5 Examples of Long Term Care With Rates

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.

Today on Finishing Well with certified financial planner Hans Scheil, long-term care, five examples with rates. And we're going to get into all that math soon enough. But, you know, we want to give you a little context for the math.

The math is critically important, but I bet if you've ever thought about it, if you did the math on whether or not you should have children, chances are you'd not have children. So we want to give you some context for the math in this particular situation. And I came across this the other day. I was studying the 38th Psalm, and you may know that famous verse, and it says, taste and see that the Lord is good. And as I began to realize, like I never had before, that when you actually taste something, especially, you know, my mother's strawberry shortcake, it affects you. Like, oh, my goodness. I mean, this is a huge effect, and it changes your attitude and many other things.

Well, you will find that the people that are most interested in long-term care, as Tom and Hans explain in their video, are the people who experience the care of their parents or the care of someone else close to them, and they realize the critical need for this particular thing. And so, again, when you just do the math on it, you know, it's not the context of it. It has to do with tasting and seeing, just like if you ever taste God, right? You're going to see that he's good. God, perhaps they think, but until they actually taste him, right? And that he comes, you know, in that moment where you need faith, where somebody close to you dies or something like that.

When you taste him, you know, that's a whole new ballgame, Hans. You know, if we do all the prices and amounts and benefits and show it from five different companies, if we just jump into the numbers and we stay there, that's going to do almost nothing to motivate you to actually address this problem and buy a policy. So what we did, and we kind of in the making of the video, we went into it too long and said, why does somebody want to look at these numbers?

Why is this going to be so attractive when this video comes out and all the material? And it's because people are, you know, concerned about whether or not they have coverage when they need long-term care. I mean, in our example, we got a male 65 and a female 65, both as a couple. And then we show their prices for the single is what's going to motivate somebody is that this can wipe you out and it just, it can cause your family to get in disarray if you have a crisis, a long-term care crisis, and you don't have adequate protection, you don't have adequate insurance. So we really wanted to focus in the beginning of like, why do you want to study these numbers?

Why do you need long-term care insurance? Why is this important? Yeah, we went on a little too long when the objective of the video and the accompanying show notes was to give you some examples is like if you listen to us go on and on and on and on about why you need long-term care, and then you kind of get where's the beef, you know, where are the numbers? Well, we wanted to have a video where we actually do that.

And so that's what the video is about. That's what today's radio show is all about is how much is this going to cost you? What are your options?

Who are you going to buy it from? What are the benefits of the policy? And we wanted to actually give you some examples. So if you go find this video, watch it, and then you'll look behind there, and you'll find at the website, you can actually download the show notes and it gives you the actual illustrations, which points out, gives you all the information that you need to make a decision. Yeah, it's absolutely fabulous that the idea of this is there's five different plans and they're comparing them like for this particular person in this particular situation, you know, this is the correct thing for somebody, you know, that can't qualify some for some of the other ones, but they can get this. And in other words, all those five plans are outlined in great detail, amazing detail in the show notes. And so wonderful, again, you go to, you know, cardinaladvisors.com and you click on the seven worries tab.

And of course, this is long term care. And there you're going to see that that video with the show notes. So we want to preface all that by saying that, oh my goodness, you can get all you want on these five plans. But obviously, if there's no need for the plan, you don't need all the notes.

But believe me, you know, for those of us who have tasted and seen and believe me, I did with with both my father and my mother in law. Then, you know, just what an opportunity this is to prepare for our children. And of course, both in Tammy and I, because we have tasted and seen, you know, we have one of these policies, so we understand. And so in our in our five examples, we use the same format for benefits. Okay, we started at $6,000 a month of benefits, you know, which is $72,000 a year. And we made the benefit period last four years, which a lot of long term care cases are through in four years.

But some aren't, but we use four years as kind of a standard format for each person if there's two people covered under the policy. And we made the $6,000 a month benefit increase by 3% inflation for the life of the policy. And so what that looks like, like on a couple, both 65, the benefits start at $72,000 a year or $6,000 a month.

