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The Asset-Based Long-Term Care Planning Toolbox

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What You Need to Know

  • The threat of a financial catastrophe is real.
  • Depending on the Medicare skilled care benefit is not a good solution.
  • Underwriting for the asset-based products has become more flexible.

What’s one of the quickest ways your clients can blow through their retirement nest egg? Long-term care, and with a 70% likelihood of needing some level of extended care, is a predominant retirement risk that should be addressed in every conversation.

Medicare: No

Many people believe that Medicare will assist with long-term care needs. However, the reality is that Medicare may only cover the first 20 days without any expenses incurred. For the remaining days from 21 through 100, there is only a daily co-pay of $185. Starting day 101, all expenses fall to the individual.

To add to this predicament, you must qualify for skilled care, not intermediate or custodial care. About 95% of long-term care and short-term care provided is custodial or intermediate care.

In the interest of simplicity, this description of the eligibility rules is just scratching the surface, and there is much more to this matter. There are many further layers of details in the full descriptions of the qualification rules and coverage limitations.

The point here is to at least address the topic of long-term care, to best serve your clients. Costs of care are continuing to rise, and today it can average anywhere from $4,500 to $13,000 per month, depending on the location and level of care needed.

Imagine adding a withdrawal rate to compensate for these expenses per individual. How long would your clients’ assets last?

The Tools

Fortunately, today, there are solutions to help our clients achieve some level of coverage should the need for care arise. Today’s most popular and financially beneficial strategies include using asset-based solutions, such as annuities and life insurance.

Strategies relying on annuities or life insurance can provide tax-free income leverage with lifetime guarantees. Some of these plans are 100% liquid, offer a return-of-premium feature, provide lifetime income, and lead to an income-tax-free death benefit.

Traditional Long-Term Care Insurance

Before the popularity of asset based long term care (LTC) planning grew, agents and advisors used traditional long-term care insurance (LTCI) policies.

The risks associated with these types of plans are the premium rate increases that can occur. Today more than ever, we are seeing rate increases on older blocks of business sold by insurers, causing some people to be priced out of their LTCI policies. If your clients already have a LTCI policy, be sure to review the contract with them and research the company they are with, to see if any rate changes have already occurred or may be on the horizon.

No Surprises

With the correct type of asset-based LTC plans, the benefits, rates, and payouts are guaranteed from day one without any surprises, and the underwriting can be incredibly generous. Most of the underwriting guidelines have become more flexible, allowing more people with preexisting conditions to become eligible for long-term care coverage.

This may take some carrier and plan shopping, but it’s worth your time to provide your clients with the most competitive and comprehensive options the marketplace has to offer.

The preliminary research and ideal planning will give your clients confidence throughout their retirement years. Be sure to review the pros and cons of each plan, talk about opportunity costs potential, and most importantly, the statistical likelihood and cost of long-term care now and in the future when they may need it.

Roy SnarrRoy Snarr, LACP, is the owner and manager of Snarr Financial & Insurance Services in Austin, Texas, at

 (Photo: Shutterstock) 


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