• Mary Sizemore

Lessons in Long-Term Care

Recent data published in Mutual of Omaha’s Hearts and Minds study shows that 52% of policyholders purchased long-term care insurance because they had been exposed to a long-term care crisis within their own family, or they provided care to someone with a chronic illness or disability. This first-hand experience with long-term care makes many people say, “I don’t want that to happen to me!”

A long-term care crisis can happen suddenly, or it can progress over many years. Either way, without proper planning, it can put your client’s retirement assets in jeopardy and force them to make decisions that could have serious consequences.

Pre-Planning for Long-Term Care

As an agent, it is your responsibility to encourage your clients to have a plan for their long-term care. Your clients should speak to their children about their expectations for their care and make plans accordingly. Long-term care insurance plays an integral part in that plan to any client who has substantial assets at risk.

Approximately $12.3 billion dollars in long-term care insurance benefits were paid out in 2021. This was an increase in payout of $7 million dollars compared to 2020. Long-term care insurance offers a guarantee to your clients that their assets will be protected, and their families will not be burdened with the liability of daily caregiving.

Motivating Factors to Purchase Long-Term Care Insurance

Aside from past exposure to a long-term care crisis, clients are motivated by these top eight factors:

· They want to protect their assets.

· They want security and peace of mind.

· They want to cover the cost of LTC services they might need in the future.

· They don’t want to be a financial burden to their family.

· They know they will need care.

· They know someone who had trouble paying for LTC services.

· They are getting older and nearing retirement.

· They don’t want their children to have to take care of them.

Focus on Assets at Risk

Not sure what to recommend to your clients? The focus should be on their “Assets at Risk.” What do these at-risk assets include?

Assets at risk are the funds earmarked for their retirement plan, a legacy, or bequeath. These are funds over and above their monthly household income.

Frequently, when a policyholder receives long-term care benefits, they want to remain in the comfort of their home, if possible. Your client can use income such as pensions, social security, or even home equity to maintain their basic living expenses. It’s the assets beyond their basic living expenses that are at risk.

If your client has anywhere from $100K to $1 Million in assets at risk, you might suggest a strategy where they can protect those assets with an LTCi plan costing no more than 1-2% of those funds on an annual basis. This would indicate an annual premium of $1,000 - $2,000 up to $10,000 to $20,000 in our example. When the client thinks of only 1 or 2% of the assets at risk, it helps paint a picture of what minimum premium can do to protect a large amount of assets.

Affordable long-term care insurance coverage is available through a traditional or asset-based policy. Various funding options are available, including 1035 exchanges, IRA rollovers, and utilizing 401k dollars. Please contact a member of our team at 1-800-945-1953 to discuss the policy options available in your state.

If you would like a PDF copy of the guide published by Mutual of Omaha, titled “Hearts and Minds,” please send your request to marysizemore@TheKrauseAgency.com.

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