But by age 90, these benefits are $12,000 a month, or $144,000 a year. So they've doubled in benefits. So that having the inflation in there is if you think about it, if you're 65 now, and 25 years from now, stuff's going to cost a lot more than it does now.

So we built in an inflation. And then we went through the various types of policies that are offered, and showed you how much it costs. Now, one thing I want to keep in mind here is this is a pretty beefed up policy benefit. Some people, when we show one of these particular plans to them, they end up buying half of it, or they end up buying three quarters of it. So it's very easy to just cut everything in half, including the premium, and move these into a more affordable zone.

So I want to give you, just kind of jump right into the five policies. And the first one is really the one with, I would say, the highest benefits because it's an indemnity policy. And what that means is you don't have to send in receipts to the insurance company when you're getting long term care or receiving it, nor do you have to hire a professional home health care agency. You could hire a family member. You could hire your own people.

You could have somebody come in and live with you. And as long as you qualify for the benefit indemnity policies, as long as you're required to get long term care, they just send you the check every month without receipts. So in this example, for a couple, it takes $220,000 of non-qualified money one time in a premium.

So it's pretty expensive. But they're buying the top of the line policy, and they make no further payments for the rest of their life. And when they both pass away without using the insurance, the death benefit is $216,000. So essentially, if you put that much money with an insurance company for a couple, and then you both make it through your life and you didn't use any long term care, they're basically going to send your premium back to your heirs.

So a lot of people like this hybrid life insurance, life long term care insurance. So it's going to pay you either way, whether you use it for long term care, or you pass away without using it, it's going to send your heirs your money back. So when you started out, you had said qualified money, or non-qualified money. So you said you needed to buy it with non-qualified money.

So for those wondering, what is it? This is money that's not in an IRA or a 401k. It's money that you already paid taxes on. And frankly, a lot of people don't have a significant sum of money that's outside of an IRA.

So this first example that I'm going over isn't really available to a lot of people. Now you can pay this premium over 10 years. So some people want this policy so bad that they split the $220,000 up over 10 years. And they pull the money out of their IRA anyhow. So there's a lot of ways to work around the premium. But that's the big stop sign for a lot of people. If they want to buy it with a single premium, they just don't have that much what is non-qualified or brokerage account money to put into the thing.

Okay? Now, the next policy, number two in the list, is a policy that you buy actually with IRA money. You could put $290,000 or transfer in $290,000 of IRA money and buy very similar benefits.

They're not exactly the same, but they're close. Still $6,000 a month, turns into $12,000 a month by the time you're 90 and somewhere in between. It has a death benefit of $300,000. So if both of you bought this and you were to pass away without using it, both of you, your heirs are going to get $300,000 back.

Now, I want to get into the nitty-gritty, but somebody would bring that question up and they say, well, gee, I don't have the money to stick in this, but I have a big IRA over here that I need to start distributing. Well, okay, that's where we're going to go to the second policy. Well, at this point, we've got to go to a break, so we want to remind you, of course, that this show was brought to you by CardinalGuide.com, and right there, it says seven worries tabs we talked about earlier, and there you're going to find the long-term care worry. And as we talked about, there's a video with unbelievable show notes that gives you all the details of all these different plans, the exact numbers within them, and how those kind of things work.

It is absolutely marvelous. It's right there under the long-term care on the seven worries tabs at CardinalGuide.com, as well as the contact information for Hans and Tom, and of course, Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement. And so with this being, again, long-term care, five examples, a really awesome opportunity for all of us to finish well, you know, as I think about the title of this show, long-term care is a gigantic part of it for many, many, many people. As to finish well requires some type of long-term care. We'll be right back. Welcome back to Finishing Well with certified financial planner, Hans Scheil, and today's show, long-term care, five examples.

