Lump Sum Long Term Care

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This is the Truth Network. Welcome to Finishing Well, brought to you by CardinalGuide.com, with certified financial planner Hans Scheil, bestselling 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.

Well, with certified financial planner Hans Scheil, this is a mouthful, but we'll try to get lump sum long-term care. And so that, like I said, it's a mouthful, but it's going to be a real opportunity, because I'm going to tell you, I learned a lot through this particular process of something I had no idea about. And it's really, really helpful, because you might know that God said it in the book of Genesis after He finished, you know, making the heavens and the earth and all the animals and the plants and even human beings. He said, it's finished. Well, Jesus used that same term as one of the last words that He said from the cross, that it is finished. And at some point in time, for all of us, it will be finished, to an extent, our life on earth, so to speak. And it's fascinating that in Hebrew when you look at that word, finished, that God used there when He finished the earth in Genesis, it begins with a letter that would indicate that it's a crown that He is wearing, that something is finished.

And so this is not a place where we want to drop the ball. I mean, we don't want to end up without the crown, right? You want to hear, well done, good and faithful servant. And our families may face some things if we don't plan for it being finished. And part of what I have learned, believe me now, in watching all of my parents and, you know, including my in-laws, go to be with the Lord, that the last stages of their life required long-term care in each of them. None of them had the sudden death thing.

They all required this. So it requires some planning, and I think it's, I would, and I know Hans would very much like you to wear the crown if it is finished. And here's an opportunity in a really neat way, because when you do it this way, it's finished. Well, I mean, this is something that, you know, I've said in the past, it might happen to you, it might not. But when we start talking about a short period of time, then it's probably, when I'm talking about long-term care, it's probably going to happen to you. You may be one of the fortunate ones that will only need long-term care for a month or two or three. And if that was the case, or four or five or six, you may be able to get by without ever having long-term care insurance. I mean, we just don't know. And then there's another percentage of the people that are going to need care and they're going to need help, whether it's at home or in a nursing home or an assisted living or some combination thereof, for a year or two or three or nine months or 18 months. And then there's going to be an even smaller percentage that are going to need this for 10, 12 years, right?

You just don't know. But one thing I do know is when this happens, it is a crisis for the family and for you. And when you get right to the financial part of the crisis, which is the area that I deal with, but first you got to deal with the emotional part of it.

And I do that as well. And at the same time, the financial piece of this is that all of a sudden you need significantly more monthly income. And when I'm talking about significantly more, I'm talking about 6, 8, 10 grand a month kind of a thing that you're going to need. And how long you're going to need that much increased monthly income is really going to be dependent upon how long you live after you start needing care. And so all of that is uncertainties, which speaks for insurance.

It just does. And so what we're talking about today is using an annuity as the basis for the policy and not a long-term care insurance or not a life insurance. So now we're talking about an annuity. Right. It's a whole new ball game.

And it's really just showing us the overall to fly up to 20,000 feet and talk about why we're doing this video from my perspective is to show you, you got options. You want solutions to this problem no matter how your life situation may have changed recently. There's solutions if we can humble ourselves actually and ask for help. Well, yeah, a lot of folks that when I bring up the subject or I'm talking about in conversation or I have a meeting or these are one of our Medicare supplement customers and then we're asking them about long-term care, first thing that'll come out of their mouth is, oh, I can't qualify for long-term care.

Okay. And that's a signal to us. They got something serious. Maybe they've applied for it in the past and were turned down. Yeah, that's very real. Or one of the couple was due to a health condition or maybe they've just decided that and they just, what they have is so serious that there's no way anybody's going to sell them long-term care.

Or maybe they're just using that as kind of a defense. Like I'm so pitiful that no insurance company will take me, but that's really just kind of using don't bring this up. I don't want to talk about it today. Regardless, we're got somebody with a health condition.

Okay. And that is the first criteria for going to these annuity products is that they will take people that the other forms of long-term care that we've talked about on the show will not, some of those people can get this. And then the third of these products we're talking about today takes everybody.

