Yeah. 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. Lifetime income annuity with enhanced Long-term care benefit.
Now, it's a mouthful, but it's so cool. I think you're really going to love this show. In so many different ways, it just shows me the tools that are out there that God has provided clearly through Cardinal Guide. But what we're going to talk about today, I think, is going to blow your mind. But as I was thinking about it and the idea of a double portion, I couldn't help but think of the manna in the wilderness that God had provided this amazing food.
That completely sustained the Israelites, and they would be able to gather it every morning. They didn't have to worry because it'd be there in the morning, and the next morning it would be there, and it was a choice, it was a chance to see God's faithfulness.
Well, it even doubled up because they were. you know, weren't allowed to work on the Sabbath, so the sixth day, They would get a double portion, according to Exodus 16. And so on the sixth day, God gave them twice as much because he knew they would need it to carry over.
Well, you're going to see that today God's provided this. Specific type of annuity that can help people on their long-term care no matter what their health. Um because there's no underwriting and that kind of thing.
So, Hans, this is so cool. Yeah, I mean we We get creative. quite a bit when we're doing financial planning, especially when we're talking to clients with health problems, sometimes pretty severe health problems, And it makes them Mm-hmm. many times ineligible for long-term care insurance. Because of their health.
when that happens, when we rub for instance in the example in the video, We got Mary, who's 65, and Joe, who's 65. And they applied for long-term care, life insurance. one of those hybrid deals. And Mary got issued. Joe did not get issued because of his health conditions.
So Where do we go from here? The first thing we've got to do is convince Mary to go ahead with a plan on herself. since they're offering it from the company because You know, and the assumption is, is that Joe is going to be the person that needs care. First And if that happens. Mary's going to be in a real pickle.
where she's having to both pay for Joe's care And She's providing the care. or or she's and or she's providing the care herself. and which is going to wear her down. And then she can look forward to no long-term care insurance because she didn't accept it. when Joe got turned down.
I mean, we run into this situation a lot. And so Um This what we're talking about today is one of the tools we use to get Joe and marry some kind of coverage for long-term care. with the emphasis being on Joe, because there are no health questions. to buy this annuity.
Okay. Yeah. Typically We use this annuity a lot. for the income. Not for the long-term care benefit.
In fact, we have a lot of clients, we don't even tell them about the long-term care benefit because these things are quite confusing to understand in the first place. And if people are buying it for income, Then Um to just go ahead and say you're going to get this income and hey by the way if you need long-term care you're going to get twice the amount. for up to five years A lot of times it just sends people on a confusing subject.
So a lot of times we don't even talk about it. But what we're doing today. is we're going to that benefit and just kind of featuring it.
So What I want to do is explain how the annuity works. In the example that we have in the video, we're putting two hundred thousand dollars Typically of IRA money, into this thing. I mean, that's that's the kind of money that people have $200,000 of. I mean, we could put regular money, and there would be some tax advantages if somebody had that much money That they wanted to stick into this thing that they've already paid taxes on. But for the purposes of this example, Let's just talk about $200,000 of IRA money.
and we're covering both Mary and Job. Both of them.
So are you with me so far, Robbie? Oh yeah, I g I I I see completely in You know, again, this idea of annuity is something I had no idea what the word even meant, you know, a few years ago when I started doing the show. But the more I've learned about this concept of putting money in there to create an income for life. In other words, it doesn't stop. Um it still just blows me away, so I couldn't be more excited about what you're describing.
Okay, so let's just talk about the income in this example. Mary 65, Joe's 65. And we put $200,000 in this thing. And if we're setting it up for income, we very well could be starting the income in the sixth year or when the fifth year is over with. And I can explain that to you later, but these things pay out better.
If you let the money just sit there for several years and you're going to get a much bigger payout.
So in the example in the video, Uh marry Jo buy this. like kind of right now they're both 65. And then they're going to be 70. before they start taking out any money out of the thing and at 70 this thing will pay out twenty one thousand nine hundred and twenty dollars a year. And it'll pay that.
for the rest of their lives.
So you're saying, well, how does the insurance company do that? I mean, you put 200,000 in. You know, certainly there's some interest. the cash value of this thing. is projected At the end of the fifth year, to be $241,000, so it's had some growth.
