Welcome to RTD Financial’s Aging Well Webinar Series. The fourth installment in our series features Al Lorenzi of The LRM Group, presenting “Extended Care Strategies”.
Overview
- Different insurance policies available
- 4 tiers for LTC planning
- Funding LTC Solutions
- What to look for in solutions
What to look for in a LTC solution
- Is there coverage for all state qualified services?
- Is there coverage for temporary claims?
- Is the cost and benefit structure easy to understand?
- Can policy premiums increase in the future?
- How are benefits paid?
Full Transcript
Monica Garver (00:04):
Hello everyone. And thank you for joining us for the fourth installment of RTDs aging well webinar. I have a 12 o’clock, so we’re going to give it a couple minutes before we launch this series, give everybody some time to join. All right, great. See people people coming in. So we’re going to go ahead and get the introduction underway so we can be on time for the seminar. My name is Monica Garver, and I am a senior financial planner here at RTD. The series was created to address some of the challenges our clients may face as they themselves, or their loved ones enter the later years in their life. This afternoon, our webinar will focus on how to pay or finance long-term care. The session will discuss the current options available for extended care strategies. Long-Term care through the use of insurance and other assets. With us today is Al Lorenzi.
Al is co-founder and principal of the LRM group legacy and risk management group. LRM is an independent insurance consulting firm that specializes in life long term care and disability insurance. LRM works exclusively with RIA advisors to identify and evaluate the impact of risk mitigation and insurance solutions as part of a financial plan. Al graduated from Robert Morris university in Pittsburgh, and has been in the business for 18 years. In the way of disclosure please note that this presentation is educational in nature. We appreciate Al taking the time to share information pertaining to our aging wealth series. RTD and Al Lorenzi and the LRM group are not affiliated in any way, formally or informally. RTD’s sole purpose in offering this webinar is to provide a means to share information that we feel may be useful to you from other and specialists. As Al continues with the presentation, feel free to type any questions that you may have, and we will address them at the end. With that I’m going to pass things off to Al for today’s presentation.
Al Lorenzi (03:17):
Thank you, Monica. And thank you for everyone joining us on the call today. I applaud everyone for joining us because I think, you know, the first step at you know, addressing some of this stuff is just knowledge and education. And hopefully today on this call, we give you that knowledge and education. So for today’s discussion, we’re going to look at what policies would insurance policies are currently available in the marketplace. There’s been some drastic changes over the last 10 years and some good and some, some solutions have gone away. We’re also gonna look at what to look for in an LTC solution and also to talk about how benefits are paid. Cause I think there’s some differences among the policies. So I want to make sure that you understand what are some of those differences.
Al Lorenzi (04:14):
Before we get into the actual insurance I think the retirement landscape has really changed and that’s based on health and people living longer, you know, the typical issues that we’ve seen in the past for people in retirement, from what they pass away from that medicine’s gotten better. People are living longer, your, you know, breast cancer and heart attack and strokes, all of that is down. Okay. And Alzheimer’s, as you can imagine is dramatically up. And I think as, as people live a longer life, it’s a little bit different. And as you enter retirement, it’s going to look different for you relative than what it did for maybe your parents and grandparents. Okay. So I think that’s why it’s really important to work with your advisor at RTD to develop a good plan for you and your family.
Al Lorenzi (05:19):
Also, you know, people are living longer, obviously. That’s true. And I thought this statistic was kind of interesting. So I wanted to share with you between 1990 and 2000, the increase in the percentage of people living to age 100, went up at 51%. Maybe that’s why Willard Scott decided to retire for those who remember, you know, he used to celebrate people turning 100 on the today’s show. He’d be a busy bee, I think today. But that just kinda gives you some idea. People are living longer, medicine’s getting better and, you know, early detection, all of these things are, have been great and people are living a more healthier lifestyle and we need to be aware of what that means going into retirement.
