Long-Term Care Funding: How To Help Your Clients Find The Money
Long-term care: It’s an unpredictable but likely expense that looms over many of our clients. Nearly 70 percent of our clients 65 and older will need some type of long-term care funding, according to the U.S. Department of Health & Human Services. And as life expectancy continues to increase, so do the duration of care and the costs associated with it.
So how do advisors help clients navigate the overwhelming world of long-term care funding without asking them to sacrifice their lifestyle and financial goals? And how do advisors do it in a painless, digestible, and fear-free way?
Once you’ve eased into the conversation and explained the benefits of shopping for long-term care funding it’s time to talk to your client about ways they can make sure the money will be there when they need it.
Asset Based LTC Insurance
At Pelorus, we offer a suite of asset based long-term care solutions that will allow your clients to have two policies in one. They’ll get one part that’ll pay out long-term care benefits if needed, and another that will pay a death benefit. Here’s how it works:
A 60-year-old nonsmoking woman in good health pays a $100,000 premium for a policy to provide up to six years of long-term care benefits.
If she never needs long-term care, the policy pays a $166,766 death benefit to her beneficiary. If she needs long-term care, the policy pays $500,298 for qualified long-term care expenses.
Her maximum available benefit is $83,383 a year for six years.
Liquid Assets
Many high-net clients plan to self-fund their long-term care. While some have the liquid assets to do so, they may be astonished by the costs of assisted living, home care, and nursing homes.
If your client plans to self-fund long-term care, start with numbers. Genworth, an LTC insurance provider, estimates the average cost for a home health care aid at roughly $55,000 annually and high-end nursing home care at approximately $106,000 annually. You can view their Cost of Care Survey here. Statistically, women need nearly four years of care and men an average of two years.
Share the statistics and crunch some numbers. Your clients may have a substantial pension, rental properties, and enough cash to self-fund. If they don’t, explore the other options, such as the asset based LTC insurance we previously discussed.
Idle Assets
Many clients have assets, but they’re idle. In other words, their money may be tied up in CDs, money markets, and life insurance policies that they no longer need or ones that aren’t producing healthy interest.
Find out whether your client has idle assets that aren’t working on their behalf. You may be able to find them a smarter investment solution.
Reverse Mortgages or Home Equity
If clients own their homes outright, they may have a high level of equity they can tap into. The trouble, of course, is that real estate values fluctuate. So you’ll also want to factor in inflation.
Reverse mortgages provide another viable option for long-term care funding because they allow seniors to access equity without selling or refinancing. The loan is repaid when either the person moves out of the home and the house is sold, or when they pass away.
Work with Us
We’ve partnered with advisors in life insurance, disability, annuities, and long-term care insurance for more than 19 years. The Pelorus team can guide you and your clients. Contact us today for assistance or to run quotes with our network of top-rated insurance carriers.
