Welcome to Finishing Well, brought to you by CardinalGuide.com with certified financial planner Hans Scheil, best-selling author and financial planner, helping families finish well for over 40 years. On Finishing Well, we'll examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes.
Now, let's get started with Finishing Well. Welcome to Finishing Well with Certified Financial Planner Hans Scheil, and today's show one of my great favorite topics, really. I love it. Is traditional long-term care versus a hybrid life insurance with a long-term care provision in it, which is just an amazing financial tool. But I can't help but note that God is long-term.
care, that's one of his main things. He has been. Concerned about uh since the whole story of the Bible began. And one of the ways that you find this in so many different ways is in the story of Ruth. In the book of Ruth, you're going to find that Naomi was the one who needed long-term care.
I mean, she unfortunately lost her husband. She lost both her sons, which in that culture and that time would meant that she was essentially with no income whatsoever. And fortunately for her, She did have a family member step in, but it's fascinating how God actually. Provided the long-term care plan and what they called gleaning of the fields, right? The Jews, thank goodness, were keeping the law at that point in time, not gleaning the edge of their fields, certainly not Boaz.
And so Ruth found herself in the right place at the right time. But then God also provided Ruth the favor with Boaz that eventually he would become her kinsman redeemer and not just redeem Ruth on Naomi on the long-term care plan, but because Of Ruth's marriage, you know, she was the mother of Obed, who was the mother of Jesse, which was the mother of King David, which again would long down the way be the heir of Jesus, right? Or the Jesus would be the son of David.
So. If you think about it, all of us are benefiting from this particular hybrid long-term care plan that God put into motion clear back in the book of Ruth. And so a long-term care is not only close to God's heart, But it's also been one of the fundamentals of of your practice, Hans.
Well, it is. And it just Some of that's my experience with my mother. You know, the fact that I was in the Medicare business since the nineteen seventies. again, when this product came along, Um I started selling it right away. probably not very effectively, but Um I've been in it.
for all along and as as I've progressed and become a financial planner and our focus becomes almost entirely Retirement people. And then the experience with my mother and the experience with many clients This is the area that we really make a difference for people, I think. I mean, we make a difference in a lot of areas, but you know, when it comes to planning your money, investing your money, setting up income streams through annuities. I mean, we're helping people in all these areas, but where we really make a difference if they come in to see us. there's a lot of people that end up with long term care insurance where they've done something within the scope of the financial plan.
Dave. Protected themselves against long-term care, or a better way to put it, prepared for a long-term care event. And I feel like. We've we've helped those People in a way that probably somebody else wouldn't have helped them the same. put them in a better place.
whether they use it or not. Yeah. What we're talking about today is We're comparing two policies with similar benefits the traditional long term care policy Um Which is just like he says, it's the same thing we've been selling since the nineteen eighties. We're comparing that to a hybrid Lifelong term care policy. Or I kind of said that.
backwards because many times we're starting with this hybrid Life, long-term care. with a new client coming in, and we're showing them how much money they can plop down to cover Two people. Husband and wife. on some pretty significant long term care benefits And a lot of times people are buying this with a single premium. They're buying it with a single transfer of money.
And so then they're comparing that, or they want to see, okay, so you're suggesting that I buy this with all its benefits. I'd like to see. what would similar benefits cost me if I just bought one of those old fashioned traditional long term care bottles. And that's what we're going to try to do today without the visual. on the radio.
So and if you if this interests you, you can go to YouTube And you can find under Cardinal Advisors, you can find the show It's right there, or you can go to our website. CardinalGuide.com. And you'll find that video and you can just listen to Tom and I explain this. with the visions.
So Um Why don't I start out by explaining the hybrid life long-term care policy.
So We have a couple, two of them, aged sixty five, Both of 'em. And we're talking about a long-term care policy with a single premium. Of two hundred and five thousand dollars to 205,000. And some change. And so you say, whoa, that's about one hundred thousand apiece.
Yeah. Um That's a lot of money. But, you know, it when you start talking to people about cranking out that kind of money and transferring it to an insurance company. It's not gone. It's there, it's in a life insurance policy.
that has a death benefit So if these two people both pass away. at any time without using the long-term cure benefit, it's going to pay out two hundred sixteen thousand. to their heirs at their deaths.
Okay. Um Your money's not gone. Um there's a major. Money is put into this policy, it has a cash value as well.
So you're really making a transfer of funds. Um And there is a way with a different company to actually buy this with IRA money. but I don't want to complicate the discussion today.