Al Lorenzi (06:17):
I did want to take a minute and just give you a snapshot of what the cost of care is looking like today. We use the Philadelphia area as just a, a gauge of what that cost is. So you could see that home health care is running about 4,200 to $4,300 a month. That’s based on a 24 25 hour a week cost. So obviously it could be higher or lower depending on how many hours you need those aides. And then you could see adult daycare assisted living and then a nursing home. And usually the nursing home is what most people are gauging costs from. So I wanted to make sure that people understood what those costs look like today. We have seen inflation on these costs over the last 10 years at a pretty high rate. We’re looking at it the last decade, the inflation on all of these costs that you’re seeing right now be close to about four and a half percent. That’s nearly three times greater than the us inflation rate. That’s, you know, about 1.7.
So the one thing that when I looked at the inflation for each of these, the home healthcare inflation is going up a lot quicker. And so the, that home health aide last year went up over 6% in costs. And the reason is people want to stay in their homes, but there’s a supply and demand issue. There’s a lot more people retiring that baby boomer generation, and there’s less aides out there and less people going into that occupation. So we’re going to probably see that maybe continue on the inflation rate, but it’s really hard to say where some of these costs go in the future. It’s a major problem, major issue. And again, I think it’s one that your RTD advisor can really help you integrate some of these things into your plan so that you can have a strategy put in place to maybe handle some of these costs in the future.
Al Lorenzi (08:35):
Now how to fund your plan. You know, there’s really three different ways where you can try to fund your plan. You can use lifestyle, income, or insurance. For today’s call, we’re going to really dive deep into the insurance portion. And I want to educate you on what insurance policies are available. And for some people that maybe they have insurance policies already, I want to touch upon some of the existing policies what’s going on with them and tell you about some new policies that are out that are causing a lot of excitement in the industry.
Al Lorenzi (09:10):
So when I look at the insurance policies available, there’s really three different types and we try to categorize each policy in one of these three areas. So traditional long-term care insurance it’s been around for a long time. It started in the late 1970s and it was called nursing home insurance. Okay. And ironically, that’s no one wants to go to the nursing home. So you know, nowadays the insurance, most people want home health care. So they changed it and they just call it, you know, long-term care insurance. And it really didn’t gain popularity until the late eighties into the nineties. These policies are going to provide the most amount of benefit for your dollar and only provides benefits for long-term care costs. The premiums are not guaranteed. And right now in the marketplace, you can only buy a policy that has a lifetime premium. Okay.
So a while ago, not so long ago, you could buy a policy that you could pay up over a period of time. And then after that, you know, you wouldn’t have to worry about any increases, but those policies don’t exist today. If you’re looking for new policies for the folks on the call that already may have a traditional long-term care policy, a couple of things to keep in mind, even if you’ve received the premium increase, it’s probably still cheaper than a new policy. Rarely do we ever find that it’s appropriate for some of the replacement existing long-term care policy. There, there has been a rare situation where we have, but if that’s something that you want reviewed, obviously engage your advisor and we’d be held more than willing to help in that evaluation process. Now, some of these premium increases, I want to make sure that people are aware that the insurance company can’t just Willy nilly increase premiums. Individually, or on blocks of business. They have to get approval from the state insurance commission and they have to financially justify that approval. Okay. And in most cases, the States are approving a portion of the increase, not everything.
So for instance, if XYZ carrier wanted to increase premiums by 50%, maybe the state will only approve a 20% increase. So there are some checks and balances there to protect consumers that have policies already. I wanted to make sure that I covered that in case there are some people on the call today that do already have the traditional long-term care policy. Now over the last 20 years. And, and the earliest was about 30 years ago, started some of the hybrid policies the life insurance with long-term care and the linked benefit long-term care policy, which also has life insurance built into it. So the first one, the life insurance with the long-term care, this has a death benefit. So it’s death benefit now, long-term care later. So it gives that protection and you have one pool of money. So if you have a half million dollars of life insurance, if you use some of that in long-term care, any unused benefits are paid out in the death benefit to your beneficiary. There are solutions with the life insurance, with a long-term care that you can have a guaranteed premium, and we can have a great flexibility on the premium schedule so we can, you know, pay it over a number of years or over your lifetime. There’s a lot of different options and flexibility there.
