Long Term Care Insurance With Inflation-Cost

This is the Truth Network. Now, let s get started with Finishing Well. Well, welcome to Finishing Well, a certified financial planner, Hans Shyle, and today s show, Long-Term Care Insurance with Inflation-Cost.

And so, you know, if you ve listened to our show or watched the videos enough, you realize that this is a critical part of your financial plan, and I can t help but think that really, if there s one item that if you mess up on, you totally can wreck your plan, especially when it comes time to protect your family, which, you know, in my case, my financial plan is for my family, right, as I ve finished well. And so, I love what God says in Haggai 1, 6, and 7. He s talking to the people that had come back out of captivity, and they weren t working on what they needed to be working on, and he said, You ve sown much, but you bring in little. You eat, but you do not have enough. You drink, but you re not filled.

You clothe yourselves, but no one is warm. And he who earns wages earns wages to put them in a bag with holes. Thus says the Lord of hosts, Consider your ways. And so, you have all this money, but boy, oh, boy, if certain circumstances happen and you find yourself unable to handle all those things without a long-term care plan, yes, you may have lots of money, but the bag will have holes in it. And what s worse is your family is put in a position to try to figure out how to do it all, Hans.

Well, yeah. And it s just, you know, I know I start a lot of shows this way, but I ve been selling long-term care insurance or trying to sell it to people since the 1980s, okay. And I would say that the first 20 years that I was selling long-term care insurance, calling on everybody, showing it to everybody, you know, waiting for the cost till the end, and then people would look at us and say, you know, I m not paying that much. I can t afford that. Or the second thing they d say is when I m sitting in a large house and, you know, it s obvious that they can afford it.

They just say, I m not paying that. I ll self-insure. And so just overcoming that and really the last 20 years, I haven t really overcome all that because, I mean, look, the people that can t afford it, we re going to recommend something else like short-term care insurance to them.

And we do have options for that. And the people that are going to self-insure, I m doing financial planning for them now, and this long-term care is just a piece of the whole thing. And really, you re not going to do a financial plan with me that you re not going to get a very clear recommendation of purchasing long-term care insurance.

For me, that s just part of the package. And so what we re doing today is we re giving you the price for a couple that are both 65, for a traditional long-term care policy with a pretty rich benefit and inflation, and then we re coming up with similar benefits or we ve created similar benefits in a hybrid life long-term care policy that you can pay for with a single premium or you can pay with it for a premium over 10 years, which is pretty substantial premium. But it s putting your money in more than just a long-term care policy. But from a benefit standpoint, these policies are very similar, very close.

And the way you pay for them is very much different. But it s going to give you a good comparison. Now, by the time I got done writing this show and it took a good while of back and forth with illustrations and coming up with comparisons to make them similar, I was bored myself because just looking at pages of numbers and reconciling things and they got a bunch of zeros inherently isn t going to motivate people. It s not going to motivate you and others like you to do anything, let alone buy long-term care insurance or protect yourself against this.

And it doesn t really motivate me to do anything. So Tom and I on the video, if you take the time to go watch that, we talked a little bit about this. And the point that we make is the consequences of a long-term care event are really more severe on your family than they are on you yourself, okay?

And that s hard to imagine. I m the one that had the stroke. I m the one that s bedridden or I m the one that has dementia and I m running around and somebody to supervise me and somebody to help me with eating, dressing, I m the one suffering the consequences and you are. But if you have the money to self-insure, you re still going to get all that care.

You re just paying for it yourself and you re not even that worried about it. The people that suffer the consequences of caregiving are the family. And those consequences are if it s your spouse taking care of you around the clock and not being able to hire somebody and I think that well-to-do people have less likely than anybody to hire home healthcare people to come in and at least give the spouse some assistance. I mean your father himself, Robbie, if I m not mistaken, he kicked the home healthcare people out of there when he very much needed them.

Darrell Bock Oh, he desperately needed them but he was having no part of it and off they went. And with my father, it was difficult but it was nowhere in no comparison to the trauma that my mother-in-law and by no means, you know, she didn t want it to happen but it just happened that we were stuck with all these decisions to make that had to do with her care and she was so out of it, you know, she complicated the issue. It wasn t like she made it easier. And of course, she didn t mean to do that. She didn t want to do that. But when you re all of a sudden in that state, you start doing things that just are not logical and being very emotional about that and to not really have any help is a difficult place to put your family.

