As the Washington Cares Fund begins the payroll tax deduction on July 1 and some 13 other states follow suit with plans for similar legislation, we’ll continue to see more in the news regarding planning for long-term care. This has certainly increased awareness of the need to plan ahead, but it has not solved the dilemma of how to pay for long-term care on a national basis. As insurance agents and advisors, we cannot wait for legislation to pass. It’s crucial for you to be having these conversations with your clients, regardless of legislation that may or may not be coming. Your clients should establish a long-term care plan today while they are healthy in order to prevent their loved ones from having to piece together a strategy in crisis mode. After all, long-term care expenses are one of the greatest threats to your client’s retirement assets.
Discussing long-term care and your client’s need for assistance as they age may not be a comfortable conversation, but it is a necessary one to protect their nest egg and ensure they have a strategy in place for their loved ones to follow. But the question is, where should you start the conversation?
Longevity
If your client is healthy today, that doesn’t mean that they will not require care later down the road. In fact, the longer your client lives, the more likely they are to become dependent and need care.
Caregiving Experience
Has your client been a caregiver for someone? Over 50% of long-term care insurance (LTCI) policyholders have purchased LTCI because of their prior experience as a caregiver. They understand the physical, emotional, and financial hardship of being a caregiver, prompting them to purchase LTCI as a safeguard.
Choice of Care Setting
75% of long-term care insurance claims are paid for at-home care, whereas 70% of skilled nursing beds are paid for by Medicaid. Your client should have a plan for where they want to receive care, such as at home or in an assisted living facility. If your client needs care, where would be their preferred place to receive it?
Caregiving Team
Part of your client’s plan for long-term care should include who is available to help with care, how often they can provide care, and what tasks they are comfortable assisting with. Is your client single? Do their loved ones live nearby? Would providing care become a hardship due to reduced salary, other obligations, or the mental and physical demand that is required?
Cost of Care
Another important aspect of long-term care is the cost involved. The cost can be substantial and pose a great threat to your client’s retirement savings. How would your client pay for long-term care without LTCI? Do they have an investment or asset that would need to be sold or divested? Would there be a tax consequence? How would this affect their spouse or children?
Lifestyle and Financial Obligations
An often-overlooked piece of the planning process is the lifestyle of a healthy spouse and their financial obligations within the community, such as community memberships, religious tidings, or their spouse’s lifestyle. Does your client have financial obligations that would be affected if they needed long-term care?
Read More: How to Handle Client Objections to LTCI
A long-term care plan is a vital piece of any retirement plan. Encourage your clients to discuss their plans for long-term care with you as well as their loved ones. Purchasing LTCI is the most affordable way to ensure that benefit dollars are available when your client needs care. It provides an income stream once the benefit trigger and elimination period (or deductible) are met. For more information on the long-term care insurance plans available in your state, contact our office today!
