Why Long-Term Care Insurance?

This is the Truth Network. 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 is Why Long-Term Care? And so it's a subject we talk about quite often. And thankfully, so I, the reason I say that is because the interesting thing about long-term care is actually when I review it in my mind based on my experience, it's one of those things that we learned from Stephen Covey is both urgent and important.

A lot of people realize it's important, but I don't know if you know how urgent it is, because if you've already been diagnosed with something, you're going to say, man, I wish I did that two weeks ago. Well, you know, there's a lot of folks that you work with that, you know, when I was thinking about this biblically, that I had the experience of working with a guy for about eight years, his name was Johnny. And I had a chance to witness to him how many times, I don't know, but I never really took the time to find out where Johnny stood with God, never asked the harder questions of him. And then one day he was in a coma and fighting for his life, and I found myself just in a horrible place of like finding out that he didn't know Jesus. His wife was very, very concerned, and there he was, and it was too late, it would appear at that time, to get a chance to talk to him about Jesus. And so interestingly, I actually went out and prayed like, God, if you'll give Johnny more time, then I promise I'll either introduce him to you or help you to get him to get to know you better.

And God answered that prayer, Johnny woke up out of that coma after four days, and later, shortly before he died a few weeks later, he gave his heart to Christ. Not realizing, you know, I passed that opportunity, it was both urgent and important. So is the subject today, right? Hans said long-term care people like to talk about it, but it is very urgent, and it is very important. We do that for people, with people, who are still in good enough health that they can act on this, and then they come in, they put themselves in a vulnerable position to us where they've shown us all their money, and they're generally not bringing up long-term care as one of the problems that they want our help with solving. It's more things like their income and their taxes, and Medicare, and making Social Security decisions.

It's all things around that you naturally think about retirement. And the most important conversation that we're going to have with them is around long-term care and long-term care insurance. And so we introduced this, and what we're doing is we're presenting people with an opportunity to do something about the problem while they still can. We're making it urgent for them. In the context of the conversation. And so I think that story is just phenomenal, and I was going through my mind thinking about people, who do I work with that I haven't been inquired about where they stand with God, and I haven't had that conversation.

And I'm going to make that urgent myself, just as a little note going forward. So we have a couple stories today that we want to share. The first one is George, who was 66 when he passed away, and his brother who was 68 when he passed away. And I know this story through George's wife, who's a friend of mine and an acquaintance and a business associate. And she is the story of two brothers, and they were diagnosed with this frontotemporal dementia at a very young age, in their 50s.

And it's the same thing that Bruce Willis has right now. It's a form of dementia that is very bad, and people lose all their abilities, and then in combination with ALS. So the ALS came a bit later, but it was all interrelated. And you can just imagine what this situation put with the family. And the story, as the story goes, is that George was as prepared as his wife and George were about as prepared as you could be for this kind of thing. They had long-term care insurance. They had disability insurance. They had IRAs. They had life insurance.

They had early withdrawal rates for chronic illness. They had just done a bunch of planning, and that's her business. And she was smart enough with this to understand that the people that really suffer are the spouse and the adult children. And so it's interesting that when they were doing all the planning, George and his wife, and she's the financial person in the family, they were talking to his brother about it, all the things, long-term care insurance, life insurance. And his brother just said, well, my wife's a nurse.

She'll take care of me. And as it worked out, she did, and it almost took her life. And, I mean, there's a part of this story where she wasn't able to leave the house for like a year at a time. People had to bring groceries to her, and she just could not be away from him without having somebody to provide a caregiver or substitute support.

So it's just, you know, it's the good story, the bad story, as much as you could make a good story out of this. And the first family, George, and just hearing the story from his wife, is they were able to, in some of the early years, do some traveling and really bond as a couple, because the disease takes a while to progress, and they were able to enjoy their children, enjoy some things, they took some cruises, that kind of thing. And his brother and wife and family, they were just too taken up with all the problems and the money problems that are created.

