What is long-term care? It’s not only about nursing homes; LTC also takes place in the home and in other non-permanent places. LTC protection is needed: 49% of people turning 65 this year will need LTC at some point in their life (Georgetown University Long-Term Care Financing Project, “Who Needs Long-Term Care?” 2005).
You might think to yourself, “But my family will take care of me” and you would be right; however, the number one reason people buy Long Term Care protection is to not be a burden on their family. The second reason is to maintain freedom and dignity, and the third is to protect their assets built up over a lifetime. (NAIC LTC Partnership Training, 2008). Unfortunately, today’s family members are just not as readily available to provide care as they were in the past.
What about costs? In 2007, the average daily rate for a semi-private room in a nursing home was $192 per day. That translates into $5840 per month and into over $70,000 per year (Mature Market Institute 2007 Survey, Prudential LTC Study 2008). The average length of stay in a nursing home is 2 1/2 years. That works out to about $175,000.
The good news is, for a 65 year old in good health, $200 a day of LTC coverage can be bought for $9.70 per day or $3540 per year (this example is based on a 3 year, Automatic Inflation Coverage, John Hancock, Leading Edge, LTC policy). If you wait only ten years, the cost will more than triple to $12362 per year.
Which is cheaper, $70,000 per year or $3540 per year?
Remember, money pays for a Long Term Care policy, but it is your health which buys your Long Term Care policy. The time to buy Long Term Care protection is when you are at an age where your health can guarantee your insurability. Once you lose your health, you lose your ability to buy this valuable protection: that is, if you are healthy, you can get a LTC policy, and if you are not, you cannot.
We are here to help you put a long-term plan into place. We help people directly and through Long Term Care specialists Bill McCool (bmccool@columbus.rr.com) and Natalie Merch (natalie@ltc-choices.com).
No one wants to talk about
or pay for insurance of any kind. No one wants to think about getting old, and
the last thing anyone wants to talk about is losing his or her independence!
“Old” sales techniques that incorporate the ideas above are part of the reason
long-term care insurance (LTCI) only has a market penetration of about 10%.
Is there a better way to think about Long Term Care insurance? Yes! By knowing a few
facts and hearing the truth based on a positive, benefit-rich approach, you can receive immediate “payback” from ownership of a policy.
First, let’s look at some
facts:
1. Once someone purchases
LTCI, no one can pry it out of their hands, which accounts for a persistency
rate approaching 99%.
2. The current average
purchase age is down to 57; the success of multi-life LTC insurance (for the deep discounts available) will push
the average age into the 40s.
3. Although we know an institutional claim
can occur at any age (i.e., Michael J. Fox and Christopher Reeve), most claims
of these types occur around age 83 (though home health care often occurs earlier).
4. The age at which a
probable claim could occur is too far over the horizon to account for the
immediate reaction we consistently observe from clients when the policy is
delivered. They express feelings of comfort, security, serenity, and
independence. These feelings last a lifetime, accounting for the low lapse
rate, and are present regardless of whether or not a claim ever is made.
When analyzing these facts,
one must conclude that there are immediate, real, perceivable, and lasting
benefits for those who purchase long-term care insurance. People buy when they
focus on the positives of owning LTCI and using a simple approach to their real risk.
Here is a list of our Top 10 Benefits of LTCI Ownership.
When you own LTC insurance, you will:
1. Have the comfort of
knowing you and/or your spouse will never be a burden on family or friends.
Advances in
medicine have extended life expectancy beyond anything we could have imagined.
Today, we see 70-year-old “children” caring for their 90-year-old parents. \
Many of us have been or are dealing with our own parents’ long-term care needs
and we know caregiving is not an easy job. Thirty-three percent — soon to be
50% — of boomers are caring for parents. Our collective experience has taught
us that we do not want to impose the same kind of hardship on family and
friends. It is very comforting knowing “today” that, by owning LTC insurance, we never
will.
2. Never
worry about impoverishing your spouse should you require long-term care.
Most clients don’t realize that current Medicaid Spousal Impoverishment Rules
require all of a couple’s money be spent to take care of the spouse needing
long-term care until the community spouse (healthy partner) is down to a little
over $104,000. Many couples usually have retirement savings substantially above
this amount. Twenty to 30 years from now, a three- to five-year claim could
cost well over $1 million. What once was a bright future for a couple planning
to retire and enjoy life can be decimated by long-term care. Spouses owe it to
each other not to destroy their retirement if one becomes disabled.
3. Have the security of
knowing you will be free to truly enjoy your retirement because your retirement
assets are protected. You never will have to “wall-off” assets “just in
case.”
Another name for LTC insurance is a
“Retirement Enjoyment Policy.” Retirees in their 70s and 80s consistently make
the conscious decision that certain retirement assets will not be touched
because one of them might have a long-term care event. People with an LTC insurance
policy do not have this concern. The comfort of knowing you do not have to cut
back on trips to visit the grandchildren, bypass the opportunity to take that
trip to
4. Have the joy of
knowing you will never put your children in a position of having to choose
between the high cost of long-term care for one parent and protecting the
assets of the healthy parent.
