Long Term Care Planning Solutions

Transcription

1 Long Term Care Planning Solutions Helping Make Sense of It All Jack Morrone, CPA, CFP, PFS

2 Today s Agenda When Is Long Term Care Insurance Right for You? Most Asked Questions about LTC What is LTC? Facts and Stats Which LTC Solution is right for you? Next Steps

3 Baby boomers and Long Term Care 3 What to Know About Long-term Care and Medicaid- The Wealth Channel The 2011 Sourcebook for Long-term Care Insurance Information AALTCI 2011, U.S. Census Bureau. 5 What to Know About Long-term Care and Medicaid The Wealth Channel Most Current Data Available

4 Let s Talk Having the LTC Discussion or their financial advisor 73% Genworth 2011 Financial Reality Check Study 59% Genworth/Age Wave. November Our Family, Our Future: The Heart of Long Term Care Planning Study 90% Genworth/Age Wave, Our Family, Our Future, November 2010 Most Current Data Available

5 Is Long Term Care Insurance Right for YOU? Are you: Age 40-80? Someone who has funds set aside as your just in case money? Concerned about what could happen to your to your retirement income? Concerned about who would take care of you if you needed extended health care? Concerned about protecting the amount of money you would like to leave for your loved ones? If you answered yes to any of the above, Long Term Care Insurance may be right for you.

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7 What is Long-Term Care (LTC)? The need for care is created by two impairments Physical: A chronic medical condition that compromises the individual s ability to get through the most basic of daily routines Cognitive: A measurable decline in intellect that compromises a client s ability to safely interact with his environment The operative word is compromise

8 What Triggers Long Term Care? Requiring assistance with Activities of Daily Living (ADL s): Bathing Dressing Eating Continence Toileting Transferring Severe cognitive impairment (mental deterioration)

9 Long Term Care Where is care provided? Home Care Unpaid caregiver (family members and friends) Home Maker Services A Nurse, Home Care Aide, and/or therapist Assisted Living Facilities provides supervision or assistance with (ADLs); coordination of services by outside providers; and monitoring of resident activities to help to ensure their health, safety, and well-being. Nursing homes provide the most comprehensive range of services, including nursing care and 24-hour supervision

10 National Average Cost Nursing Home (5) What to Know About Long-term Care and Medicaid The Wealth Channel 2011 Most Current Data Available

11 Average Cost Care Outside of NH (6) NCPC- National Care Planning Council - October Most Current Data Available

12 Cost of Care Average Used the Cost of Care for Washington (1)Based on 5 days per week by 52 weeks (2)Based on 44 hours per week by 52 weeks (3)Represents the compound annual growth rate based on Genworth Cost of Care Survey (4)Based on 12 months of care (5)Based on 365 days of care Most Current Data Available

13 Who Covers What Most Current Data Available

14 Consider the Odds Someone turning age 65 today has almost a 70% chance of needing some type of LTC services and support (3) (1) AALTCI- The American Association for Long-term Care Insurance Sourcebook (2) 09/19/12. (3) - Administration on Aging

15 Starting Young Not Just for Seniors 40% of Americans who need long-term care are between the age of 18 and 60 4 The Sourcebook for Long-term Care Insurance Information AALTCI LTC Partner-Long Term Care Covered, Choosing the Right Long Term Care Insurance Benefit Period, Oct, 19th, American Association for Long-term Care Insurance, 2012 LTCi Sourcebook. 4 Life and Health Insurance Foundation for Education, Most Current Data Available

16 It s a woman thing /20/12. 9 Completelongtermcare.com, August Healthcare Costs in Retirement, Feb 2012, Harris Interactive. Most Current Data Available

17 The Need for a Plan (7) LifeHealthPRO, This Isn t Your Parent s Retirement, October 4, Most Current Data Available

18 Your Long-Term Care Experiences Who? Where? How was it paid for? Who provided the care? How long did the person need care? Was the care expected or unexpected? How did long-term care affect the family? PLEASE SHARE YOUR STORIES

19 A Variety of LTC Solutions Traditional LTC Plan type most are familiar with Most customizable Ongoing premium payments LTC/life asset based products Return of premium feature Guaranteed premium paid for a guaranteed specified period. Simplified Underwriting Annuity/LTC Tax Deferred Growth Simplified Underwriting Offers typically 2 to 3 times of LTC benefits Earns a minimum guaranteed interest rate Life Insurance with LTC Rider LTC concerns with a need for life insurance for financial protection

20 Traditional LTC Old Approach vs. New Approach Policy Options Old Approach Individual Plans New Approach Shared Plans New Approach Your Budget Monthly LTC $6000 $5000 $4500 Benefit Period 5 years each 3 years Shared 2 years Inflation Protection 5% Compound 3% Compound 3% Compound Monthly LTC at age 80 $15,161 $8768 $7891 Premiums $17,492 $7207 Approx. $4740 Couple (age 60) Select Non Smoker State of Washington * Things for You to Consider: What do you estimate your cost will be for LTC services? How much can you afford to contribute to the cost of your care? How much will you need your policy to pay in benefits each month? How long can you wait before your policy pays benefits What annual cost of insurance coverage can YOU afford to pay? Most Current Data Available

21 LTCI: Why Not Self Insure? Source: This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing Most Current Data Available

22 Traditional LTC vs. other LTC Solutions

23 Life Insurance with LTC Riders (Hybrids) Riders are additional guarantee options that are available to an annuity or life insurance contract holder. While some riders are part of an existing contract, many others may carry additional fees, charges and restrictions, and the policy holder should review their contract carefully before purchasing. Guarantees are based on the claims paying ability of the issuing insurance company. * Varies based on carriers, state and clients age

24 Annuity with LTC Riders Fixed annuities are long-term investment vehicles designed for retirement purposes. Gains from taxdeferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply. Fixed annuities are long-term investment vehicles designed for retirement purposes. Gains from taxdeferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.

25 In Summary The likelihood of needing long-term care is significant The cost of such care can be financially devastating Not covered by heath insurance Not covered by Medicare after 100 days Long-term care coverage is another piece in financial and retirement considerations Purchasing LTC insurance coverage may help preserve financial well-being and provide peace of mind

26 What s the Next Step?

27 DISCLOSURES: The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendations for any individual. To determine which investment (s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Life insurance policies contain exclusions, limitations, reductions of benefits, and terms from keeping them in-force. Your financial professional can provide you with costs and complete details. [Add one of the disclosures listed in the notes (Tahoma 16) to meet compliance requirements: IAS IS Bank/Credit Union - Hybrid.] Insurance guarantees are based upon the claims paying ability of the issuing company. Securities offered through LPL Financial. Member FINRA/SIPC.