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January 16, 2021 8:30 am
Most clients who come to us saying they are self insured for long term care - but do you really know what this means? Hans goes over what being properly self insured for long term care actually entails!
Hey this is Mike Swick from if not for God podcast our show stories of hopelessness turned in a hope your chosen Truth Network podcast is starting in just seconds. Enjoy it, share it, but most of all, thank you for listening and for choosing The Truth Podcast Network. This is the Truth Network welcome to finishing well brought you by Cardinal guy, certified financial planner belongs agile, best-selling author and financial planner helping families finish well over 40 years of finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Social Security, Medicare, IRA, long-term care, life insurance and investments and taxes. Now let's get started. Finishing well welcome to finishing well with my good friend planner certified functional today show, which I am just as delighted to see where it goes, because I know how hard I tried to self-insure myself is this case long-term care or self-insuring long-term care and it really does fit John perfectly well with Jesus's message gets you know up until I was in my mid-30s. I've been trying to self-insure my eternal care and enter the deer that you know as hard as I work it. It never felt like I had gotten there or are you and certainly you know I'd left my self. I'd open for eternal horror. Had I not accepted the miraculous insurance plan of fire insurance plan for chiefly sad for me but that literally was able to pay it something that I couldn't afford right and you know that was again allowing to have this kind of situation but it fits perfectly well with what we can talk about today because really want when we think about long-term care.
A lot of people's fallback position as will all have about if I needed and that was certainly my father's situation where you know so if I talk about long-term care insurance and traditional long-term care insurance is a product and then is an industry.
I mean, I've been offering this for more than 30 years of touch less than 40 but a long time, unless and ever since the first study came out so how many people are really taking this advice and buying this insurance, now from liberal like the life insurance marketing research Association stuff that people like me read them limericks and that really, but it about 10% of the people who could buy should buy can qualify for early age to do it have long-term care insurance but 10%, which means that 90% don't and some of that falls on us in on the industry just we we can go over that. On another day.
Or you could say all that falls on us is that number should be 30, 40, 50% of we did a better job in communicating this and offering it more people would have it when I want to tell you as a person who's really sat down and sold this product for many many years and you start looking at those 90% that don't a lot of those people are deemed self deemed I'm self-insure all just use self-insurance and when you go to my book. I'm in my book the complete personal guide to planning for living in retirement legitimizes self-insurance because I would tell you that there is more people that deem themselves self-insure more than 10% of that pool or deeming themselves in this category while I'm self-insure which so what we want to do today on the shows just talk about that.
So what does that really mean in my book. I legitimized and I said you know you if you this then what you really need to do is put together a plan and I can help you do it.
And like I have some people that have taken me up on that and we've put together a whole plan for them self-insuring long-term care, which means they can pay for themselves what they need so is just meeting with the incoming client the other day who was very well off. I say very well off of me in a corner home but he's he's he's got a very comfortable and secure retirement have and he's very thoughtful, very diligent, very complementary of us read the book, listen to the show and so were just going to just get just come in as a client and we got over. I just asked him.
I just really discuss the role of. About long-term care from the just as a preliminary he's just very quick to come out with leases to take care of that myself and I'm self-insure it.
He said I'm I'm just, you know that $500 a month that I'm just keeping that in all all all I'll pay the bills as necessary. I didn't say anything, just the sky like silence.
There and then he said either John now because you know and I said well yeah I'm here and I said would you like to hear what I have to say that he said yeah oh yeah I said well I said if I could offer you long-term care insurance today to cover you and your wife for $500 a month. My advice would be you would take that so fast before merely insurance company changes her mind. The reason I'm saying that is your wife is not eligible for long-term care mean so you're rejecting something that hasn't even been offered or maybe it was in the past with the condition that she has is not something that just showed up three years ago or whatever so he's he's been through this thing looked at it, ruled it out as that is too expensive and he just said I got enough assets so any less a story about him and where that ends up going will see and it is just, I talked to him a little bit more and we got to the end.
He said all I'm listing touché yeah because because I just moved into his 80-year-old self. And I said let's just talk to your eight-year-old self for a minute. Even if you have which you do substantial money and it's still going to be there when you're 80.