The linked benefit products are similar to the life insurance with a long-term care. One of the primary differences is you get a little bit of life insurance and we’ll actually go through some real examples. But the primary you know, benefit in the policy is long-term care. The death benefit really just is more or less a return of money to your beneficiary plus nominal interest. The policy premiums and benefits in this policy type are guaranteed. And typically the premiums are either a single pay, or you could stretch it over maybe 10 years, but the good news is, is it is guaranteed. Now what I’d like to do is dive a little bit deeper in each three of these and kind of go through some of the pros and cons to each insurance policy.
Al Lorenzi (13:49):
So you understand, you know, what’s good about them. What, what may attract me to them, or maybe what would cause some hesitation. So in that traditional long-term care policy, it’s going to offer the most design flexibility, so different features and benefits, different inflation options, there’s different elimination periods, different benefit periods, all of these different things. You can really, there’s a lot of customization that could, can go together on that policy. And it provides the most amount of leverage for your dollar for longterm care. One of the unique features to traditional long-term care policies, that is a rider that you could add to new policies is called Sharecare. When we do traditional long-term care, which you know, less and less people are looking at that versus some of the other policy, but when we do it, it seems to be that that share care is something that people like and how that works is if you each say, well, you know, assume let’s say Bob and Sally have a long-term care policy.
If Bob never needed long-term care, his benefits would rule to Sally. And if Bob did need care and he used all his benefits, he could reach over and grab Sally’s benefits and vice versa, and Sally could grab Bob’s benefits. So by adding that to the policy, you know, you increase the likelihood that all those benefits could potentially be used. Traditional long-term care policies could potentially qualify for the LTC partnership program per each state’s a program and traditional long-term care policies. If you do through a company there is a unique tax benefit because they, the company could dock the premium, but the benefits are still tax-free. Most insurance you don’t get, or most things through a business, you don’t get like double tax benefits like that. So that’s, that’s a great pro for traditional long-term care. The top two objections I get to the traditional long-term care is the top two cons on this is the use it or lose it.
So what if I never need it? You know, it’s not cheap. And I spent all this money and I don’t get anything else, but long-term care. And that’s true. The premiums are not guaranteed and that makes people nervous. There’s been a lot of things and you know, the press and, you know, maybe amongst colleagues and stuff like that, hearing about premium increases and that can, you know, scare people, particularly, you know, as you go into retirement, you have so much money and you try to do a good job at budgeting and stuff like that. And you know, that, that could be unfortunate if the premiums go up substantially. Again, as some of the other things that I touched upon lifetime premiums is the only thing option available today. The other thing that people don’t think there’s less and less carriers offering traditional long-term care. You have Genworth and John Hancock are the two biggest in-force books out there for long-term care. They represent more than half of all the long-term care insurance policies enforced. Neither of those companies are doing new policies for traditional long-term care. You have Prudential, you have MetLife that also got out of traditional long-term care insurance. Now, those carriers didn’t get out of long-term care altogether. They just got out of traditional longterm care. Now they’re doing solely the life insurance. These hybrid long-term care with life insurance policies.
Al Lorenzi (17:36):
So let’s talk about the life insurance with the long-term care rider. This will provide the highest death benefit. Again, has that premium flexibility. There could be depending on the type of life insurance cash value and the cash value could be a liquidity feature. If you needed to cancel the policy, you can get maybe some of your money back or whatever the value is at that point, or potentially get some of it say, Oh, well, I don’t need the cancel at all, but maybe I just want to dial it back and take some of the money back. The other thing is you could do tax-free exchanges. We’re seeing a lot of clients that are at, or near retirement that bought life insurance because they had young kids, they don’t anymore. And we can tax-free exchange the values to policies with long-term care riders. And I think personally, this is a great area to address one’s longterm care needs. Because again, like we said, at the beginning of the presentation, people are living longer. Okay.
