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Building a Long Term Care Strategy Financial Planning Association – Northeastern New York Chapter What is long term care? Defined as the assistance or supervision you may need Long term care can be received at home, in the community or in a nursing home or assisted living facility. Services needed because you are not able to perform some (2 or more) of the basic Activities of Daily Living (ADLs) How much could long term care cost? Address the Need for Long Term Care in Your Retirement Strategy Your life today is all about options Building a retirement strategy is about living the way you want to live, including in the event of a long term care need At least 70% of people over 65 will need long term care services and support at some point. Two Key Questions to ask yourself 1. “What is my written plan?” 2. “How will I pay for this?” What are your options? Self-funding Private Family Support Public Programs Insurance Or a combination of these options. Perceptions and Misconceptions “I already have health insurance. I’m covered.” “I probably won’t need long term care.” “My family will take care of me.” “I’ll never end up in a nursing home.” “If I need special care, I’ll pay for it from my retirement and my savings.” I’m too young to think about being old.” When you think about your financial security during retirement, which of the following is most important to you? Handling unexpected medical expenses Having enough income to sustain my lifestyle in the future BUT……. Another consideration is the impact that a long term care event will have on your family. How would an unexpected long term care event affect people you love? Care Coordination Complex challenges. Simple claim process. Assistance to help you find eldercare resources and providers in your area. Care Coordination can help you identify services and providers that may help you stay home and maintain your independence as long as possible. Types of Traditional LTC Plans NYS Partnership and Non-Partnership Shared Care Solutions Alternative LTC Products Where do they fit in? Cost Differences Competitive Positioning Doesn’t Change Women Charged More Than Men Most Pricing Anomalies Occur at Age Extremities Stick to Basic Life Insurance Product Selling Strategies Coverage Options Long-Term Care and Chronic Illness Riders Known Cost, Known Benefits “Free” Accelerated Death Benefit Riders Unknown Cost, Unknown Benefits Hybrid Products (Linked Benefits) Different Purpose, Different Design Underwriting Requirements Cognitive Impairment Test Mortality vs. Morbidity Simplified Issue Contractual Provision Key Questions to Consider What types of services do the benefits cover? What had to happen for me to go on claim? How much benefit will I receive, and how often? What happens once I go on claim? What types of Services do the Benefits Cover? Custodial services, services that help with the 6 ADLs. (Home health, hospice care, adult day care, etc.). Informal Care Qualifications depend on Benefit payment structure Reimbursement Indemnity Cash How much benefit will I receive, and how often? Dollar-for-dollar versus Discounted Rate Predetermined percentage of death benefit (2%, 3%, 4%) Capped at IRS per diem limit and Above *Pulled from Nationwide’s Understanding the Variations in Long-Term Care and Chronic Illness Riders marketing brochure *Pulled from Nationwide’s Understanding the Variations in Long-Term Care and Chronic Illness Riders marketing brochure What do I have to do to go on claim? Permanency: Is the qualifying condition temporary or permanent? Elimination Period: Exhibiting symptoms or receiving care? What happens once I go on claim? Effects on the policy Who will manage the policy? Available Solutions with Living Benefit Riders Term Insurance Conversion Options Permanent Insurance Annuities 4 Reasons to Consider Hybrid Life/LTC Options 1. Your premiums are locked in. 2. Any LTC coverage not used remains in a death benefit pool. 3. LTC payments go to the proposed insured – not the caregiver 4. There is inflation protection you use no matter what. The toughest conversations are often the most important ones.