Um But still Now you're going to pay out $21,920 a year as long as Either Joe or Mary is alive.
So one of them lives up to This thing's going to pay out a lot of money. just in and of itself. Yeah. predictable income The end What we do a lot of times is we use this as a social security bridge.
So if somebody is debating whether they're going to start their Social Security now. Or They're going to wait. Until Um seventy.
So Yeah. What we're going to do is we're going to set this thing up so that when they get their large Social Security check, that's probably still not going to be enough. then they're going to have the $21,000 a year. for life to go with it. But what are you going to do in the meantime?
Well, many times we set up another annuity that only pays for five years.
So Um And so they're getting the $21,000 constantly.
So I don't want to get into something we do in financial planning. I'm going to lose people. that are driving down the road listening to the radio. But the purpose people buy this annuity for typically, and we recommend it. is to have an income start at a future date.
of a specific amount that's guaranteed And then once it starts. It does not stop. until both people covered on the policy are deceased. And that's a pretty nice Guarantee.
Okay. Right. But in our exact amount doesn't, unlike Social Security, it doesn't decrease when one of them passes, right?
So in your case, you got money. Mary and Joe? Right? That's the example. Yeah.
So Joe passes away. Right. Um you know, at like eighty. Mary lives to 95. Mary still gets the $21,920 a year.
And most people pay these things out monthly right with their Social Security check so they get a. you know, they get two checks. um for the rest of their life or Some people buy several of these things, so you got a bunch of checks coming in. Monthly. In any case, let's get back to our example.
And what we're talking about with Joe is is that he Is buying this thing. Mary and Joe are buying this thing because we want to get some. coverage in there for Joe for long-term care.
So If it Worked out is we put $200,000 in in October 2025. And in Let's call it November. Twenty Thirty one, or in the example, it says January twenty thirty-one. Um we're going to start the twenty one thousand nine hundred and twenty dollars. And that $21,920 pays out for life.
of both of them, but it's Joe that we're zeroing in on. And if Joe needs long-term care, For any reason He meets the criteria of the policy that he needs help with the activities of daily living, two of them. His twenty one thousand jumps to forty three thousand eight hundred and forty or it doubles. and it can stay doubled. for up to five years.
So Um that's not going to be enough to pay it'll be enough to pay possibly for home health care, but for assisted living, you know, that's going to pay half of it. And for that reason, If Joe is still kicking along just fine at the end of five years, we're probably not going to start the income. We're probably going to leave this thing alone. until either Joe either gets six or ten sick or ten years passes. Can In this example, when they're both going to be 75.
Um the income would be thirty two thousand instead of twenty one thousand.
So if they waited five more years, the lifetime income would be thirty two thousand dollars for the rest of both of their lives. But the doubler amount For Joe, which we're going to use it on, If he gets sick, Is $64,160 a year, the doubled amount. And that is going to be a big help. toward long-term care. Um And it's going to do a lot more than they than just if they left this 200,000 invested.
I mean you know, if you do the simple math, which You go, okay, you invested $200,000 to begin with. Just if Like you talk about, and if you're getting $21,000 a year, and some one of them lives longer than 11 years, already you're ahead of the game. But when you, you know, I know there's interest and that kind of thing. But when you add that. Double in there?
Then at $60,000, you know, just four years of that and you've You've completely paid back what you put in, and you still have the coverage for your wife, et cetera, until it's absolutely amazing. And this would be a good time to mention that the show is brought to you by Cardinal Guide, CardinalGuide.com. And if you go to CardinalGuide.com, you're going to find the Seven Warriors tabs. And today, interestingly, it's kind of a combination of long-term care, but it's very much the income tab that we're talking about.
So if you go to the income tab, you're going to find a video they did along these same exact lines of lifetime income annuity with an enhanced long-term care benefit. And again, you can see the show notes and you can see all these examples that Hans is talking about. Absolutely amazing stuff. And also at cardinalguide.com, you're going to find Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement, and a workbook that goes along with that. And of course, the Contact Hans and Tom page.
Which believe me, this is one of those amazing products when you understand it as a tool. But it has its downsides too. We'll talk about a little bit when we come back.