So mortality has gotten better. We’ve actually seen life insurance internal rates and everything come down. So a lot of times we can, you know, find that policy that someone’s had for a while, and they don’t need, like, they once purchased it for, we can tax-free exchange it to a new policy and that new policy has a better cost structure on it. And, Oh, by the way, the new policy, we can add the long-term care feature.And I have a great example of that. For us later today. There are options for guarantees with the life insurance, with the long-term care. Some of the cons there’s no inflation with the life insurance, with the long-term care. So you’re kind of capped at whatever the death benefit is. It does have the highest overall premium out of the three because it’s driving. The overall value of the life insurance is, is a big part of that cost.
Al Lorenzi (19:42):
Okay, now we have the link benefit, LTC policies. And again, this is something where you’re getting a small amount of life insurance. The life insurance is probably close to a little bit more than what you put in, and you’re getting a bigger, multiple on that for a long-term care. You have guaranteed premiums. You also have what’s called a return of premium option. So each of these policies, they vary a little bit amongst them, but at some point, if you wanted to cancel the policy, they could give you 80 to 100% of your money back guaranteed. Okay. they do have the death benefit again, because they are built on a life insurance chassis. So to say, we can, again, do tax-free exchanges from existing life insurance policies into these policies as well. Some of the negatives there’s limited premium options.
So there’s a couple of these policies that are only single premiums. And so when you look at it and be like, well, how do I come up with 80, 90, a hundred thousand dollars to buy one of these things? That’s a lot of money. So there are some that we can spread out maybe over 10 years. But again, I think that’s really where we would work closely with your RTD advisor to figure out how best to financially work this into your plan. And there’s not much life insurance. It’s probably one of the worst, you know, leverages from that perspective life insurance contracts, but that’s not why anyone buys these linked benefit products. They buy them because of long-term care. And the life insurance is there to say, Hey, if I don’t need it, then my beneficiary, spouse, children, whomever are getting everything I put into it, maybe plus a little nominal interest.
Al Lorenzi (21:29):
So let’s look at an example. We use the 62 year old female, and we ran a couple of different policies just to show you some numbers. I think I learn best by seeing numbers. So we wanted to, you know, take a minute and do this. So traditional long-term care policy, I use $9,000 a month because that’s what per previous slide, the nursing home costs were about today. Okay. When you looked at a five-year benefit, 3% compounding inflation and that $9,000 monthly benefit at age 80 grows to be $14,874. The premium on this policy just for this one, individual is about $10,000. Again, lifetime, not guaranteed.
Anytime we’re working with people on traditional long-term care policies we try to make sure that they are aware that there’s going to be some premium increases in the future. I hope there wouldn’t be, but the reality is there probably will be one of the things that we usually work with the RTD advisors on is, you know, illustrating in there maybe a little bit of inflation on that premium to make sure that the plan is sustainable. If there’s some premium increases over the years. Now, if we move on to the life insurance with the long-term care rider, we ran $250,000 of life insurance. How the monthly benefit works on that is it’s 2% of the face amount. So 2% of 250,000 is $5,000 a month. So you have access to up to $5,000 a month, and you can use that if you hit the maximum for 50 months, okay. The premium on that policy is about $5,600 a year. So we ran a lifetime premium, and this policy is on a guaranteed contract. And it is one of the more popular ones that we look at because people are interested or more interested in the guarantees. Okay.