So there's hybrid life long term care. Single premium. 205,000. Death benefit two hundred and sixteen thousand covering two people aged sixty five, And then alternatively to the $200,000 premium. They could pay sixteen thousand a year for twenty years, They could pay twenty five thousand a year for ten years, or forty four thousand a year for five years.
So there's There's more ways to pay for this stuff. than just plopping down all the money at once. Um And you say, well, what do I get for this?
Well you're going to get a long term care benefit that pays for Nursing home. Assisted living. Home health care. adult day care I mean, it's $6,000 a month is where the benefit is. if you bought this and they started using it at 65.
And if you go 20 years later, when they're 85, the policy is going to pay ten thousand almost eleven thousand dollars a month.
So there's an inflation factor in here. or one hundred thirty thousand dollars annually And it's going to pay that amount. on each person for four years. or I could pay it on one person For eight years.
So I don't want to dig too deep into the benefits. But you know, that's what you're getting. for this is you're getting a pretty beefed up long term care policy that's going to protect you very well.
Okay. So let me take a breath here, Robbie, and just get you to react to that a little bit. Right, and and so you know you know, one of the thoughts you I would have had, you know, if Looking at the situation long before I never even thought about long-term care until I met you, honestly. But as soon as I saw it, I was like, whoa, I'm going to pay all this money, and then if I don't need it, Then what happens, and that's the beauty of the hybrid long-term care plan from my perspective, is. is by going that route, not only you know, we're doing all that you're talking about right here.
But if I don't ever need it... it's still gonna pay out to my heirs this you know, $216,000. Or again, cover my wife for as long as she may need it. And it's just a really neat deal.
Well, it is. It's just essentially Either way, they when when this first came out, they talked about live, die or quit. The people who live A long time. Or one of them lives a long time and they use it up. they're going to be real glad they bought it.
The people who die without using it. it's going to send back the life insurance benefit And then there's the quit feature, which is that several years down the road, If you just decide you don't want this, you can get a significant amount of money back out of it. Let's just leave it at that. Those aren't as Pretty as they used to be, because nobody nobody ever took advantage of that. Yeah.
It was really designed to answer that question. is is that, you know, I'm going to pay all this premium. never use it for long term care and then all that money's just gone to the insurance companies.
Okay. Yeah, and And so that's the one side of it. And let's real quick before the break Looks Let's just talk about if you wanted to buy these similar benefits In a traditional long-term care policy, what would it cost you? And again, it's six thousand a month to start almost eleven thousand a month by the time you're eighty five. half a million dollars on each person A benefit for if it's all used for one person, a million dollars of benefits.
I told you how you can buy that on the life insurance policy. On the traditional long-term care policy, for both of them, it's going to cost $9,000. three hundred and ninety six dollars a year. in premium. Um And so and that breaks out about six thousand for the lady.
He ends 3,500 for the man. Can they buy that even in a long in a lump sum? They cannot buy that in a lump sum.
Okay. We should go to another company that has a lump sum Buy out. But if we went to the other company and replicated these benefits, the lump sum. would end up being about as much as the the the life insurance benefit is. Wow.
Okay. Yeah, you know, so it is possible to answer your question, but um not practical. Is it if you want to pay it with a lump sum, you buy the other policy. But what most people are doing is they're comparing So do I want to Um Do I want to or not want to? Put a little over $200,000 into this policy, $100,000 for me, $100,000 for my wife.
Yeah. Um kind of leave it there and I'm not touching this money. for the rest of my life. Um do I want that? Or would I rather pay nine thousand three hundred ninety six a year to buy similar benefits And that premium goes on for the rest of your retirement.
And there are a few key differences. Number one, There's no life insurance.
So you could pay for this for like Ten years. And then both of you die. Yeah. No nobody gets anything back. The other thing I thought about, and again, I hate to interrupt your train of thought, but I just have the question that or the The beauty of perhaps the one pay on the traditional long-term care Isn't it possible for the rate to go up on the long-term care?
But if you bought it in one lump sump, it's locked in, I would guess.
Well Okay, so so the answer to that is This 9,396 on the traditional policy. can go up. This is a good time to remind everybody that this show is brought to you by Cardinal Guide, CardinalGuide.com. And if you go to CardinalGuide.com, you're going to find actually the last of the seven worries tabs is long-term care, as I recall. And so you want to go there for lots of reasons.
And if you do that, you're going to find a video with the exact same title of traditional long-term care versus hybrid long-term care, hybrid life insurance long-term care. and you know show notes, all sorts of details on these differences. get a lot more questions answered because it's a critical Situation. You can also find Hans's book, The Complete Cardinal Guide to Planning for and Living in Retirement. As well as, of course, Contact Hans and Tom Page.
really help you work through this extremely critical aspect of finishing well. And so we'll be back with a whole lot more finishing well. 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 traditional long-term care versus hybrid life. long-term care.
