More than 50% of Americans turning 65 years old will require long-term care services and supports, which means that everyone should have a plan for their extended care. Unfortunately, not everyone will qualify for long-term care insurance (LTCI).
How to Determine Client Suitability for Extended Care Planning
When considering which prospective clients are suited for LTCI, you should take into account both their health and their wealth.
Health
Your clients should consider purchasing long-term care insurance as early as possible. In order to maximize insurability and any potential health rate discounts, we recommend a target age range between 45 and 65. Clients with many chronic illnesses will likely not qualify for long-term care insurance, but they may be insurable for a short-term care insurance policy. Or if they have an imminent care need, they may benefit from using a Medicaid Compliant Annuity to accelerate Medicaid eligibility.
If you’re not sure whether your client would qualify for LTCI, we can help! Our team is always available to assist with prequalification. Click here to access our intake form.
Wealth
Typically, LTCI may not be a viable option for clients with assets under $50,000. For clients with assets of $50,000-$100,000, their LTCI premiums should not exceed 7% of their income. And for clients with assets greater than $100,000, long-term care insurance premiums should not be greater than 10-15% of their income.
Read More: Why Your Clients Should Pre-Plan for Long-Term Care
What to Look for in Your Client’s Portfolio
- Older life insurance policies or annuities that have gained value
If your client no longer needs these policies, they can exchange them tax-free for a long-term care insurance policy. - Stocks, bonds, and other investments
Where are your client’s investments? If your client were to need long-term care services, they should have assets that can easily be converted into cash to pay for care. Depending on the investment vehicle, tax consequences may apply. An LTCI policy will provide benefits to pay for care, rather than having to wait to divest investments. - Real estate
Investment properties or vacation homes cannot easily be sold to provide income in the event your client requires care. Additionally, the residential home may be subject to Medicaid recovery in certain states if your client qualifies for Medicaid long-term care benefits. If your client wants to pass down the family residence to a child or other family member, they should meet with an elder law attorney to discuss the estate recovery laws in their state. Purchasing a long-term care insurance policy to provide benefits may be more suitable under these circumstances. - Special bequeaths or charities
If your client has established a special bequeath to a family member or charity, an extended care crisis may whittle away at these funds. Long-term care insurance can protect these savings. - Business ownership
Tax deductions are available to business owners who pay for long-term care insurance through their C-Corp. Executive carve-outs can be established so the business doesn’t have to offer LTCI to every employee.
Long-term care insurance offers your client and their family a way to plan for their extended care. With LTCI, they transfer some or all of their risk to an insurance company, and in return, they receive benefit dollars to pay for the care they require. An LTCI policy also comes with the added benefits of a care management team and funds for home modification, if necessary. Plus, LTCI brings much-needed peace of mind to your client’s loved ones. For more information on the LTCI policies available in your state, we invite you to schedule a call with us.