Adult children have a
natural desire to help their parents, but what do they do when assisting one
parent harms the other? Balancing the cost of care for one parent while
protecting the assets of the other can be an impossible task. The beautiful
part about owning LTC insurance is you will never put your children in this position.
The last place any of us want to be is in a nursing home. With this in mind,
think of the following scenario that is quite common: Dad has health issues
that could be taken care of at home but require 16 hours a day of professional
home health care services. This kind of care will be about double the cost of
putting Dad in a nursing home. What are the “children,” now in their 50s or
60s, going to recommend to Mom? Owning LTC insurance, which can pay the higher cost of
home health care, allows Dad to stay at home, where he wants to be, and
protects Mom’s assets at the same time.
5. Know you will be in the “private pay” category, entitling you to your
choice of private-pay care, should you need it.
The two most beautiful words
in the English language when it comes to long-term care are “private pay.” In
short, private pay means you have the ability to get exactly what you want and
never be put in a position to settle for second best.
As a “private pay customer,”
you are empowered to hire and fire, and to make sure caregivers are competent,
friendly, and concerned about your care. “Private pay” equals “power of
choice.”
6. Be confident you will
not ruin your spouse’s health by making them your primary caregiver.
The second toughest job in
the world is being a caregiver; the toughest job is being an unpaid caregiver.
My nephew had muscular dystrophy and was confined to a wheelchair until his
death at age 21. As I watched my brother and sister-in-law take care of Johnny,
I had to admire the love, exhausting work, and time they took in caring for
him. Parents will do that; spouses will too, but they do not have to if they
own LTC insurance. It only makes sense to have professionals do the heavy lifting.
7. Substantially increase your ability to stay at home, surrounded by loved
ones and friends.
Margie Barrie, LTCP, author of Fifty Ways to Boost Your Long Term
Care Insurance Sales, has coined the phrase that LTC insurance is really a “nursing
home avoidance policy.” Owning LTC insurance with a strong home health provision allows
you to maximize services in your home, enabling you to stay where you want much
longer than would be possible otherwise.
An additional benefit of
home care services is that friends and relatives will want to come and share
their companionship for more than one hour, which is all most people can endure
being in a facility setting. None of us wants to go to a facility; a good LTC insurance
policy extends your ability to stay in your home.
8. Rest assured that all
your current hard work, planning, investing, and savings will not be
obliterated.
Boomers consistently work
quite hard at managing their retirement accounts, spending hours analyzing
companies, reviewing choices, and working with financial planners. A long-term
care event down the line may cost well over $1 million. Smart investors plan
for this event by buying LTC insurance. Not planning for this risk is like trying to
construct a home without a foundation. No one wants to see everything they have
built destroyed.
9. Know your children
will never have to choose between your care and their inheritance (which often
includes the education of your grandchildren).
Nature says children should
leave the nest and come back home only to visit, seek advice, and occasionally
ask for money.
No matter how much money you
have, the people who are expecting to inherit it might be interested in
maintaining its full value. An estate planning attorney we work with told me
the following story. A client with net assets of more than $100 million asked
him to review his insurance policies. One of the policies was LTC insurance. Thinking to
himself that he was about to give some of the best advice of his legal career,
he suggested his client cancel his LTC insurance policy “because he had plenty of assets
to cover any event that could occur.” The elder client, who raised thoroughbred
horses and took risks his entire life, took the attorney by the hand and simply
said, “No. I am keeping that policy because if the time comes that I need help,
I want my children thinking about my care and not their inheritance.”
10. Never be forced to
get rid of your beloved pet; they will always be with you — right by your side.
A pet is so much more than
an “animal.” Pets are companions that are always glad to see you, no matter how
late you come home. Their therapeutic abilities are numerous; science has shown
that petting a dog or cat, watching fish in an aquarium, or listening to your
parakeet reduces stress and lowers blood pressure. Pets are also akin to
personal trainers or aerobic instructors. After all, they make you get out of
bed in the morning, they take you for walks, and insist that you feed them. In
short, you are a “caregiver” who enjoys the job.
Many “private pay”
facilities accept pets. If you own LTC insurance, you will not be forced to abandon your
beloved pet.
All 10 of these benefits are immediate and lasting, and give your client freedoms they will not experience if they choose to bypass the opportunity to own LTC insurance.
Now is the time to use this new “positive benefit” approach with your clients,
especially in light of the Deficit Reduction Act of 2005 that went into effect in 2006. This federal law
closed loopholes that used to allow people to transfer the cost of long-term
care to the taxpayer. No more “passing the buck” — your client’s own retirement
assets must now be spent to pay for long-term care expenses. In addition, this
law enabled new Partnership plans to be created in all 50 states. Now almost
everyone can afford LTC insurance because they can buy an affordable plan that matches
the assets they have.