I'm a tell you this could be like pulling teeth to get your eight-year-old self to approve your son going down to the bank or the investment company and sell enough investments and actually create an acute cash to hire a home healthcare agency in your your your wife's can be over there pitch a fit raise just and that's a lot like the story with your dad robbing thou evidence, I mean, and how he actually had gotten long-term care insurance on his wife which was significantly younger than him was not my mother because my father been remarried, but he with it. He was self-insure as far as it was concerned and and and certainly he was retired comfortably and he had plenty assets and then after his fall. Yeah, unfortunately for him he only wasn't able to take care of himself. So when you guys are going out of town for the weekend right and so what would happen. We've actually Tammy and I moved in the house and we were taking care of them so we have long-term care plan. It was called Robbie and Tammy, which was fine, you know, I was honored really enjoy spent a month in the last year with my father tremendously. However, my daughter was and is in college at Stanford University and hope plan and she had a big parents weekend that was real important that we come to her in a deal at college in and Birmingham. They were like dad.
We can't, you're not a position right now to be left alone sorted when you need to hire one of these home healthcare people to come in and out of the wall in a we called on me so yeah that's fine.
Column will will set it up so you learn about all this would be. We were just new doing the show together right right right and if I'm not mistaken for that weekend. It was like six or $700. It was you know which announcement you meant, but all my gosh it was like you know my father was just he was good with money from the standpoint. He was very frugal, but you know what it knowing it will be a renovated number only did he throw him out it just that was insane.
They have that that we're going to spend that kind of money but but literally there he wants and so what you know he was talking to his 80. In this case, seven-year-old self and and when it came time to actually spend the money so that Tammy and I could go away for the weekend without a guilt complex that we were leaving him unattended to.
Now that's that's kind aware that that was left which taught me something you know it bit you know. I'll explain with another story that that that would mean self-insurance when you've decided to self-insure for anything just probably law involves a lot more than you think it because the insurance companies really guaranteeing you when you buy insurance that whatever you're ensuring that there can have the money. First of all to pay the claim. The monies going to be there and it's going to be in a specific place as José Robbie Gilmore on okay and they also are going to be prepared to hire and pay for the home healthcare agency is just yet is is is not can be something that you start second-guessing enema thrown out exactly opposite. Because here's the OL I have a policy thanks to you, but that the Tammy and I both have at end. I don't want to bend to get out. I have set up as a situation came up and my kids were taking care of him like no call these people for goodness sakes use this money slanted for further student be there taking care of you there just going to have some help right okay and then there's a big difference in so where is really going with this whole topic is self-insurance for long. No self-insured for long-term care is your plan by design or by default and what I would propose is most people who deem themselves self-insured by default so they just kinda ended up there through their research and they're just saying they're really saying is too expensive. It's not worth it to me to pay a premium to an insurance company. I'd much rather just keep those premiums because you do this whole thing myself, but that's even more laid out well by design than they really are a lot of merges, thereby default and what I'm proposing is that the very least make maybe just through listening to the show and taking some actions afterward.
Even if you don't bind the insurance you could simply get a little more toward the design and as you could have a discussion with your family and with whoever handles your money to say like if this happens, I want you to do this and do this and I want you to pay for it. From this, and here's the tax ramifications of me that that that there were certain to get toward a plan by design, right, which I think you hear the miraculous side of them out of my kindest know when Jesus comes and helps you get your fire insurance through his blood, which puts out all the fires. By the way, you know, it's out of a miraculous thing happens. I think when we come back your to hear that there's a miraculous plan for the self-insure. Slick from my perspective when I hear how Hans explains that's really get to that. But of course today show right long-term care. The whole concept. It's all there in Hans's book the complete carnal kind of planning for living in retirement is available in cardinal guide.com as well as the chapter long-term care is downloadable, absolutely for free love to have you visit cardinal guide on time so we come back even more miraculous ideas self-insurance. Hans and I would love to take our show on the road to your church, Sunday school, Christian or civic group. Here's a chance for you to advance the kingdom through financial resources and leveraging Hans expertise and qualified charitable contributions veterans aid and attendance IRA Social Security care and long-term care.
