitive Impairment
 Alzheimer’s, dementia, stroke,
head injury
 Requiring supervision

Long-term care is a continuum of
care, housing and services
people and their families may
need because of a chronic illness.
It’s assistance with so called
activities of daily living (explain)
or supervision caused by severe
cognitive impairment. The goal
whenever possible, is for you to
remain at home allowing your
family to oversee your plan of
care.
Why is Long-Term Care
a Problem?
We are living longer!
Unchanging Realities
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People will live a long life
Disability in retirement is a
reasonable possibility
Care is expensive
Clients can’t afford it
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Ever
… and continue to keep their
financial promises
Step 1: Establishing the need for
LTC because of longevity…
“ LTC is a problem today because
people are living longer. Wouldn’t
you agree? If you take reasonable
steps to take care of yourself, you
are likely to live a long life. Even if
you don’t take care of yourself some
new medicine or procedure is likely
to be developed that will extend your
life. When you live a long life you
could need care. Could this happen
to you?”
Key point...
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It is important that your client
agrees that he/she will live a long
life AND when they do live a long
life then there is a reasonable
likelihood that they will need care.
Never assume that the client
understands. Listen to what they
say. Listen to their conviction or lack
of it.
After they agree ask...
Key question
What consequences will providing
care for an extended period of
time
have on your family’s
emotional, physical and financial
well-being?
Consequences to
families…
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Stress of care giving hikes older adult
mortality rates.
Caregiver can become as chronically ill
as the patient.
Caregivers suffer from stress related
illnesses.
Long-term care tends to tear families
apart because the responsibilities of
providing care is not shared equally.
Engaging the client...
Step 2
“ When you live a long life and
need care your family will do
everything in their power to help
take care of you.”
If the client is married look at
his spouse and ask:
“ If your husband needed LTC
would you do everything that you
could to keep him out of a facility?”
“If you need care your wife will
take care of you, but there is a
cost to that care. Think of it this
way. She will be under a
tremendous amount of stress
being a caregiver. What will that
stress do to her? How will that
stress affect her health? What’s
your plan to protect her?”
LTC is a children’s
problem
“Your children will do everything in their
power to keep you out of a facility.
What change will that have on their
lives?”
“ What affect will the stress of care
giving have on their health and the
relationships that they have with their
families? Brothers and sisters? What’s
your plan to protect your children?”
What’s your plan
to protect
your family?
The plan is to stay in the
community for as long as
possible without
devastating your family’s
emotional, physical and
financial wellbeing
The plan depends on the
family…
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Single individuals
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Married with no children
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Married with children
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Second marriages
Plan of care…
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Home Care
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Assisted living
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CCRC
QB
How to fund the plan of
care?
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$20 per hour x 8 hours = $ 160 per day
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$20 per hour x 10 hours = $ 200 per day
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$20 per hour x 12 hours = $ 240 per day
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$20 per hour x 24 hours = $ 480 per day
The client begins to
realize...
Long-term Care
is a
Family or Friend Issue.
Key point...
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It is important that your client
agrees that living a long life and
needing care will have serious
consequences to his friends or
family
Never assume that the client
understands. Listen to what they
say. Listen to their conviction or
lack of it.
Move on to Step #3.
Step 3…What Pays for
Long-Term Care?
MONEY
Qualified
NonQualified
“I can self insure”
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The cost of liquidating qualified funds
to pay for care.
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The loss of investment opportunity on
funds liquidated to pay for care.
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Assets that are difficult to convert
without severe tax or market liability.
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Preservation of principal.
People have continuing
commitments…
. . .lifestyle of surviving spouse
. . .care for children or grandchildren
. . .protection of legacy assets
. . .to their place of worship
What happens if you need care?
Key point...
Retirees live on
income
not principal.
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$1,000,000 = $ 40,000
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$1,500,000 = $ 60,000
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$2,000,000 = $ 80,000
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$3,000,000 = $120,000
What percentage of
that income is
committed to your
lifestyle?
110%
“Would you like to pay for
your care with
income and principal
or interest?”
$5,000
$180,000
$3,000,000
$120,000
“I can’t assure you that if you
need care over a period of
years, that your income stream
will be sufficient to support
your lifestyle and pay for care
at the same time.”
Unintended invasion of
principal
What have you allocated
from your income and
retirement portfolio to pay
for your plan of care?
Long-Term Care
Insurance
BENEFITS will pay for
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Partnership
Home care benefits
Assisted Living Facilities
Care Co-ordination
Shared Care
How to fund the
plan of care?
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$20 per hour x 8 hours = $ 160 per day
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$20 per hour x 10 hours = $ 200 per day
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$20 per hour x 12 hours = $ 240 per day
Long-term care insurance
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Provides income to be used to pay
for care your family will find most time
consuming and stressful.
Provides income that allows your
spouse to maintain her relationship
with you and supervise your care.
Provides income that allows your
children to maintain their relationship
with you and supervise your care.
Life
insurance

Disability
income

Guarantees
income
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Guarantees
income
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Which
preserves
lifestyle
Which
preserves
lifestyle
Annuities
LTCi
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Guarantee Guarantees
s income
income
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Which
preserves
lifestyle
Which
preserves
lifestyle
Long-Term Care Insurance
allows your retirement plan
to execute for the purpose
which it was intended:
RETIREMENT
“Take the loss you can
afford.”
Planning for care…
3 Choices
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Make a bet (avoid & hope)
Have a plan with an allocation of
income and assets (unintended
invasion of principal)
Have a plan with a transfer of
risk