The third is the link benefit product. I use the single pay for this scenario. So if someone is 62 year old female put in a hundred thousand dollars, it would have a six year benefit, a 3% inflation. The monthly benefit would start on about 4,500 at age 80, with that 3% inflation would increase to about $7,800. Now, if you look the death benefits 110 and some change, again, it’s not a great death benefit feature, but having six years of, you know, $4,500 a month or, or $7,800 a month at age 80, that’s really where this policy is intended for. Now, this particular contract had a a hundred percent return of premium beginning in years six. Ironically, we don’t, I’m trying to think in the last 10 years, I don’t think I’ve ever had anyone take advantage of the ROP. It just, you know, people get these policies, they typically keep it because as they age and they get health issues you know, they it’s reality, Hey, I might need this. So they they’re really, you know, not giving that up, but it’s nice to know that it’s a feature there. If, if you need it or something changed and you don’t need the policy anymore, there is a way to get all your money back.
Al Lorenzi (25:17):
I did want to give you an example, a real life example. So again, we’ll call this guy Bob, cause I just think it’s easier if I have a name to use. So an advisor brought me Bob’s policy last year. Bob is entering retirement. And so he’s engaging his advisors saying, Hey, am I good? Do I have enough money? And, Oh, by the way, you know, I bought this policy a long time ago. When I, when I was young and had kids and I, I don’t know what I should do. And so the advisor brought it to me. The current death benefit on the policy was 716,000. It was purchased back in 1987. He’s been paying $337 a month since 1987. The policy cash value. If he wanted to cancel the policy right now, he’d get a $182,000. Okay. His cost basis in the policy, what he’s actually paid into it is about 122,000. So the good news is, you know, he’s got more value than what he’s put into it.
Now with life insurance gain is if he surrendered this, the gain will be realized as ordinary income tax. Okay. And, and so the tax on that 60,000, that difference there be pretty high because it’s ordinary income tax. Now, we also looked at future forecast from the policy. It had a guaranteed who is age 78, but based on the current interest rates, it was only projecting to age 88. And most people don’t realize that life insurance policies, permit life insurance policies, them staying in force is usually predicated on some underlining performance either tied to interest rates or market returns or something like that. And so this policy, because it was set up in 1987, had a higher interest rate assumption and or expectation it’s not living up to. So it’s going to fall short and, and, you know, at age 89 he wouldn’t have the $716,000 of insurance. He wouldn’t have the $182,000 of cash. He would have nothing. Okay. But if he passed away prior to that, his family would get the death benefit.
Al Lorenzi (27:39):
Now, what we did was we looked at a solution adding longterm care for him because this was one of his concerns as he enters retirement, say, okay, well, how do I protect my nest egg from that risk? All right. So we looked at it, there was two policies in the marketplace that made sense, John Hancock and Nationwide. The John Hancock policy what we looked at is the same premium. Okay. And what we did is we use the current cash value as a 10 35 exchange, a 10 35 is just a tax-free exchange from one life insurance policy to another. So that’s how we were able to roll the money over without paying any tax. And we were able to increase his life insurance in and add a long-term care benefit of about $14,000 a month. Okay.
And on top of that, we’re able to extend guarantees and have the death benefit projection based on the current interest rate. And we actually moved it down, even lower on the assumption. Then the current would go for lifetime. So we recognize that the client may want it fully guaranteed. So we did want to show them well, what would that look like? There’s obviously a cost to the guarantee. So with nationwide has a fully guaranteed contract. We’d be looking at it a little bit less insurance, about 584, but also long-term care monthly benefit of about $11,000 a month. So what a great way to use money that he’s already budgeted money that he’s already using okay. To solve at getting some long-term care coverage. And so one of the first things, when we started working with your advisor and the clients is what existing policies do you have? Is this a source of funding for potential long-term care policies?
Al Lorenzi (29:33):
Okay. When we do work with advisors and clients, and I’ve been doing this 18 years, it kind of works out that we have strategies and certain conversations we have with different groups based on their wealth net worth and income. Okay. So just wanted to, and there’s different strategies for each kind of group. All right. The first group is people that really don’t have much money and they’re Medicaid likely we don’t really work with this group, but we recognize that there are people in society that they just can’t afford, long-term care insurance. And you know, if someone’s in a home, they should probably get an elder law attorney and help them preserve what they do have. But most likely they’re gonna rely on the government. Okay.
