Long Term Care FAQ

"The government will take care of me."

• No. Medicare and health insurance programs are intended to cover hospital and physicians' costs, not long term care expenses. Many people who pay for nursing home care out of their own pocket deplete their entire savings and therefore must apply for Medicaid, the government program for the financially impoverished. Individuals who have accumulated significant assets for retirement are at more risk.
• Medicare pays for only 13.7% of long term care costs.
• The Balanced Budget Act of 97 significantly reduced the dollars for both Medicaid and Medicare.

"I'm never going to a nursing home."

• 1.5 million people receive care in nursing homes; 12 million receive care outside nursing homes in many alternative settings.
• LTCI can pay for assisted living, home health care, adult daycare, etc.

"I want to talk to my (attorney, CPA, financial planner) first."

• Are these planners experienced with LTC? Do they know the tax incentives to purchase coverage or consequences of not purchasing LTCI?

"I don't want to think or talk about it."

• Anticipate this attitude. This is usually a multiple interview sale. This type of sale needs to be slowly introduced to the client and may take 2-3 visits before the client becomes comfortable enough to make a favorable decision.

"I might never use it."

• Risk is proportional to the premium. When you purchase coverage at a younger age, the premium will be much less expensive than when you get older.
• The healthier you are, the longer you'll live and the greater the risk of long term care.
• Various products offer:
  • Return of Premium rider
  • Shared Benefit option

"My kids/spouse will take care of me."

• LTCI can work in conjunction with a family member providing care.
• Most families today are located a distance from home and are dual income earners.

"I have plenty of money"

• LTC is the second largest financial threat to the estate or one's accumulated assets are wealth.

"It's too expensive. I can't afford it."

• Suitability is the key. Clients shouldn't spend more than 6% of income on LTCI premiums.
• Spell benefits out. A cumulative premium of $60,000 can potentially offer $750,000 in cumulative benefits.
• The cost in premiums over 20 years will generally be equal to the costs of 3-4 months of care in a nursing home.
• LTC is the second most expensive risk, and the probability of needing LTC is greater than any other risk, other than death.
• Twenty-two states have approved new tax incentives for LTC coverage and thirty-five states have pending legislation.

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