It comes in at three levels. I mean, you could actually be using long-term care and still move some money into an annuity with this third product and they will accept you. It's on the lower of the three benefits coming out of your annuity, but they'll still take you.

And then, you know what, we're just talking about that one. There's three levels of benefits. So say you put in $100,000, there's one of them that's going to pay you $2,000 and some dollars, I don't have all the, $2,266 a month for 60 months based on your $100,000. So I don't want to get thrown a whole bunch of numbers at people. Yeah, and maybe for a minute actually to back up even further, because I know if you were talking to me three years ago and you used the word annuity, you just sent me out into the ozone somewhere. I had no clue what an annuity was.

But you said it, you made some statements there that said, you know, there's different ways to approach this. You got a life insurance product, which is, we've talked about before, we could... Which is most of what we sell. I mean, people that are buying the lump sum or the single premium life long-term care, you know, it's a life insurance policy. And then you have the underwriting of a life insurance policy. So they're going to reject some people based on their health.

Right. And then you have the regular long-term care, which you can see why they would, you know, clearly somebody's got... Because you're just paying one month's premium or one year's premium. And so they're going to reject even more people for health problems. Then you got the short-term care, which is an option, which a lot of people can get short-term care with health conditions. And we write that in a lot of instances.

And this is just another option. And so an annuity for those of us who are like me that two years ago didn't have a clue, from a financial product standpoint, it's... Well, annuity is like a savings account with an insurance company where the interest earnings are tax deferred. Okay? I mean, that's the kind of annuity that we're putting your money in here is it's a savings account or it's an insurance policy where you're putting a lump of money in there and you're earning an interest credit every month. And then that interest that gets credited accumulates over time and you don't pay taxes on the interest till you draw it out. So that's an attribute to it. And then at some point in the future, the annuity is designed to start paying you back and then it will pay you for the rest of your life a certain amount. Okay?

That's a simplest form. Right. But we have all kinds of annuities that we do that don't even involve long-term care, that they're just people are there for investment reasons, tax reasons, managing cash, managing money. Right, which is what we've always talked about in the past. So this is a new animal to me.

Yeah. So this is an annuity policy that we haven't really talked about it because we only go to it when people either get turned down by those other forms or they've got significant money already in an annuity because there's a whole other group of people out there that bought an annuity from some company several years ago and they just let it sit. It's grown to a certain size and they've got a bunch of pent-up taxes due so that if they go get any money out of that annuity and spend it, they've got to pay taxes on the interest first, principal second. And so consequently they don't ever take anything out of there and that kind of annuity can be rolled over into one of these annuities by section 1035 transfer so it just with no taxation and it just so it's like it takes the same tax basis from where it is moves it into the new one and you're doing that so you can get long-term care benefits. Exactly, which is really a big part of an understanding that like I always call you the goad.