So it's a pretty simple story, and you've heard me, maybe you could react to that a little bit, Robbie. Yeah, the part about that story, when I heard it, that really just touched my heart, was this poor woman that was the nurse taking care of her husband, she did not leave the house for the last year of his life until his funeral. Right? And she finally got out of the house when she got to go to his funeral. And so, like you said, it totally took everything and then left her with freedom, unfortunately, to go to the funeral.

It's just, it's unthinkable. And, you know, again, it was an urgent and important thing at the time, but something that we don't think about that really could have been avoided. Well, yeah, and so what started to develop, when I just heard this story a few weeks ago, and I heard it pretty much in detail from, again, from George's wife, and heard a lot more facts about it that I haven't gone into, but it started to get of the excuses that people give me.

In the second part of the show, we're going to go over just kind of a list. I mean, one of those excuses that people do to just kind of push the problem aside, it says, you know, that my kids are going to take care of me. A lot of people use that to distance themselves from the long-term care conversation or to just effectively shut Tom and me down. This will just say my kids are going to take care of me. My daughter's a nurse. My daughter, you know, I put them through school and I raise them, they'll take care of me. And, you know, so we'll get into that a little bit later, but that's what kind of fostered the show.

And so I want to give another example of what's going on right now. This is a client of mine who came to me really through the book that I wrote ten years ago. And this guy was a medical doctor, retired, and he was 72 years old, I think, then, and he's 80 now, so it was eight years ago. And he was a plastic surgeon.

And at age 57, he broke his neck, which is a terrible thing, and he couldn't do his surgery anymore. And luckily, he had a disability insurance policy that to this day is paying him almost $18,000 a month tax-free. So he was smart enough to buy that insurance back when he was a young person, a young plastic surgeon, and that is still paying at 80 years old, and he's still alive and kicking.

But that's not why I'm bringing him up on the show. He also bought long-term care insurance, and not a full-size policy. He bought, effectively, about a half-size policy.

He took care of half the risk, but he and his wife are very glad that they bought it. He had a very severe stroke in December. He was in rehab for 30 days. He was in the hospital for a couple of weeks, and then he was in rehab for 30 days. And they sent him home, you know, and just because Medicare stops paying for the rehab after, you know, 30 days is long to have Medicare pay for it. And I guess he could have stayed there, but his wife is a nurse as well, and she's a client of mine, and I've been very much in touch with her helping her get the claim started. But she says, well, I really don't need home health care before he was home yet because hospice and Medicare are going to take care of if they're going to come in every day. Or actually, she said it was just two days a week, and I said, well, I told her, I said, ma'am, two days a week is not going to get it. And an hour, you're going to have an aide for an hour, and you're going to have an RN or a skilled caregiver doing some things two days a week. That's not going to get it, is you're going to need home health care to come in like three or four hours a day and relieve you probably seven days a week. And so I began, the policy pays for that, and I began the process of working on it.

So I don't need to give a lot of detail around this, but, you know, this story is about two months old at this point, and she's been taking care of him at home for about a week or two. And she has an amazing, optimistic attitude. So that's about all I'm going to tell you about that. This is a good time to remind you that this show is brought to you by Cardinal Guide, cardinalguide.com, and there at cardinalguide.com, you're going to see that, you know, the menu items are the seven worries that we talk about all the time in the show, and one of those worries is long term care. And so if you go to the long term care tab, one of the seven worries, you're going to see this show as well as a video and show notes on all the details of what we're going to talk about today. And of course, there's Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement, and the Contact Hans page, because again, your situation with long term care, etc., you know, can all be customized. You know, once you get up with Tom or Hans, it's all there at cardinalguide.com. So we'll be right back with a whole lot more on why long term care.

Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency. Welcome back to Finishing Well with certified financial planner, Hans Scheil, and today's show is Why Long Term Care. And so we've had a couple stories, Hans, on, you know, how you can see this practically, but, you know, we wanted to talk about some of the things that people think, well, this is how I'm going to handle my situation. I know a lot of people say, well, I'll just pay for it myself. Well, yeah, I mean, there's just a lot of the people that we're doing financial planning for, they're coming into us, and they have money by definition, and they have resources, and so they're, but most people come predisposed, they don't want to talk about long term care. This is a more threatening thing than dying is, and, you know, as Christians, we're not supposed to be afraid of dying, and I think as we get older, a lot of us really aren't, because we know where we're going, but that still doesn't stop us from having an inherent fear of death.

But this is more threatening than death in and of itself. It's the, you know, that I lose control of my activities of daily living, of just going, you know, I can't function without somebody helping me, and most people associate with that an institution that we're going to go into a facility that they're going to say I'm never going to go into. And I'm giving this very logically, I'm laying out the fear, and it doesn't come back to us logically, but the reality is people just, when they're in their 60s, and they're doing retirement planning, they just don't want to go there.

I mean, most people. And so, you know, when I was getting ready to write this show, I thought, well, what are the excuses that I hear, what is the technique that could, because most of the people coming into us, they already know me because they've been watching videos, listening on the radio, and they genuinely want my help, but a lot of them shut me down at the initial step or shut us down on the subject of long term care. Or maybe there's a couple, and one of them's all four talking about it, but the other one just comes in, and so what are the things they say to shut us down? And you just brought up the first one is I'll just self-insure, I'll just pay for it myself. And so let's talk about that a little bit, is that, you know, self-insuring, it's not really self-insurance, that's kind of a term that was just made up, because in order to really be insurance, you need a pooling of risk, you need several people all agreeing to pay for each other's long term care, and this is just a group of one or a couple, and they're just, so it's more like self-funding would be a more proper way to describe it. And what I want to ask, and I do ask the people that tell me that, well how much do you have set aside? How much money do you have set aside to pay for long term care if it happens to you?

And seldom do I ever get a really good answer to that question. What do you think people say to that, Robbie, when I ask them how much do they have set aside? I imagine they get a pretty funny look on their face, and they go, well I have it in my IRA or I have it in several accounts, you know, I'm covered, I have it plenty, I have plenty. That's about what they say.

They don't give me a number, and I say, no, I'd like a number. I mean, I just, you know, if you have an insurance company and they're going to pay for your care, they have a specific dollar amount set aside to do that, and so I'm going to just pin them down a little bit, and then if they can't answer the question, I'm going to start filling it in for them. Long term care costs anywhere from $60,000 to $100,000 a year, and you know, the average stay is about three years, so I'm thinking that, you know, in order to be self-funded, you're going to need, you know, $150,000, $200,000, $250,000. Do you have that much set aside for this? And, you know, the missus is still under the self-insurance program.

That doubles everything. You know, now we need half a million dollars or whatever, and that doesn't seem to scare people, and I'm not bringing it up to intended to scare them, you know, as creating a big number, but when people say that they're going to self-insure or they're going to pay for it themselves, most of them have given it very little thought. Yeah, and let me jump in here a second, because I know if you're listening to this, you may be interpreting like this, like, oh, Hans is trying to sell them an insurance policy, and I don't want people to miss your heart, okay? Because that's not actually what's happening. What's happening is Hans is like your big brother or, you know, trying to help you finish well, and he knows that one of the biggest disruptions that can happen to your financial plan is something like this happening that puts your wife in harm's way, and he does not want to see, you know, the end game of what happens if you don't have this kind of help, and so when you hear him talk about asking people these questions, it may be tough.

You may be thinking that he's, no, no. What he's trying to do, actually, and I know this, and I know Tom is exactly the same way, their heart is when we do one of these plans, when we set up this kind of insurance, we are not only helping the client, we're helping their family, so that at some point in time, their wife is not saying, gee, I wasn't able to get out of the house the whole last year of Robbie's life except when I went to his funeral, right? That's exactly right, and so, and frankly, when we get into conversations and people start giving us some real pushback, start bringing up, I don't give them these answers that I'm giving you, right?