Robert Bock Well, it is. And so you do this for your family and you do this so that your whole retirement plan doesn t get turned upside down. I mean, your family, if they re going to use your money to pay for it, a lot of people say this self-insuring, self-funding, like they re going to at 85 or 90, when they need somebody to take care of them, they re going to be the financial wizard they are at 65 and they re going to know what account to take it out of and whether it s the IRA. It s not a practical plan.

So let s move into what we re talking about. So the plan that I selected is going to start at age 65 with $6,000 a month for care. Now, that s going to pay for home health care, people coming to your house, taking care of you. It s going to pay for assisted living, which is not independent living. It s assisted living, where you re needing help with two of the six ADL s, activities of daily living, or you have a cognitive impairment and you re living in a place in a small apartment and you have people watching over you, it s the same $6,000 a month, or a nursing home, or adult day care. So it s pretty flexible, both policies, and that s if you use it at age 65, which by the time you re 75, that s going to be $8,000 a month, because this policy has inflation on it. And the premium is not going to increase for the inflation.

That s all built in right from the beginning. And at age 80, which is 15 years from now, $9,300 a month. Age 85, $10,000 a month.

You know, at age 95, $14,564 a month. So the benefit just keeps going up and up and up and up and up without a corresponding premium increase. Now, if you look at the couples policy, and they re both using it to the max, which is four years for each, or it s eight years for one. So in other words, there s an eight-year runway on this thing, or time horizon that you can use what starts at $6,000 a month. But between a couple, one of you can use it for six years, the other one two years.

I mean, it s interchangeable. And the maximum that this policy is going to pay is right at $1.4 million. So that s the point I wanted to make is for a premium, and I m going to get to the premiums in a second, you can buy a pretty substantial policy relative to the amount of money that you kick out the insurance company is going to kick out a heck of a lot more than you put in. So respond to that, Robbie.

Yeah. And, you know, the beauty of all that is, if you think about it from a family standpoint, you know, there you are, if you re at home, you got people coming to help with everything. And it just, it allows your family to be your family, you know, to come visit and enjoy their time with you and not go through literally trauma of what do we do now?

How do I deal with this? It s really, really, really difficult. And having experienced it now with two parents, I can assure you that, you know, I have my plan in place. And I think of, you know, people s financial plans that didn t take into any kind of long-term care, but then ended up trying to buy it later on because of an event or something like that. And it just gets crazy expensive, right?

Oh, it does. And, you know, if the house is on fire, you can t buy fire insurance. I mean, it s just, if you wait too long to buy this stuff, you re probably not going to be able to get it. And if you, you know, we have plenty of families call us up or something just happened and now they want to buy long-term care insurance.

So you say, No, you can t do that. And then we re going to sell it on the healthy spouse. But the one that just had the event, wish we could do something, but we can t. And, you know, so what I ve done is I ve created this policy with the benefits are the same whether they re on the traditional long-term care policy, which you just pay by the year and you pay forever, or if you buy the hybrid life long-term care, you re either going to pay one big lump upfront and be done with it, or you re going to spread that big one lump over ten years. So and I think in the second half of the show, we re going to get into the numbers about the premiums and the life insurance.

Is that right? Exactly. So when we come back, we ll get to all that. Right now, we re going to remind you that the show is brought to you by CardinalGuide.com. And if you go to CardinalGuide.com, you re going to see the seven worries tabs. One of those, of course, is long-term care. And if you go there, you re going to find a wonderful video with all sorts of details and show notes and all those things for further information on this whole idea of the inflation right around on the long-term care insurance. And of course, the Contact Hans and Tom Page and Hans s book, The Complete Cardinal Guide to Planning for Living and Retirement.

It s all there at CardinalGuide.com, a tremendous resource. When we come back, we ll have more on long-term care insurance with inflation-cost. Investment Advisory Services offered through Brookstone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal Advisors are independent of each other. Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents.

Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency. Welcome back to Finishing Well with Certified Financial Planner Hans Scheil and today s show is long-term care insurance with inflation-cost. And so Hans, getting into those costs. Okay, so we came up with the benefits and we spent the whole starts at $6,000 a month of benefits, $72,000 a year for a single that has four years coverage, $288,000 or a couple $576,000. But that s if you start using it in the year you bought it, okay? If you use it when you re 80, $9300 a month, $112,000 a year of benefits, $448,000 of benefits, almost $900,000 for a couple, use it when you re 90, substantially more than that. And so what we re going to do in this part of the hour is talk about the differences in cost between the two policies that pay these similar benefits, okay? So the cost for this is the cost for a single premium and a 10 pay and then a lifetime pay cost. So if we go with the traditional long-term care insurance, the main option that people choose and the one that makes is a lifetime pay. So for the couple, both 65, they re going to pay $14,611 a year for this policy covering this amount on both of them. And that premium is going to go on for the life of both of them. Now, if either person in the couple has a claim or they re using the policy and they use it for longer than 90 days, this thing goes on waiver of premium. That s why people want to stretch that one out for life because, so both spouses will be waived during the time that the one that s using it. And then if the one passes away, then the survivor is going to still have the policy, but they re going to start paying premiums again as long as they re healthy.

And then the premiums will get waived again when they start using it. Now, if you break that down instead of buying it on a couple, for a lady or a female, $9,491 a year, which is a little about 800 bucks a month. And for a male or man, $5,328 a month.

So, I mean, that s, you know, and so when a person is single, then it s not, there s a big difference between the ladies and men. So, and you re going to find on the life insurance side, it s not as much. So that s the traditional long-term care, $14,611 a year for a couple, probably around $1,200 a month if you paid for it by the month. Pretty steep, but when you compare that to something that s going to be paying your family and you hundreds of thousands of dollars a year for several years, it s very doable. Now, people really in the most side, they buy this hybrid life long-term care. And when I get through going through these numbers, you re going to find out why. So, paying a single premium on the couple s policy is $220,000 essentially.

There s a little bit of change on that. $220,000 one-time pay, you re done paying it forever, okay? So, the premium can never go up, nothing. And if when both of these couple both people and the couple pass away, if they didn t use it at all for long-term care, there s going to be a life insurance benefit of $216,000 that goes to their kids.

I mean, that s the simplest way to explain that. So, what people find attractive is they didn t really reduce their estate by the size of the premium because if they don t use it, then it s going to go back to their kids by beneficiary. And if they do use it, and maybe even use it to the max, there s still going to be $21,600 of life insurance benefit paid to their beneficiaries even if they did use it. So, there s some life insurance in this always.

And for the single to buy this thing, it is a single female, it s $137,000, okay? And single premium, they buy all those benefits I just described, never pay any more premium, and if they pass away without using it, it s $288,000. And if they do use it and then pass away, $28,800 goes to their beneficiary.

So, it still has a residual death benefit. And for the male, it s $122,000 and one-time payment, and it has the same $288,000 death benefit or $28,800 if they used it. Now, I m going to talk about the 10-Pay because a lot of people don t have that kind of money sitting around that they can just send in for long-term care insurance if they do great. But you can spread this over 10 years. So, for the couple, what was $220,000 is $26,000 a year for 10 years. For the single female, which was $137,000, they can spread that over 10 years for $17,000. And for the single male, what was $122,000 a single premium, they can spread that over 10 years for $15,000. So, I just rattled off a bunch of numbers. It kind of gets boring when you re doing that.

But talk to me a little bit, Robbie. Yeah. Well, when you talk about hybrid life insurance policy, you can see that, number one, as you talked about, whether you re male or female, it doesn t have that situation where ladies tend to outlive their spouse a lot longer, so you ve got a big policy difference between the two. And then also, obviously, the beneficiaries of your estate can use it if you don t end up using the care. But I also like, you know, for some people, they do have 401Ks or IRAs or something where that one lump sum is a great way to just say, Okay, this is allocated. It s done. I don t have to think about it anymore. And I have all this coverage.

You know, I like that. It s simple. That s the way most people buy it from us. With a lump sum, transferred over tax-wise is a rollover from their IRA or 401K. And then there s a bunch of financial mechanics. You ve got to pay some taxes along the way over the 10 years. So just understand that you can buy this out of IRA money or a policy similar.

