Do you remember Dorothy in the Wizard of Oz clicking her ruby slippers and chanting ‘there’s no place like home’ then waking up to find herself back in the warm embrace of Auntie Em? Sadly, most of the people in nursing care facilities (now referred to as independent living retirement communities and senior assisted living centers to make them sound like nicer places) wish they could do the same. They just want to go home. But for many of them that isn’t possible because they can’t afford in-home care. Or they may end up signing away their life savings in order to be cared for by a Medicaid program that is wanting in every way.
As most financial advisors know, long term care insurance is a potential solution for clients in their 50’s and up. Unfortunately, this type of planning can get pushed to the back burner. Other planning and priorities always seem to take precedence.
And this is where, for Supernova advisors, the monthly 12-4-2 conversations can come into play. Long-term care can be a a good topic to discuss during one of your regularly scheduled calls or meetings.
From a financial viewpoint, the best candidates for long-term care insurance are generally people between the ages of 45 and 75 with at least $200,000 of assets to protect. The American Association for Long-term Care Insurance survey found that 54% of the people who apply for long term care insurance are between the ages of 55 and 64, but 23% of those candidates are rejected due to unacceptable health conditions. In other words, the older you get the more likely you will be to have a medical condition that could disqualify you. And a whopping 69% of people will need some sort of long-term care during their lifetimes.
Clients might put this off and think they won’t need this care or they have enough assets to pay for their care out-of-pocket. That may or may not be true. The 2012 Cost of Care Survey by the American Association For Long Term Care Insurance found that the cost today for a private room in a nursing home is $81,030 for 1 year, $255,447 for 2 years and $447,741 for 5 years. In ten years, that would run $125,704 for 1 year; $396,282 for 2 years; and $694,595 for 5 years.
If you were to opt for in-home care the costs would almost certainly be even greater. The median cost is $86,944 for 24-hour care per year. And no one can predict how long they are going to live in that condition.
These costs don’t include other expenses you may already have in place. For example, the home you want to go back to, medications, autos, pets, and other obligations such as taking care of your spouse. In fact, in a lot of cases long-term care can double or more the amount of money you are currently spending. When you measure the cost of the insurance against the risk of unexpected expenses it seems like a good hedge.
Talking with your clients about this difficult subject will increase your value to them and give you the good feeling of helping them plan for the future. And when you include more topics like this in your 12-4-2 conversations, you are setting yourself apart from your competition. If you need help building your client communication calendar, you should consider joining our member-only website or sign-up for one of our coaching programs.