This is just years of experience, and I'm telling you right now more of what I'm thinking than what I say, because if somebody really wants to put this over on the side burner, I'm fine with that. I mean, you're just going to go ahead and do it, but I'm going to bring it up again throughout the planning process, and by the time we get done with the plan, I just want to let them know that we're not signing off on their future as regards to long-term care, because it could put a serious dent in it, but let's move on. First of all, if you're self-insured, when you're actually implementing this insurance plan at 85 and accessing this $200,000, $300,000, or $400,000, it's not going to be you doing it. It's going to be your daughter, and does your daughter know where this money is, and does she know the tax implications and which accounts to sell from, and usually the answer to that is no. And so, I mean, the best thing to pay long-term care out of, in my opinion, if people that have a lot of money is actually out of the IRA, and so if we get in that situation, or you have somebody that has to pay for their long-term care, I'll be glad to help you. We probably want to draw, depending on their situation, any money that's left out of their IRA and pay for it, and there's some tax reasons to do that.

But let's keep going. We already brought up that my kids will take care of me, and that's what a lot of people are going to say, you know, because that's what their grandparents did, or maybe they took care of their parent. Or a lot of times these days, that really didn't happen. It was more their parent took care of their grandparent. I mean, there's a ways you can go back. That was pretty common where the older person still lived with the younger family, and everybody pitched in and took care of them, and they were taken care of at home, and that's not real practical anymore, and it's certainly not sound in a financial plan.

It could very well not be possible. Another one that people throw at us is none of my relatives live very long, so a lot of people will associate and bring up examples like their father or mother. They passed away at a young age, and they never needed care, so therefore the same thing is going to happen to me.

I don't need care. I could give you a lot of answers to that, but we live in different times, and there's a lot of people that have something like a stroke, or they develop dementia, and they're not lucky enough to die. They're kept alive for five or ten years, and they're needing full-time care. So going on, you know, I can't afford it.

A lot of people will just say that, and when that's true, we're not going to try to sell it to you. And typically people that can't afford it, what we're going to try to line up for them is a short-term care policy, or a policy that they can afford that's going to buy them like a year of care, or a year of home care, and it's going to pay for that. So they can just have some time to get their act together, so when they have to pay for it themselves, they've at least had some insurance coverage for a smaller period of time, and that's very affordable. And then kind of the final one, which we hear all too often, you know, if it comes to that, I'll just do myself in. I mean, there are these people out there that have this suicide plan, and they vocalize it, which makes me think it's not really a real plan. There's very few people that are really serious about this, but they just throw it out there. And, you know, you buy long-term care insurance, and you take care of this risk, you know, first to protect yourself, but it really is protecting your family, because the consequences to your family of you needing care and not having a proper funding for it, the burden falls on the family, because they have to provide the care. Yeah, and I've been on that end of it a couple times, and, you know, it's a difficult time to have to make those decisions, because you've just gotten this news that, you know, your father broke his neck, or your mother-in-law's COPD's gotten to the point where she's no longer able to function at home, and you're making decisions, and there was no plan, and, you know, honestly, I really think my father's life could have been extended somewhat had we really understood what I now know about long-term care and trying to think through these particular things. What I try to do when people are sitting in front of me is I try to raise the level of urgency of dealing with the problem, and there's so many solutions for this.

There's so many different ways to protect yourself, and unfortunately, you need to get this stuff where you still have some reasonable health, where you can still get around, and you still got a sound mind, and you can have some health history. That's a good time to point out that the way to do that is go to cardinalguide.com. If you go to cardinalguide.com, you're going to see the Seven Worries tab. Again, today's show is on long-term care, and also Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement, has lots on long-term care, and of course, there's the Contact Hans page where you can give him your individual situation.

So great show, Hans. It's cardinalguide.com. Thanks.

Thank you, and God bless you. This 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 Whale 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 Whale 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 Whale radio show on the website and send us a word. Once again, that's cardinalguide.com. Cardinalguide.com. This is the Truth Network.