Just go to cardinal guide.com and contact Tom to schedule a live recording of finishing well, your church, Sunday school or civic group. Contact time to cardinal guide.com that's cardinal guide.com the welcome back to finishing well certified planner shadow is long-term self insured long-term care insurance and I'm telling you when I heard this I was like oh wow, that is miraculous. So I think you can be really glad that you stay tuned for this second half of this particular episode when I was writing in the book about self-insurance and legitimizing it.
I had the experience of really doing that as a financial planner and we do financial plans for people written financial plans, and when people are in their 60s and 70s were going address long-term care and for the people that choose not to do any insurance solution for were still going to recommend within that financial plan that they put together something by design that is going to say you know I just this is the money that I want you to use.
This is where once you get that this the tax implications of that. I want you to try to get this done for me at home as you not to be making all these decisions yourself in 80 or 85 S. at least to get a plan together.
That's what I was intending on the book I was writing about where I had done that and what I've found is that many of these people that were deeming themselves self-insured in the beginning of meeting me throughout the process.
The state self-insured, but they deposited some money with an insurance company they put that money aside which turns into much more money on any of the hybrids it turns into much more money for long-term care. So that's kind of an over simplification so I want to do today is just talk about the simplest one of these products the can really talk about it with $100,000 deposit and this is $100,000 that you would just not paid to an insurance company would just transfer it into an account at the insurance company and then that account grows it interest is not can be huge interest is it's kind like a bank.
It's all guaranteed and you just not going to get a lot of interest a lot of growth from your gonna need to go to the stock market room for that we could certainly help you with that. But this is taking that self-insurance money and we just can use 100,000. As an example and were gonna move it from wherever it is now whether that's the bank or an investment account and were gonna move it to an account of the insurance company and then it's gonna sit there and be the first hundred thousand dollars that you're going to spend on long-term care and any growth you get on this money which would normally be taxable if you ultimately use it for long-term care. There will be taxes on that either, but pushes to remove the hundred thousand from where it is to the insurance company. It sits there it grows and then if you pass away, never using this for long-term care, which if you're self-insured. That's what you're betting on is your thinking.
Mom never really going to need this so I'm just gonna keep this by myself and then if I die without using it, it will go to my kids with this is the same way as hundred thousand put over the insurance company grows it interest you die because your kids or your spouse are very names the beneficiary say why would I want to do that. If that's all it does well is not all it does. So it has triple or benefit or you know it has another $200,000 of long-term care insurance that sits there behind your original hundred thousand. So the way it works. If you're a single person and you buy this if you need long-term care you to get 4200 bucks a month for either home health care, nursing care, assisted living any of this stuff is normally paid for under long-term care gave 4200 bucks a month for the first 24 months or year essentially use up your own money come from the insurance company but when that runs out when 24 months of past and that money is all expired. I have another 48 months of 4200 bucks a month so there's were the we don't want to call it, free insurance business. Nothing in this world is free but is gotten there miraculously without having you have apparent ongoing premium sentence: I think about that. In simpler terms, this is my simple brain works that so if I put $100,000 and over here. I keep my hundred thousand dollars if I don't spend it. My kids are to get that hundred thousand dollars, but much more importantly if I am fat you need it for home healthcare insurance.
My 100 becomes 300 care. That's it. And that's miraculously the slightest murder no books for couples but works a little differently. So now if we have $100,000 and that's what you put into but we want to cover two people husband-and-wife same hundred thousand but it now. The initial benefit. 36 months, $333.70 it's 36 months so you get a little smaller benefit or they're going to distribute your own money back to you over a little longer time and it's a little bit less, but it's covering both of you. So if you both were in there at the same time were getting home healthcare at the same time within it's really only spread over 15 months because it are 18 months because it can pay to 3333's at once. So another words with this policy you blow through your own savings account. Your self-insurance account your own money at different rates depending upon whose insured but at some point you situation your gonna run out of your hundred thousand and then you're going to have another 200,000 sit on the back at going and we have several couples that have bought this type of insurance and we have several single individuals. Some of them there people who went here because they couldn't qualify for some other things and there's this thing is pretty easy to qualify for and some people with like if you got dementia you can't buy this, they won't take you or if you have you know if you have several strokes or you have Parkinson's. You have Parkinson's.
I mean there's some very debilitating chronic illnesses with the insurance company won't offer you the steel but what I will tell you if you if you got those things or something severely.