And so Hans, we've got a lot to cover. We do. And so we're comparing Two policies. on a couple Both sixty-five. Right.
And we're looking at a hybrid life long term care policy with a big single premium. And we're comparing that policy with a traditional long term care policy which just has an ongoing annual premium That goes on for the rest of your life. Um and both policies have similar benefits. And by similar benefits, I mean six thousand a month, That's seventy two thousand a year if you started a claim immediately. those benefits increased by three percent.
each year on a compound basis, the inflation the benefit at age eighty five is almost eleven thousand dollars a month on either policy. 130,000 a year. Yeah, a maximum on if they both used it equally, five hundred and twenty thousand dollars Age. or if one person used all the benefits of the policy, it'd be over a million dollars by the time, twenty years from now when they're 85.
So There is are a few significant differences between the two policies. One of them is that the traditional policy is a reimbursement policy. Meaning that you would have to incur six thousand a month in expenses to get six thousand. or when you're 85 you'd have to incur eleven thousand in monthly expenses and showed the receipts for them. and then they would reimburse you eleven thousand dollars.
for reimbursement receipts. Under the life insurance long term care, it's an indemnity policy.
So if you qualify for the policy, and you're receiving care. They just send you the $11,000 every month.
So that's a significant difference. But I don't have a cash indemnity traditional policy to compare it to.
So you know, it's significant But for somebody that's in a facility or whatever, it's insignificant.
So I don't want to hang up on that one smaller point. 'Cause we're really comparing the two policies. And something I'd like to get done in the back of the show here Yeah. this isn't like the only thing we offer. I mean, first of all, this is on a couple And I wanted to just talk a little bit about what this would look like If you're just a female aged sixty five and you wanted to buy this by yourself.
or you're a male aged sixty five, you want to buy this policy by yourself, Either you're not married. Or your spouse might be uninsurable or already have insurance for whatever reason. a lot of people that buy this just buy it on themselves. And so with the two hundred five thousand dollar premium, Single premium You could get similar benefits if you're a male. for about $100,000.
Yeah, that's a simple with a $100,000 single premium payment. Yeah, there was a Single female. about one hundred and twenty to one hundred and thirty thousand. would buy similar benefits. Um Cheer you.
Yeah If I get over in the traditional long-term care, They actually give a breakdown of the premium. Uh of the policy. The ladies' portion of the ninety three-ninety six is about six thousand a year. and the man's portion is about $3,500 a year.
So Um ladies pay a lot more for this because More of them end up in a facility using nursing homes and assisted living and home health care And the ones that do end up there they stay there for longer. on average than the men do.
So There's quite a price break for buying thisism. you know, as a man. Um So a lot of people that purchased these they don't really have this option. I mean, if If you don't have $100,000 as a single person or $200,000 as a married couple, or you're not willing to spread it out over 20 years or 10 years. or those are just two big dollars that you don't have.
Well, there isn't really a lot of point and getting too deep into the cash indemnity. in the hybrid lifelong term care. I think that we're going to just get you over to traditional long term care Yeah. We're going to figure out a way. for you to pay if you're a lady 500 bucks a month.
Or for a man you know, thir three hundred bucks a month. Yeah. If that's too much for you, then we're going to start trimming that down. in terms of the benefits of the policy.
So that we at least can get you something because you're not going to be penniless the first day you start using long term care.
So you don't have to insure all the risk. I'm just doing this to give an idea. of what both of these types of policies cost you. Yeah, I I get it, and I I got to tell you that. You know, for me, it it The significant issue is, you know, how important is this in your life?
I have a dear, dear friend, actually, an actress that's helped me with. that um Christian Car guy um Theater. Episode Who You know, she's in her late seventies, gets a brain tumor and interestingly the but fortunately for her life, or the tumor's not taken her life, but it did take completely her short term memory. And and so every day she wakes up with exactly the same Um You know, questions: why am I here? What's going on?
She's in a facility now because she can't remember anything like two seconds after you tell it to her. And she didn't see that coming, and her brother. Was left to try to deal with this, is that she really can't deal with next to anything. And it's fascinating to me How God is Continued to care for her in this long-term care situation, which nobody would have ever seen coming, but she's liable to live for a very long time. Um based on her situation, but with her memory, you know, it's just it's it's really, really hard.