We want to help finish well, so Hans, take it away. Okay, so we were given the example that goes through all five of these is $6,000 a month of benefit, $72,000 a year for long-term care, either at home or in a facility, four years of benefits, 3% inflation on that. And the first example, we were putting for a couple, both 65, $220,000 depositing into this, and then knowing that if we never used it for long-term care, it's going to pay our beneficiaries back most of the money that they put in it.

But that's not what we're buying it for. We're buying it for the long-term care, and this thing could pay out well over a million dollars to the both of you for long-term care. Now, the second example has similar benefits, but we're going to use IRA money. And in this case, we'd have to put $290,000 of IRA transfer, custodian to custodian, and it would provide very similar benefits, over a million dollars of lifetime benefits if you use it when you're 90. And this policy is a reimbursement policy.

So we talked about that on the first part of the hour. And so next up is the third example, and this is a traditional long-term care policy. So no big annual premium, no big one-time premium.

What it is, is you're just going to pay by the month or pay by the year. It's just like any other insurance policy. And very similar benefits, $6,000 a month, $72,000 a year. It's going to grow at 3%, so by the time you're 90, if you were using this thing, $12,000 a month over a million dollars in total benefits, and the annual premium is $12,554 a year for two people, two people aged 65. Now, if you go over to the, if you bought this policy individually, and you're single, a female would pay $9,458 a year, and a male would pay $5,311. So men are a lot less expensive than females on long-term care insurance at 65.

And people are going to say, well, why is that? Well, women just are more likely to use it, and the men are more likely to pass away with never using it or use it for a little bit. And women use it longer.

I mean, if you go in any assisted living facility, like I did when my mother was in there for years, and you just look around, it's mostly women in there. And that's the reason for the difference in the price. So that kind of gets hidden when you buy a couple policy. But when you break it out, it's significant. And the fourth policy is we're going to now go from a life insurance policy and a long-term care policy to an annuity policy that offers long-term care benefits.

So why are we mixing it up and making it more confusing? Well, this policy would require a single premium. You can only buy it on one person.

So there is no couples policy on this. And it would take $115,000 of premium or of money that you're going to pay into this annuity. And you pretty much, if you're going to get the long-term care benefits, you're going to need to leave it there for the rest of your life. And this policy, if you look at the benefits at age 70, $6,666 a month, the lifetime benefit of the thing at age 70 is $864,000 a year. If you look at the benefits at age 85, $10,000 a month, $120,000 a year, $600,000 max. So you start going through this.

I don't want to confuse everybody on the show. Why do we have this annuity that has these odd numbers? Because this policy, you can have some health conditions. You can have some significant health conditions.

We've talked about this in prior radio shows. And we can get a whole lot more people insured on this fourth policy for what are similar benefits. We have people with rheumatoid arthritis. We have people with Parkinson's. We have a whole list of illnesses where we've been successful in getting people approved for this policy.

Now those are in their early stages. If somebody has advanced rheumatoid arthritis or they have advanced Parkinson's, they're going to get a smaller benefit on this policy. But what we've done on the video and in the show notes is we've actually run the illustrations. So I'm throwing all these numbers at you. But you can actually download both the couples policy and the singles policy. And you can just read them and look at them and find which one would look at you.

As I told you earlier, you could put them in halves. And then the fifth policy that I've put up here is the one actually that Robbie has. And I have a piece of this policy myself where I bought the home health care benefits on this. And it is a short-term care or a recovery care policy.

And it does not have inflation on it. So I just started the benefits at 9,000 a month. And they're going to stay 9,000 a month if you're in a facility. And that's 108,000 a year. And it only pays for one year. So it's a little bit of a limited policy.

But one year is a long time. And it has a separate benefit for assisted living, excuse me, for home health care. And the separate home health care benefit is 1,200 a week. And both of these benefits are an indemnity on this policy. So they're just going to send you the 1,200 a week for 52 weeks if you're getting home health care.