The middle class is probably an area where we see probably a bigger risk of saying they, they got enough money where the government’s really not going to help them too quickly. But they all don’t have so much money where they could self-insure. And really this group here is one where we look at a traditional long-term care insurance, sometimes the link benefit product as well. But they’re trying to avoid, if one person goes into a home, the other spouse is still living and then they go through a good bit of that money could leave that surviving spouse in a difficult situation. Okay. The next two categories, we have very similar discussions.
So with affluent and high net worth clients. If similar discussions, those discussions are a little bit different because, you know, they could potentially self-insure okay. They may not want to, or maybe they’re fine with that. But what we want to do is engage them at different ways to self-insure. And one of the things we like to educate them on is ensuring against the portfolio, their investment portfolio, for an unexpected LTC event that is timed with maybe a market correction or account values that are down. So if we can use the insurance as protection on the portfolio, then maybe if that event happens, you don’t have to sell into losses. And, you know, it’s really hard to build back account values when you’re taking withdrawals of substantial amounts of money out of the accounts for long-term care. So I think there can be some planning strategies for the affluent and high net worth clients that we can put into place and show them better ways and strategies of self-insuring to protect their portfolios. And most likely, you know, this group has also lived through the dot-com crash 2000 the 2008 that they, I guess, blame on real estate in the banking debacle. And maybe there are some that remember black Friday.
So you know, these are events that have happened and who knows we’ll probably have some other events that are, have some, some name and, and maybe blame associated with it as you enter retirement. But the difference for the affluent and high net worth for the high net worth, we’re talking about people that have estate tax liabilities and under current law, that’s about $11 million for an individual and for a married couple it’s about $22 million. So once you’re at that level or higher, we usually want to also work some trust planning in conjunction with the planning that we’re talking about because we’re cognitive of the estate tax that could be potential for your family. And we want to make sure we do this appropriately.
Al Lorenzi (33:37):
Okay. Now when I was a kid, we’d get a maze, you know, that puzzle that sometimes you see at restaurants for kids and stuff like that, and you try to figure out that puzzle. And I always thought it was really interesting. It was really easy to do those types of puzzles if you work backwards. Okay. And I think generally speaking maybe even with your advisor, they work backwards, what are your retirement goals? And then they show you what you need to do to get there. And I take the same approach when we talk about long-term care. So we want to understand what tier group of the person we’re talking about, but we also want to understand what the balance sheet looks like, because there are usually ideal assets that could fund long-term care. And so we went over one of them was existing life insurance with cash value, but here’s a list of different types of assets for different age kind of groups and what we may want to use to help fund long-term care. Okay.
Al Lorenzi (34:43):
Now what to look for in a solution. Okay. And this is if you’re buying a long-term care contract believe me, there’s insurance jargon and it gets confusing fast. And what we try to do is take our time, educate clients. And so for the folks on the call, I want to make sure that you understand when you’re looking at a policy, you would want to understand what are the qualified services covered in the contract. Okay. And making sure that there’s flexibility there, because let’s think about this, you’re buying it today, but you’re not hoping to use it today. And I guess you’re not hoping to use it in the future, but reality is that maybe 20 years from now, you need to use that policy or 30 years from now, what has changed? What are the future services that we don’t even know about is the language broad enough to take care of that? Okay.
There’s also policies out there that may pay for temporary claims. They may not. So there’s a lot of what we call chronic illness policies out there. And excuse me, a chronic illness policy only pays for conditions that are chronic. Okay. And what that means is you are not going to be able to recover from a, what that condition is. A good example would be a stroke. Okay. Usually chronic illness policies initially don’t cover the stroke claim because they don’t know what residual effects yet. There’s some rehabilitation that happens there. And if the residual effects of the stroke and you cannot perform two out of the six activities of daily living, then, then they pay out. Where there are other policies that cover temporary claims and permanent claims. One of the things to be aware of when you’re looking at a policy is if they use the words LTC or long-term care coverage, there’s a lot of additional regulation and oversight for the language that is required required now that the insurance company use on how to be on claim for all the same.