Interestingly, we're still doing Christian Cargai Theater together 'cause I can give her her lines one at a time and she can speak them, which makes her feel like she's still doing something as an actress and gives her sort of a purpose for life. But it sure shows you why these things can just sneak up on you, Hans. They can. Yeah. You know.
I have people that have lots of resources as clients or the potential clients and a lot of people throw at me Well look, I have enough money. If this happens to me, I'll just pay for it. And my answer to that is you do not want to put your family in that situation. I mean, if a crisis hits you like hit her, if you can afford to do something about it, Wouldn't it be nice if her brother went through her things? And he found a long term care policy that she bought ten years ago.
or five years ago that Um somebody like Hans sold her and Can you imagine how comforting that would be? He'd still have a big problem on his hands. I mean, this doesn't make the problem go away. It just takes money less out of the issue. And unfortunately, if people don't have insurance, even if they're very well to do, money is the whole conversation.
And for her. her care and her well being need to be in the conversation. Not Not how we're going to pay for it. Right, right. Um these are a great thing to hand over to your family and just say, oh, I thought of this.
And Uh you just go to these people and we can pretty much go anywhere we want. We got this and my other assets and We can just buy our way in there and If you're going to be cared for real well.
Okay, so today we're talking about traditional long-term care and hybrid life long-term care. And frankly, it doesn't make a lot of difference to me Which one of these two I even have some people buy a combination. They pay a lump sum for One part of the risk, and then they get one of these traditional long-term care policies for another part of the risk. I mean, we can work these numbers around. Um people that really want hybrid life long term care, they like the idea of paying for it.
but they don't have anything but IRA money. We have another company that we go to and Uh we use It's actually the company that I use and it it Yeah. Yes. We're just going to make a transfer from your IRA of a hunk of money to another IRA at the insurance company. and then they're going to piece it out of there.
over ten years and uh put it into The lifelong-term care buzz.
So there's lots of ways. to finance these things. if you've got some assets If you have Um Some money coming in. The end. you know, and I always point out to people like If this is a strain to buy this stuff now, you can imagine what a strain it's going to be for your family.
to start paying for this care. all of a sudden when they weren't looking for it. Yeah, that's absolutely huge. Absolutely huge. You know, that's again why we have that as the seven worries.
You know, the last worry is it's kind of. A hinge pin that the whole plan kind of falls apart if you don't have something major in this area, right? It does. Yeah. you know, you come into us and you do a financial plan, Mixed into there is going to be some long term care insurance.
Now it's your option whether you take it or not. I mean, not everybody takes it, but we're going to, you know, just be prepared for that. You're going to get. Get this stuff explained. We have some people come to us.
They don't want us to deal with the rest of their money. I mean, we we need to ask some questions about it. But they all they want us to do is is offer them long-term care insurance. And so we we have a lot of clients like that Yeah. We're going to need to learn a little bit about your money and how you're going to pay for this thing.
make sure we're not overselling you something you can't afford. Um But uh Any way you want to work, we don't charge for initial consultations, so anybody that wants to call me up and talk about this for a while. or anything else that we talk about. I'm here and I'm available and I'd love to talk with you. Yeah, which is pray with you as well.
Wow, that's that's begging. And so we wanna remind you at this point, because the way to find Hans is cardinalguide.com.
So if you go to cardinalguy.com, there you're gonna find the seven worries tab, as we've described. The last one is long-term care. And there you're gonna see the show notes. Which give you great details on all the differences of these two plans that Hans outlined today and what that might look like. And again, they never do the cookie-cutter approach.
So for you, it may be the long-term care plan or the hybrid. Just figuring out which one would be the best in your situation. It's all there at cardinalguide.com, as well as Hans's book, The Complete Cardinal Guide to Planning for and Living in Retirement, and of course, the Contact Hans and Tom page, which we talked about. It's cardinalguide.com. Great show, Hans.
Thank you, and God bless you. The opinions expressed by Hans Scheil and guests on this show are their own and do not reflect the opinions of this radio station. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Investments involve risk and, unless otherwise stated, are not guaranteed.
Past performance cannot be used as an indicator to determine future results. Any strategies mentioned may not be suitable for everyone. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for you. Before acting on any information mentioned, please consult with a qualified tax or investment advisor to determine if it's suitable for your specific situation. Finishing Well is designed to provide accurate and authoritative information with regard to the subject covered.
Investment advisory services offered through Brookstrone 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. 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, IRAs, long-term care, life insurance, investments, and taxes, as well as Han's best-selling book, The Complete Cardinal Guide to Planning for and Living in Retirement and the Workbook. Once again, for dozens of free resources, past shows, or to get Han's 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.