So we'll be right back with a whole lot more. Stay tuned. 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, Lifetime Income Annuity with Enhanced Long term care. Benefit. That's such an amazing thing, Hans. Yeah, I mean, so people.
buy these things Yeah, and one of the questions, just about every one of them asks, well, what happens If Joe and Mary pass away before you even start the income. And You know, people want to know that. I've heard about these annuities. They just suck up all your money if uh if you die. Yeah.
It doesn't work that way with this one.
So if both of them are gone, Before they start the income. Then the cash surrender value is going to be the death benefit or the accumulation value. If both of them died in the fourth year at the end of the fourth year their beneficiaries are going to get $232,000. um the plan plus some of the interest. But let's take an example.
that let's say they did start the income. In the at the end of the fifth year. And so they're getting that $21,920 a year. And they're going along. And then both of them Passed away, like in the eighth or ninth year of the policy, in 2033 or 2034.
Well, what's going to happen is that $21,000 is going to come out of their accumulation value. And if they collected it for like three years, And then they're both gone. Whatever's left in the policy of the accumulation value is going to go to their heirs.
So if there's anything left in the cache in the policy, That's going to go to the heirs. Um I can think of another example. Let's say that. Uh they're going along. They haven't started the income yet, but just Joe dies.
He doesn't need any long-term care. They haven't needed the income yet. And He dies.
Okay. Now Mary's going to have some options.
So one option is she can just take the accumulation value and start something else different than this. That would be one option. She could also just leave the policy intact. let it grow and start the income whenever she wants to start it. But it's going to be a higher amount.
the income will actually be more than is on this chart because Now they're only ensuring longevity for one person. Which is her.
So The future income would be more. Um I mean, there's all kinds of options, but the key that I want to get across to people is. Your money is put with the insurance company, it grows. Or it does no growth because if you had a bad year in the Market. It can't lose anything, it would be zero.
But Just in you know, this thing is just going to go along and grow in the good years. and it's going to grow and grow and grow and then If you're deceased. Um You die, the the the money is going to go to your beneficiaries.
So Um But you're not really buying it for that. You're buying it for this future income and then the ability to double it if you needed long-term care. Yeah, you know, it it's just a perfect enhancement f for people on Social Security. you know, they you know, if they want the extra two or three thousand dollars, especially i Again, the more we think about this and we talk about it in different shows. that if one spouse passes, then you lose immediately that second check.
And at a point that the widow or widower is going to face. single taxpayer And things along those lines. And so, you know, it makes something like this even cooler. This one, you don't lose the second. This one's just steady-fready.
Like, you're going to keep getting it.
Well, let me tell you about another benefit is you can do a Roth conversion inside of this annuity. And it doesn't have to be for the whole amount anymore.
So you could say do a $20,000 Roth conversion. for ten years. And it had to be a little more than $20,000 because you'd have to convert the growth as well. But Let's just make the example simple. Good.
You need to get it all converted. before you start the income. Because once you start the income, it's going to get crazy to try to convert any of it. But To the extent you can get that done, if you can get all of it done over several years.
Now those income payments are going to be tax free. if if you're buying this with IRA money. Right. And so will the doubled amount.
Okay. So there's a lot of things we can do with this. We also have people that come into us for financial planning, and they're just not going for that. Insurance and the life hybrid long-term care. Or maybe it's a couple where Joe got turned down and Mary says: if they won't take Joe, I ain't buying it.
Okay. But they're not mad at us, but they're not happy with the insurance company. And so. For whatever reason We can put a larger amount of money in this thing. The end.
really cover them both. for long term care because they're both covered on this. But they can't both use it for five years. I mean, they can only use it one at a time. and it needs to be at different times for long term care, Um But we have several clients like that.
that have bought a series of these things. and it adds up to quite a substantial amount of money. And they're just eyeing that long-term care. Like if we need it. It's there.
but they're really buying it for the income and then they're going to let it grow for the whole ten years.
so that they make that income as high as they can possibly make it. And then they also make the double the amount as high as they can. Yet some people buy them in a ladder.
So that They don't have to turn them all on at the same time.
So they can turn one on at five years, another one at eight years, another one at ten years. We have a lot of creativity with this.