And again, we put this policy up here for many different clients. Number one is the price on it is very competitive. I mean, you're going to pay $1,268 a year or a little over $100 a month for a 65-year-old male or female. So that right there has a lot of people's attention.

And it's a price performer. And I sell this to a lot of very wealthy people as well and clients because these clients have told us that they're just not turning over to an insurance company, $220,000 or $290,000. Or they just said no, they have enough money that they're going to pay for it themselves is their answer. Well, then I get into a discussion with them that typically if you're going to pay for it yourself, that isn't too pretty when you're actually doing that because it's going to be your daughter or son-in-law or son who's actually doing the mechanics on that. And many times it's very hard for them to know what accounts draw out the money.

We've gone over shows on that before. And so many times they'll go for this because it buys them a year in a facility and a year at home from the insurance company. And then, you know, just then we can start digging into our assets and it puts a little buffer between them and spending their own money.

And I have a lot of very well-to-do clients that end up going for this. Yeah. And again, you know, the thing kind of confused me at the beginning, you know, when I first got this policy was the idea of an indemnity. And, you know, we haven't talked about it yet in this show, but when you can no longer meet the, what is it, six things of living or what is it called? Two of the six activities of daily living.

Right. In other words, when you can no longer dress yourselves and bathe or whatever the situation is, there's a whole, all those six, then all of a sudden you qualify. And once you qualify, because it's an indemnity, you don't have to turn in receipts, you don't have to qualify some other way once you've met that qualification that you can't meet two of those required six things of living. And I suppose the doctor has to send that in.

Is that what happens, Hans? It has to be certified by a healthcare practitioner, so it could be a licensed social worker, but yeah, they have to certify that you can't meet it. And you have to have three visits a week from a home healthcare agency, so you're actually going to have to send in a few receipts. But once you send in those three receipts or prove that you paid for those three visits, they send you the whole 1200 bucks. That's what's an indemnity for the whole week, and you can spend that other money on any way you choose.

Right. And again, you got a year of home healthcare and a year in a facility, which for me personally, it's what you could qualify and what you could afford. And of course, I would have liked to afford something different, but that's what I could. And under the circumstances, that would have covered either my father or my mother-in-law in their last year or so of life.

They both would have ended up in a facility for part of that and had home healthcare for most of a year, but it would have easily paid for all that in both cases. Yeah. And this policy, by the way, has easy health qualifications, like the annuity that I talked about.

Less difficult is, I guess, a better way to put it. And you can also buy just the home healthcare piece of this. Right. And so, you know, the nice thing about these five examples, again, they're all at the seven worries tab under long-term care, and you have all the details on, okay, this is what happens with this one. And again, you know, there's really, really nice that in some cases, you know, if you never use it, you know, you get everything you ever put into it back. And, you know, those are absolutely beautiful hybrid long-term care. And then you've also got the annuity one. And just some really neat examples of things people could do, right, Hans?

Yeah. And so, if you want to look at the illustrations without having to call us up or whatever, I mean, you can go in, and this isn't going to be exact because you're not exactly 65 and you're not in the health, but this is going to give you an idea of cost and benefits where you get the whole illustration. It's right in the show notes of the video, right there at our website, cardinalguide.com. You can go in there, you can find this video, and then you can find the show notes right behind it, or you can go on YouTube and find the video, and the show notes are right there behind it. It can be downloaded very easily.

Right. It's all right there at the website, as we've mentioned many times, as well as the complete cardinal guide to planning for and living retirement. That's Hans' book, an awesome resource, you know, obviously, or maybe not obviously, but for me, I absolutely love the fact that I have that if I need to check something for a friend or a family relative, somebody that I'm talking with.

And of course, my favorite, because the idea of finishing well is to get one that's customized for your situation, your assets, and again, your family. All those figure into the equation, and so you need the contact information for Hans or Tom, and it's right there at cardinalguide.com. Great show, Hans. Thanks.

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 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 website and send us a word. Once again, that's CardinalGuide.com. CardinalGuide.com. This is the Truth Network.