Like here's some more salty advice from my friend, right? You know like oh I need to think about my own situation and not so much for me because you know I just lived through the passing of my mother-in-law and we took care of her for the last four years and and what my wife you know ended up doing because she didn't have long-term care especially in the last four months of her life was grueling if she'd had more help and all those things. And I knew actually after with my father that you know my children I want them to obviously be part of it and I want to you know forego the hospital as long as possible and get you know home health care but I don't want my children to be burdened with all that we were burdened with people sure go through that stage of life it's very very very difficult and so such a such an important thing. So understand you don't have to have an annuity already that's accumulated interest you haven't paid taxes on but it's a nice place to start when somebody already has one of those right and they're concerned about the taxation because either they're going to pay taxes on that money or they're going to pass that on to their kids and their kids are going to pay taxes on all that accumulated interest we can use that as a basis for one of these policies okay and because when it's paid out as a long-term care benefit for qualified long-term care services it's not taxable so you can actually access tax-deferred money and turn it into tax-free money so just leaving that that's an opportunity but the main place that we offer these are people that have health conditions that they couldn't get the other and they have some money sitting on the sidelines that they are not needing to deploy for income so we can mix all that and figure out and in the second part of the show we're going to be going over three different options that we work with frequently and talking about how they could fit for some people. Yeah and as you shared with me sometimes that wasn't all that much money that the lump sum had to be so I think it's it's out there kind of for everybody so I'm so excited that we're going to continue this but we've got to remind you this show is brought to you by cardinalguide.com if you go to cardinalguide.com you're going to find how to get up with Hans very important his book the complete cardinal guide to planning for and living in retirement as well as the seven worries tab with all the show notes all the information we're talking about today with today's show being about long-term care insurance so we'll be right back with all these it is finished options how cool is that 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 shaile and today's show lump sum long-term care with some really wonderful solutions and and so what are our options here hans okay so i'm going to give you some specific numbers and understand that you can go first of all on youtube and find the lump sum long-term care show and you can access the show notes and the video where we went over the same thing we're doing on the radio or you can go to cardinalguide.com which is what most of you do and you can just find the show notes up there for this show the lump sum long-term care and they'll actually have illustrations for a 65 year old man i don't know that makes a difference whether you're a man or a woman on any one of these three annuities so but a 65 year old example with a hundred thousand dollars going in here and we generally use a hundred thousand in our examples because it you know what it's pretty easy to double it cut it in half you know add 50 percent and so we'll just run with what we've got so the three products are one of them is annuity care from one america which we've shown and talked about that company quite a bit and this is the annuity product that the second one is the four care insurance from global atlantic and the third one is the bridge product from equitrust and they're they're all three different i mean the only thing they have is similar is that they're using an annuity as the chassis or the vehicle that the money's in and that the interest earnings are going to accumulate tax deferred and that all three of these pay out a substantial amount at some future date if you're needing long term care and then all three of them give you a much easier time with underwriting although they all three do it differently so we don't usually explain all three of these two clients that are right for these we usually just pick the one that's right for them and just begin explaining that so this is a little bit of going to school on the options we have available to us so the annuity care is is probably the most limiting in its underwriting so there's there's there's a lot of people that get turned down for life long-term care or traditional long-term care insurance for health reasons and annuity care still won't take them but then there's a lot of people that annuity care will take them so this is probably the first place we go if we've just had somebody turned down for long-term care and this product like in this example you can buy it as a couple or you can buy it as a single the example that we're given here is a single and we're doing a hundred thousand dollars there's only one rate class and if we put a hundred thousand dollars in here and you needed long-term care right away at 65 it's going to pay you out 28.99 a month for 72 months if you needed the long-term care at 80 it's going to pay you five thousand two hundred and twenty a month for 72 months for long-term care all of those payments would be tax-free so you can see this one is a little harder to get but it's going to pay a pretty substantial long-term care payment for a nice period of time when you're probably going to need it because it's going to probably be many years from now when you're going to need this so in there some kind of lifetime extension or something there is an extension rider on there but I don't want to get that detailed with all of these so I just want to stay general now and we're going to go to that one first but still a lot of the people that we bring that have health conditions are still going to be excluded from that one okay and then we're going to go to the next one is to the forecare and the forecare they have a question on there so I always talk about what they don't do they have a question have you been turned down for long-term care insurance in the last year and if that is yes you can't get this until it's been a year so right off the bat if somebody's just turned down for one of the others we can't use this for a whole another year so that's why we don't even try to apply and get turned down we're going to go right to this if we think you can get it right right right before you get turned down for long-term care and this then you so you can't answer that question right because they don't go for medical records nothing and your hundred grand there is you're going to end up in one or two places you're