So we we we can We can sit down and kind of make it what we want to make it. Right. And so a certain portion is your planning Yeah, you guys often talk about risk. But here is this I mean Once you Put this money in, in other words, this is going to provide an income. It's solid as it can be.
Um Like you say, to help with long-term care insurance, but it doesn't necessarily replace it if somebody qualifies for, like you said, that life. hybrid because Right, it's a little different situation when it comes to well, it is, and you know. What I want to explain on the downside is as if If you start the income at like 75, And both of you are just kicking along. And then You don't have any health problems. that require long-term care till you're 90.
Yeah. There's not going to be any cash value left in the policy when you've been collecting checks since you're 75, and consequently, there's going to be no doubler. Because the doubler only works if there's cash. or accumulation value in the policy.
So if it's all been passed out. Yeah, for for um Uh income I mean, the income payment at the standard amount is going to continue until both of you are gone, but the doubler is reliant. It only works if there's cash in there.
So there's some downsides to this. That it's not really a replacement for long-term care, but for people that aren't going to buy long-term care. then it may not be a replacement, but it's something. And they like that they can fall back in case they're wrong. Most people don't buy long-term care, they don't ever think they're going to need it.
I mean that's That's what's really at the core of it. They don't necessarily tell me that. And a lot of them kind of wink at me. And I went back. Like, it's usually one of them that thinks they're not going to need it.
And so that's just kind of a benefit that's buried into these things.
So they're going to be collecting some money from an insurance company if they some extra money if they need long-term care. Make sense? Absolutely. Absolutely. And like you say, there's a The chances that you know, if they both need it, then obviously you're gonna need something on top of that, which it's that's why it's beautiful to me to put together a whole plan that includes this being part of the money, 'cause as you say in the video so many times, you you don't recommend put people put all their eggs in this basket.
Oh. Never. I mean, we just, I mean, I mean, never. We, you know, we spread it around. A lot of times, with people that have large portfolios, We're putting the bond money.
into this thing. You know, we're taking if they're on a sixty forty Uh mix. 60% equities and 40% bonds or fixed income. We're going to take that bond and fixed income. and make it something that's really fixed.
Yeah. put it into this. And then Weird. We're going to try to make money for inflation and other things in the equity portion. and we can help them invest that or we can leave it where it is.
So no. And then sometimes we're going to take the 60, 40 people. And we're not going to take the whole 40 and put it in this. Perhaps we're going to take. twenty percent of the forty percent or half of it and put it into this, and then leave the other 20%.
invested in bonds. or maybe go to something with a guaranteed interest rate. No, this is just one piece of a larger financial plan. but I'm just explaining the tools that we have at our disposal.
So I want to go over one thing real quick.
So, the qualifier to get the doubler invoked. What it says is you need Two of the six. ADLs. You need human assistance. You have to require human assistance.
the stan you know, to to help you with bathing. Dressing. transferring, toileting. eating recontinents. Yeah.
Two of the six. you need to require and our favorite two are bathing and dressing. It's the simplest to get an insurance company to pay. And we just have the doctor certify that. And most people That Needing long-term care, they can't take a bath by themselves and they can't get dressed by themselves.
They need help. And so, why mess with the other four? Absolutely. Well, this is a good time again to remind you that This show is brought to you by Gardinal Guide, CardinalGuide.com. And if you go to CardinalGuy.com, you're going to see the seven worries tabs.
And today's show is under the income tab as we're talking about this annuity. And if you go there, you're going to see an amazing video along these same lines: Lifetime Income Annuity with Enhanced Long-Term Care Benefit. And it's got the show notes and it's got the board you can see where they give these examples of what you can do when you put. You know Different amounts of, or go to the different length of time on it, but also just want to remind you: you can put more or less money in this depending on what your needs are. And that's part of the reason that you're going to want to have the Contact Hans page available to you so you can contact Hans or Tom, you know, where they can customize this to your situation with your financial situation.
It's just amazing stuff to plan with them, as well as Hans's book, The Complete Cardinal Guide to Planning for Living and Retirement, and the study guide to go with that. It's all there at 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. Strategies mentioned may not be suitable for everyone.
Information Express 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.
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