Long Term Care has received a lot of attention lately and put health and family top of mind. We therefore hope that you find this alert informative and of value. Please get in touch with questions or if you would like to learn more. Stay positive, healthy and safe.

Dear Clients and Friends –

Long Term Care and nursing homes have been in the news a lot lately courtesy of COVID-19. Health and family are top of mind right now so we thought some education on this important subject would be timely and of interest.

What is Long Term Care?
Long Term Care (LTC) involves assistance with the activities of daily living for an extended period of time. Care is commonly provided at home, in community settings, and nursing homes.

Odds and costs are significant. Couples age 65 and above have a 70% chance of one event occuring. The national average cost in a nursing home is ca. $573,000 today and can mushroom to ca. $1,900,000 in 30 years. These numbers are after-tax and LTC costs are projected to compound by 4-5% annually.

Aside from significant odds and costs, equally if not more important is the impact of LTC events on families. Family members living closest to the affected person(s) are forced to pause their lives and often find themselves in overwhelming situations with tremendous stress and no support.

Here is an informative deck from one of our distribution partners with pertinent facts and statistics that explains why LTC planning is so important (learn more).

What Are My Options?
The LTC marketplace has evolved and new solutions have become available with better long term value, improved rate guarantees and increased planning flexibility. Today’s most commonly used planning techniques include:

  • Self Insure: Segregating liquid assets into a side fund is an option. Upsides include no outlay. Downsides include a significant opportunity cost and potential market volatility.
  • Stand Alone LTC Policy: These policies provide only LTC benefits. Upsides include low costs and inflation protection. Downsides include non-guaranteed rates and no living or death benefits so if you die without ever getting sick, the policy was a boon for the insurance carrier.
  • Asset Based LTC Policy: These policies provide LTC benefits, cash value and a small death benefit. Upsides include rate guarantees, inflation protection and return of premium options. Downsides include opportunity cost as policies are commonly funded with lump sum premiums, although more and more carriers are offering extended payment options.
  • Life Insurance with LTC Rider: These policies provide permanent life insurance protection and allow the policy owner to accelerate the death benefit for LTC expenses. Upsides include attractive long-term returns if you get sick or die, meaning you are assured a return on your premium outlays. Downsides include medical underwriting and higher costs.

To give you a feel for the costs, here is an analysis we prepared for a 55 year-old prospective client that compares the projected NPV costs, benefits and IRR’s of all options if he lives, gets sick or dies (learn more).

Policy benefits, features and underwriting are nuanced and require professional guidance to properly match them with clients’ planning needs, funding budgets and risk tolerances.

We Are In Crisis Mode Now. Do You Know Anyone Who Can Help Us?
If you didn’t get around to planning or something unexpected and catastrophic happened, our firm has developed a strategic relationship with a firm called Theia Senior Solutions.

Theia’s goal is to help families navigate the challenges of complex topics like dementia care, aging safely at home and life altering health care diagnoses. They specialize in the following areas:

  • Care Consultations to address critical questions a family may have on transitions of care from hospital to home, home safety, and how to best support a loved one that is resistant to accepting help.
  • Patient Advocacy for health care navigation, doctor visits, supporting a loved one when a family lives at a distance, etc.
  • Emergency Response Plans and Crisis Engagement when a family has been caught off guard and needs immediate support.
  • Family Meetings when there is lack of alignment to ensure the safety and well being of the care recipient.
  • Vetting of care givers and facilities.

Most importantly, they can relieve the caregivers and oversee a plan of care to make sure that loved ones will be OK. 

Please visit Theia’s website for more information (learn more). If you would like to get in touch with Joanna Gordon Martin, the company’s founder, please reach out and we would be happy to connect you.

The Bigger Financial Security Picture
Most financial planners, wealth managers or RIA’s are compensated on assets under management. If you manage money for private clients and this risk exposure concerns you, we can help you incorporate LTC services into your practice and protect your business against costly care events down the road.

We see family situations where the children are better off financially than their parents. Money can move upstream to fund portfolio protection on the parents’ lives.

Employee benefits are another area worth paying attention to. A lot of employers purchased LTC policies from carriers that have exited the business and raised rates a few times. If you were afffected, diversifying your LTC coverage with today’s policies may be prudent.

Lastly, businesses can get meaningul tax incentives for acquiring these products. Properly designed LTC coverage can be a powerful tool to recruit, retain and reward key talent.

We have many great resources and capabilities in this space so if you have questions or would like to learn more, please get in touch.
Stay positive, healthy and safe.

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