either going to end up in the premier rate class which is the best and then the second one is the standard and all this means is if you have a hundred thousand dollars that you put in this thing the hundred thousand is going to earn interest every month it's going to earn a little less interest than it would in some other annuity because it's the difference of what they're paying is actually buying you the long-term care benefit inside of this it's kind of hidden but we could show you what it is but they're never going to come asking for premium or money or more money this is stuff it's all cooked right from the beginning and this thing grows at interest and when you need long-term care you know if you needed it right away they're going to start paying four thousand two hundred eighty nine a month and they're going to pay that for a long time like seventy two months now that's at sixty five but if you wait till eighty to use it they're going to pay you six thousand six hundred and twenty eight dollars a month for seventy months and then the numbers at the standard rate are just smaller so the whole concept is you're using your first hundred thousand dollars plus interest first so all they're doing is sending you back your own money for the first two years but then once you're through your own money and the cash value is nothing you at the state issues the premier you've got another two hundred thousand dollars sitting there where the insurance company is going to keep paying you for a long period of time much easier to qualify for even than the annuity care with one america it's just a set of questions if you can answer them all no we're going to get you in one of the two categories but you can still there's people that can't get this for they either have these short health questions and they answer some of them yes or they've been turned down by somebody else in the last year then this third product comes from equitrust and it's called bridge and first thing with it everybody qualifies they got three rate classes so right off the bat i had a lot of interest in this thing because you know i just can start naming people that are still without long-term care insurance or they bought the short-term care because it was the only thing they could get and they're happy with it but they still don't have a large long-term care maybe we sold their spouse the thing they the big thing that we did qualify for we go back to them and we start taking a look at this now this only takes non-qualified money or not ira money but it will take a lump sum of you know you could do as small as 50 000 or 30 or 40 it will take transfers from other annuities it'll also take subsequent premiums so you can add to this over the years so if you're 65 you could start with this thing and then as you more money becomes available you could you could add to it now there's some conditions on that but i it has the ability to do that and it has three rate classes and they're not going to hold your health conditions against you near as much with this bridge thing i mean the first thing is they got a couple of questions that i could go over with you individually you know if you have like ms or you have aids or you have something very serious that very much limits your ability they're not going to turn you down they're just not going to underwrite you they're going to put you in the third classification right off the bat okay so i would ask you those questions and then we wouldn't wonder whether you can get and the third classification is not all bad now if you go through underwriting and you've answered all those questions no and you go through underwriting they do this video thing where you're going to do a video thing with the company that does the underwriting and they're going to rate you more by how spry you are i mean whether you can get up and down you can get around you get up out of a chair walk around the room i don't know lift your hands above your head i mean there's looking for mobility people that you know need a walker or need a cane or you know people that are going to fall and you know i have a lot of people with serious health conditions that can do all that stuff just great they just got this serious health condition that these other companies are saying no to they're perfect for this and they're going to put you either in the preferred class or the standard class and you know without throwing a lot of numbers at you all three of these are very favorable so you've got a chance at being evaluated for the good mobility you have and the good memory because they're going to give you a complimentary memory test on this thing as well where they're going to you know ask you the president is and name a list of five animals and then you have to be able to recognize three of them or something five seconds later or whatever i i don't know exactly but it's one of these delayed recall memory tests so point being is is we've got a lot of options we understand the underwriting for all of these and if you have some resources that you can put in a lump sum into this we can put the spouse with the health problems into one of these products and the other spouse we can put into one of the other products that we talk about all the time sometimes we put both people on one of these annuity products i mean the goal here is to take some of your resources put them aside state they're there for long-term care let them grow and earn interest maybe it won't be as sweet as some of the other products but it's still interest with the idea that these things will create that monthly income exactly when it's needed and keep paying it for several years there are options if you know are willing to just ask and so in order to do that you got to go to cardinalguide.com that's cardinalguide the bird like cardinal and guide.com and there you're going to find right the seven worries tabs which include one of those is long-term care and you're going to find the show notes all these numbers delineated for you that Hans shared today in the show as well as the video on the exact same subject and of course Hans's book the complete cardinal guide to planning for and living in retirement but most of all easiest thing is just call Hans you know how hard is that and and get a one-on-one and with your situation and and believe me you know it's gonna it's you're gonna be so glad you did thanks so much for another great show Hans thank you the opinions expressed by Hans Shile and guests on this show or 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 or not guaranteed past performance cannot be used as an indicator to determine future result 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 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 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 hans 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 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 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