And how that is, is you cannot perform two out of six activities of daily living, or it’s a cognitive impairment. Some of those activities of daily living or dressing, eating, toileting, transforming from a bed or chair, continents and you know, preparation. So if you can’t perform two of those, and it’s your doctor, not the insurance company’s doctor, or if it’s a cognitive impairment. So if you see the words, long-term care or LTC rest assure that there is additional regulation and oversight on some of that language in the contract, as it relates to how to be unclaimed. So you wouldn’t have to worry about the temporary claim issue. If there, if you don’t see that, and you’re seeing the words chronic illness, then you want to make sure that you read it really closely and ask questions. Okay. we’ve covered, you know, premium increases is important to know if your policy has that. One of the other things that i think is really important to understand how the policy pays out. Okay. And there’s two different structures. There’s reimbursement and indemnity.
Al Lorenzi (38:16):
Okay. And the best way for me to explain this to you is to show you an example. Okay. again, I learned best by showing and, and learning off an example. So let’s assume for a second, you have a policy with a monthly benefit of $7,000 and you’re receiving some costs and the cost is $3,200. Okay. And we will assume that under the reimbursement, okay. That they’re all qualified care expenses. Okay. And in this reimbursement, you must submit bills, receipts and, and they’ll reimburse you for the expenses. Okay. And any expenses that are not covered they’ll bill you for the difference. So here, what we’re seeing is you have some thousand dollars a month, but since your expenses are only 3,200, that’s, what’s paid and the rest just stays in the policy that you can use in the future, you don’t lose the difference. Okay.
In the indemnity policy it’s pretty simple. You qualify your on claim, they pay, pay you the full $7,000. Okay. Tax-free now in that situation, you only have expenses at 3,800 use the 3,800, you pocket the difference. Okay. Now, one of the things that sometimes people don’t think about is there’s a lot of informal care costs that aren’t covered under qualified expenses. Okay. Let’s say you need to pay someone to come to the house, to cut your hair. You need to pay someone to cut your grass. You want to pay a family member that’s taken time off work each day, or going part-time to compensate them because they’re helping out. You wouldn’t be able to do that. And that wouldn’t be able to be covered under a reimbursement plan. So the indemnity policies offer a greater flexibility and control over how that money is being used. And, and I think it’s just easier. And we’re seeing a definite uptick in policies with an indemnity features.
Al Lorenzi (40:32):
Okay, now we did go over some of these things about the LTC solutions what to offer and you know, what to look for. And I encourage you to engage your advisor at RTD and, and, and have a plan written out have them help you evaluate, you know, the reimbursement and the indemnity what the premiums look like if they’re guaranteed or not, should we incorporate inflation? And on that premium in the future. And the one thing that I think goes under stood with long-term care policies is they provide long-term care policies, provide two things. One is a bucket of money and resources to help pay for the cost. And we have talked about that, okay, the other thing, the long-term care policies and most long-term care policies provide is a bucket of resources for the family.
Okay. So let’s say, you know, mom needs care, okay. And it’s not mom, it’s, it’s maybe son, daughter, spouse, whatever. That’s trying to figure things out. Okay. And I know for myself, when I, I don’t know where to go or what to do, I go to the resident expert and that resident expert today is Google. Okay. At any time you ever tried to find something on Google, it takes you a long time because there’s a lot of stuff there and you, you know, you might never find what you’re looking for. So the care coordination service through these carriers is like a concierge service. It doesn’t cost you anything. You can call them 24 seven say, Hey, mom has this you know, she’s starting down a path with dementia, or we want home health care here’s what’s needed. And they help you understand here’s what’s needed: you need a bed, you need a nurse, they coordinate all that care. So the loved ones are making these decisions at a high level. Okay.