I just wanted to give you the numbers of comparing things that are about as close to apples to apples as you re going to get. And also keep in mind, you don t have to buy a full-boat policy to protect your family. I mean, we have some people take what we show them on this basis, and they cut it in half. And they, you know, because it s a great idea to have insurance. And especially even if you had $3,000 a month now instead of $6,000 for home healthcare, that would have helped you out with your dad a lot.

Yeah. s 20 years from now, you know, the full-boat policy would be almost $11,000 a month for home healthcare. But half that policy, the $3,000 a month would be $5,500 a month. So just keep in mind that we can negotiate and come up with something more affordable. Sometimes people have a lump of money that they re willing to put into that, and they want to ask us how much care insurance and life insurance will this lump buy, and we can work this thing backwards. We just plug that in, and we show them the long-term care benefits. So I just have this out here just to give you some idea of the cost of a full protection plan. And then if you get in touch with us, and we ll work through this. A lot of these people that buy long-term care insurance, we meet two or three times by Zoom or on the phone before we re doing something, because we ve really got to get a handle on what they can afford, what they re willing to pay, and what kind of benefits they re going to get from that.

Right. And, you know, as I get a little older, and I do a devotion at Assisted Living every week, and, you know, it s interesting, my wife and I have very different views on this, and it s a great discussion to have with your family. Like, from her standpoint, I want all my care at home. I never want to leave home if I don t have to. I want to stay here. You know, that s how she feels. And, you know, I see her point, and that s what she wants. In my case, I mean, at the point in time where I m no longer able to go out and go fishing or enjoy my life or whatever, I just assume being in Assisted Living where, you know, I m seeing other people, and I can have some kind of fellowship.

I don t want to sit at home alone. You know, that s just me. You know, but the nice thing is those policies, you can see they give you flexibility to do what you want and flexibility to what your spouse wants, right?

Because it could be very different things. Absolutely. I m with you, though. Actually, I m with your wife.

I m going to that place kicking and screaming. I mean, I can make myself happy. I can wheel my wheelchair out on the front porch and wave as many people as I want to go to, figure out a way to get to church and a few other things. But people are different. I mean, my mom couldn t have been happier in all the places she was because she just my mom liked to engage in conversations with people, and she just wanted people like you. And my experience is most of the people that were in there were pretty happy.

Maybe they wouldn t tell you that, but you could just tell that they enjoyed the camaraderie. Yeah, and there s all kinds of different places. There s places like I would go kicking and screaming, too, believe me. And, you know, it s just a matter of facility. But, you know, the thing about either long-term care or the hybrid policy, what it gives you is freedom, right?

Freedom for your family to give you the care you need, but essentially freedom for you to make those choices ahead of time and have those discussions with your family so they know what you want. Yeah, I m with you. I have this stuff. I mean, I just I do, and I recommend it for all my family. So it s a great point to point out that we have all those worry tabs at cardinalguide.com. If you go to cardinalguide.com, you can see, you know, all of those, including long-term care, being a very important one from our standpoint. And if you go there, you can find many videos, including this video, about the inflation-cost writers that we re talking about in today s show. And, of course, to Hans s book, The Complete Cardinal Guide to Planning Foreign Living in Retirement, and the all-important, right, contact Hans and Tom Page because, you know, this is one place where really there is no cookie-cutter deal, you know, like Hans was talking about.

You know, what makes sense for you and your family is going to be a lot different for different folks based on what your needs are, ages, our health is, all those things are a big part of that. And so, you know, that contact Hans and Tom Page is a critical part of cardinalguide.com when it comes to this particular issue from my standpoint. And so, again, we re so grateful you joined us today, and great show, Hans. Thank you, and God bless you.

Thank you. We hope you enjoyed Finishing Well, brought to you by cardinalguide.com. Visit cardinalguide.com for free downloads of this show or previous shows on topics such as Social Security, Medicare, RAs, long-term care, life insurance, investments, and taxes, as well as Hans' best-selling book, The Complete Cardinal Guide to Planning Foreign Living in Retirement, and the workbook. Once again, for dozens of free resources, past shows, or to get Hans' book, go to cardinalguide.com. If you have a question, comment, or suggestion for future shows, click on the Finishing Well radio show on the website and send us a word. Once again, that's cardinalguide.com, cardinalguide.com. This is the Truth Network.