by John Darer® CLU ChFC MSSC CeFT® RSP CLTC
Last week I had the opportunity to see the movie "Still Alice" , a powerful movie which deals with the early Alzheimer's diagnosis of a 50 year old happily married woman with three grown children, a renowned linguistics professor who starts to forget words. When she receives the devastating diagnosis, Alice and her family begin a journey that finds their bonds tested. The concurrent track of the movie touches aspects of the journey from her children's standpoint that is familiar. My father was diagnosed with Alzheimer's in 2004, at age 70 and he died 9 1/2 years later. Towards the later stage of the movie, Alice has a home attendant and there is an implication that she may enter an assisted living facility. Dad entered assisted living at age 77, in March 2011.
We had the foresight as a family to engage in a discussion about long term care, the result of which was to set up a long term insurance program for both of my parents.
At the time my Dad was 65 and my Mom 61.
The mathematics on my father's policy. My sisters and I paid approximately $44,000 in total over 12 years (1999-2011); Dad entered assisted living March 2011. Top facility in CT at a cost of about $100,000 per year. He died in November 2013. In under 3 years the policy paid for more than 6 times what was paid in premiums, allowing my father to live a dignified and enriched life to the end, allowed us to supervise his care, maintain our careers and to preserve my parents' and our own assets. It gave us choices and the choice was the best facility we could find, Waveny Village in New Canaan, Connecticut, a very special place.
But LTCi is not just about nursing homes and Alzheimer's. I started my own long term care policy at age 38 because I am in a business where I see people get into serious accidents and sometimes the defendant only has a small $100,000 policy. The lack of liability coverage coupled with the fact that medical insurance is not a source to pay for long term attendant care is a good reason to start early. i know of people who have suffered a debilitating illness like a stroke in their 30s and 40s. At this point with the policy in force for 15 years and 5% compounding each year my daily benefit is probably sufficient to give me the a choice.
There are other solutions too.
A Long Term Care Benefit Plan converts a life insurance policy’s death benefit into a “living benefit” that will allow them to remain private pay and choose the form of care that they want.
Most forms of life insurance are eligible, including term insurance. The Long Term Care Benefit Plan pays out the present day value of a policy and protects the funds in an irrevocable, FDIC insured Benefit Account that makes monthly payments directly to the care provider. Because the funds are protected and only used for care, it is a tax-exempt, Medicaid and VA qualified spend-down of an asset that far too many seniors abandon as they move towards long term care.
This option, by design, extends the time a person would remain private pay and delays their entry onto Medicaid. It is a unique, tax-advantaged financial option to pay for care because all health conditions are accepted, and there are no wait periods, no care limitations, no costs to apply, no requirement to be terminally ill, and there are no premium payments. Again, ANY type of life insurance policy can be used to cover any form of senior care the policy owner wants: Homecare, Assisted Living, Nursing Home, Memory Care, and Hospice.
I offer LTCi in a number of states and I am currently offering Long Term Care Benefit Plans (life insurance conversions) in Connecticut, with other states to follow shortly.