And, and as a result, they can spend more time with the loved one with their families and careers, because let’s face it. Most of the people that are making these decisions or trying to coordinate this care are people probably in their forties or fifties. And they probably have kids and have careers. And it, it can be a big strain. So this is a great resource for clients to have ther, for their families. And particularly if the families, you know, don’t live close, or maybe only one lives close, that could be a big burden on the person that lives close. So this, this is a great service. When we work with clients, we make sure that they understand that a, the carrier has it and B how it works so that they can not only communicate to their family about their plan for long-term care, but they can also communicate to them that there’s a resource for them. Okay. To use that it’s not all on them to figure it all out. Okay.
Al Lorenzi (43:49):
Now I want to thank everyone for joining us today. I’m gonna hand it back, I guess, to Monica or we have any questions. I hope that today you got a better feel for the marketplace, the products are available and you have a better well-rounded knowledge of long-term care and the insurance policies available.
Monica Garver (44:17):
Thank you, Al for for that very thorough presentation on the extended care strategies available on the landscape, especially, you know, how things have changed. And some of the comments that particularly of interest was the comment you made about the premium increase in how and how that’s regulated. That was information I think was very useful. If we have any questions, I don’t see any questions from the audience. At this time, if you have a question, please feel free to type it in the message box on the webinar itself while people are throwing accumulating some questions out, let me ask you in a traditional long-term care policy, if those are in existence for members of our audience, who are their loved ones, what are some of the other typical riders that we would have seen? I know in my family we had my father had passed away without using his benefit and he did not have that shared care rider. But what he did is it, did, he had some kind of rider that my mom then didn’t have to pay her premiums anymore. So, so does that, does that rider exist typically in some of those?
Al Lorenzi (45:25):
Yeah. That rider is still available and a lot of the great riders have gone away but the waiver of premium after the first death of a spouse, that, that is an option that is still available with certain carriers. The, the other option that we see is a zero day elimination period on home health care. So maybe you have a 90 day wait on you know, traditional nursing home facility care, but you could add a zero day for home health care. And typically that’s the progression. People start at the home and as, maybe it becomes too difficult to provide that care at home, then it may be transitions to a nursing home or assisted living stuff like that. So yeah, the, the other big feature to a traditional long-term care policy that’s not available anymore is return of premium. I get that question all the time. I want to buy long-term care with a return of premium rider. Unfortunately, there isn’t a single carrier in the marketplace that’s offering that.
Monica Garver (46:39):
Okay. That’s good. What are some of the other typical questions you might most frequently get regarding long-term care, body of knowledge?
Al Lorenzi (46:48):
Yeah, absolutely. So one that comes up pretty frequently is reviewing someone’s policy. They may be getting a premium increase or maybe they just got it a while ago. And can you look at our policies or anything better? And I don’t, I can’t tell you one time that I have come back and said we, new policies are better. They’re even the premium increases are dramatically less than a new policy. And a lot of times the benefits that are embedded into their existing policy with certain riders that aren’t available or other certain benefits, we can’t even offer them. So if anyone has an existing policy have some peace of mind knowing that what you have is probably very good. The, I would say the other thing that we come across a lot with this is people with, like I mentioned, existing life insurance policies, not knowing that they can roll those over into these hybrid policies. Every time we show people that they’re like, I can use the same amount of money and get long-term care, it’s a very cost efficient way to address them.
Monica Garver (48:15):
All right, Al well, thank you. We at this, at this point, again, don’t have any questions from the audience. So we wanted to thank you all for participating. We will be providing a recorded copy of today’s presentation. Keep your eyes open for the invitation, for our final presentation in this aging wealth series recognizing and preventing elder abuse, that presentation will occur on September the 12th. So again, on behalf of RTD, we want to thank you for participating thank Al for his time. In this fourth installment of our aging well webinar, and I bid you all a good afternoon. Thank you. Thank you.