We have other alternatives understand about this policy but you know if you had cancer two and half years ago and you're in remission. You can get this thing. If you have a stroke three years ago and you recovered for the most part and you could have some ongoing issues, but you can get this policy so there's a whole lot list of things that you can have that they'd never take you on regular long-term care insurance will take you on that. And then if you get things that we won't take you on this.
We've got other products room got about 50 companies that offer this Stuff. So we've got a pretty big assortment of products and solutions.
We have some for everybody on this specific one is literally that simple is is that you put 100,000 at the insurance company that your self-insurance fund.
If you access it. You use it you blow through it and it's really just them giving you back your own money.
Maybe plus a little bit of the interest and when your fund is empty.
You got twice as much as you put it on the front and there you have that's miraculous with her offer that to everybody. If you wind up needing. This is can be the best investment you have made your life and again I think for me when I first entered into the conversation.
You know when it said long-term care insurance and I'm thinking the dreaded word nursing home. I'm thinking assisted living or something like that. But clearly the way these are structured nowadays, and especially with all this going on with Kovic. Whatever this is completely just like my father situation you get these people coming to your house and your family connected to you. This isn't like the nursing home policy. You can get them to do household chores and pay for under this policy, so long as you're getting here along with you do things like cleaning the house and mowing the yard. I don't know doing the dishes, just just stuff that you can't do for yourself. Now you can get the policy to only pay for that. Like you can't just be an older person just as Allen so we can do when you got a need to care and be getting the care where there helping you with bathing and dressing and doing all those kinds of things but once you there, then you can have this other stuff thrown in there so and we used a number of $100,000.
I mean somebody that says well that's not enough benefit will then you could put 200,000 or we have some people to say I don't have $100,000.
I can think of some clients that have bought this with 50 or 75 amidst sky given the smaller benefit but a lot of folks you know people up in their 70s 80s you know in they got a savings account put aside and they don't really spend in that and when I asked them as a financial planner what's up money for. Well, not really for you, give it to my kids will once she is given to them. Now all know I don't do that might need it will will much needed for and then here we go through all questions in one case I ever need care in case I ever had to go to a nursing home or assisted living somewhere like that. This product makes a lot of sense. Somebody who's wealthy that has a lot of hundred thousand dollars is around different places than from a practical standpoint, if your dad had something like this. I mean it in the insurance was never paid off on him, but it would've been a lot easier to talk him into paying for those people for 600 bucks for the weekend, or to have that over six or eight months, even if they were just all about his own money as if it's a plan for it by design for long. Now I take my dad for example, because the way his estate structured, it would've been a lot easier since I was essentially as executor and I need taken the money that he actually had another fund and I had to go get a stamp that had to go through all kinds of shenanigans to get it. I had to pay taxes on it through estate tax. I had distributed in a certain way to all the different point and all sorts of stuff if that had been in one of these accounts might be that a beneficiary they dissented. Everybody was supposed to get one gone through probate when the been taxed by the you know at an end.
There's all kinds of benefits from getting somebody that knows is you doing to arrange your money. I don't care whether your 60, 70, 80 or 90 something and even if you gonna say all we've already done now okay your dad was there. He said he all taken care of okay and to his credit for what he you know, diminish, and he enjoyed doing what he did with that money I wouldn't take that away from them for any you know but from justice, straight practicality standpoint. On the way that things came down.
She had no idea it would come down, you know, it would've been a lot better to have it. His advisor was not looking at the end or even close to the end. His advisor was looking at the here and now advising him on his finance and what you know what we do in my practice is all about is you relook at the here and now in order to try to get you what you need and accommodate what you need but were not planned for later years. In the end years and then what your families dealing with after you die in your state.
So again this topic is all there a cardinal guide.com which we know today show is long-term care or self-insured long-term care what that looks like it's in his book the complete cargo guide to planning for living retirement again) Cardinal guy.com are so glad you listen today. Thanks for listening. Thank you. We hope you enjoyed finishing well brought you by Cardinal guy.com is a cardinal guide.com for free downloads of the show previous shows on topics such as Social Security, Medicare and IRAs, long-term care and life insurance, investments and taxes as well as cons 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 what to get Hans will go to Cardinal guy.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 Cardinal guy.com Cardinal guy.com. This is the Truth Network