Fully Guaranteed and Powerful Long-Term Care Strategies

Troy Sharpe: I’ll never forget this gentleman that I sat with about seven or eight years ago, back then I was sitting on five, six appointments a day but the 20 minutes that I spent with this guy still sticks with me today. He was 87 years old and he said, “Troy, I’ve been listening to you on the radio for many years. I’m almost certain you can’t help me, but I had to come in to know for sure.” I said, “If that’s the case, sir, then this probably will be a pretty quick meeting. Tell me, what’s on your mind, how can I be of service?”

He looked at me with a very stern look, and he slid this piece of paper across the table to me, and he said, “I want you to read that.” I picked the piece of paper up off the table and it says, “Dear sir, we’re writing to inform you that your long-term care premiums are going up 100% this year.” I set the piece of paper down, and I said, “That’s pretty common, especially someone your age, I see this all the time.”

He said, “Troy, that’s not the problem.” He said, “The problem is this is the third year in a row this has happened to me.” I learned a powerful lesson that day and it’s impacted the way that we look at long-term care planning for clients ever since then. In this video, I’m going to show you how to avoid what happened to him by sharing with you a powerful and fully guaranteed long-term care strategy that’s available to you, that wasn’t available to him when he purchased his policy all those years ago.

Hi, I’m Troy Sharpe. CEO of Harvest Financial Group, a certified financial planner professional, host of the Retirement Income Show, and also a certified tax specialist. There are many different flavors of the type of strategy that I’m going to show you today. Depending on your age, the state you live, how healthy you are, all these different variables can factor into what’s the best strategy for you and your family.

After I go through this, if you want to learn more, please reach out to us and we’ll run that analysis and help you find the most guaranteed and powerful strategy for your situation. First and foremost, we have to understand some basic concepts, indemnity versus reimbursement. An indemnity style plan is when you qualify for long-term care, you immediately get a check sent to you. Now, why that is powerful for you and what that means for you is let’s say you have someone taking care of you at home. You have a caregiver like a child or a grandchild that has to take time off work.

In an indemnity style plan, you can not only pay for your long-term care services if you have a home health aide or whatever that may require, but you can also give money to children or grandchildren, or someone from your church or the neighbor to help you if they’re taking time off their work. You have flexibility with how you can spend that money. Additionally, you can be in a facility or at home. The second type of long-term care policy out there is what we call a reimbursement plan.

It’s exactly what it sounds like. You pay out of pocket first and then you get reimbursed for expenses and they have to be qualified medical expenses provided by licensed health care professionals. On top of that, you can’t have a reimbursement plan at home, you have to be in a facility. Reimbursement style long-term care plans aren’t nearly as flexible as indemnity style plans. Second thing you need to know, what is the fine print? What are the things that you need to be aware of?

How can the insurance company get out of not paying you? You want something that’s very clean. You want something that says if you cannot perform two out of six activities of daily living, that is the standard qualification for long-term care in this country. You want a note from your doctor, you don’t want to have to deal with the insurance company’s doctors. Note from your doctor certifying that you’re unable to perform two out of six activities of daily living.

Those activities of daily living are bathing, eating, dressing, getting dressed by yourself, toileting, making it to the toilet, transferring, being able to transfer in and out of bed without any substantial assistance and then incontinence. To recap, if you’re going to buy a long-term care policy, this is the type of policy I would want for myself. I don’t own a long-term care policy, I’m 41, by the time I turn 50 I’ll probably buy one at that time.

I would want it fully guaranteed, where the insurance company cannot increase the cost of premiums over time. I would want it on an indemnity-style plan. Then last but not least, I’d want my doctor to write a note saying I’m unable to perform two out of six activities of daily living, or ADLs for short. Now, that certification by your doctor, that you’re unable to perform those ADLs probably will have to be recertified in the subsequent years.

Now, as I previously said, there are several different flavors and variations on the market depending on your age, your health, the benefit if you want inflation protection, the state you live in. All of these different factors flow into the best company or the best strategy or product for you and your family. If you do have questions and you want to pursue this after you learn a little bit about it, feel free to reach out to us and we can help design the best structure for you.

We’re about to jump into some real-life fully guaranteed numbers here, but first I want to be very clear that there are many factors that can influence the amount of benefit that you receive for the investment that you make. Some of them are your age, the state that you live in because the insurance industry is state regulated, the product and the company that we go with, the health that you’re currently in, if you want inflation protection on this benefit or not, so many factors.

I just want you to take away from this the basic concepts but don’t assume that this is exactly what you would receive, although it should be somewhere in the ballpark, but there are definitely some companies and strategies that provide a lot more than others. If you want to look at a customized quote and go through a situation for you and your family, just reach out to us, we’ll help you with this. One more thing to keep in mind here before we jump into the numbers is that everything has a designed purpose.

What we’re about to look at its designed purpose is to maximize your dollars on a fully guaranteed basis for long-term care protection. It’s not something you use to grow your principle. It’s not something you use to keep liquid. It’s not something that you use for any other purpose, except to maximize your dollars for long-term care protection. Here, we’re looking at a male, age 60, here in Texas and pretty average health.

One company in particular that we’re looking at but again, there are several companies, several products out there. This is something that needs to be customized to your situation, but you’ll get the power or the impact of what something like this can do. We’re looking at $100,000 single premium. This is non-IRA money. This can be structured where it’s 5,000 a year for a certain number of years or 10,000 a year.

I show 100,000 because it’s a very easy way to show the power of those dollars. Also, I like the larger lump sum because it gives you a bigger bang for your buck up front and also in the back end. The first two columns are surrender value and death benefit. Surrender value is how much if you decide you want to walk away with it the very next year or in future years, how much you get to keep. When we set money aside for long-term care, you shouldn’t ever consider anything like this if you think you’re going to need to surrender, plain and simple.

There are other tools out there that we can customize that are 100% liquid, but you’ll have a little bit less bang for your buck. Remember the concept when we get to retirement, our dollars should have some type of purpose. This money is designed to be aggressive growth. This money is designed to provide income. This is designed to be safe. If you’ve watched this channel for a while, you’ve heard me talk about the importance of certain monies having specific purpose.

Some of the money we may have in one bucket is for aggressive growth. That’s not the money we use for this. Some of your money may be for income. Some of your money may be for safe growth, the money that we use for these types of strategies, we set it aside and it’s designed for healthcare planning for long-term care and it’s a very efficient and powerful way to leverage your funds on a fully guaranteed basis.

Surrender value again, long-term planning strategy, not the purpose, but if you walk away with this, you’re going to lose some money. Death benefit, this is a tax free death benefit. It’s only a little bit more than you put in. Again, not the purpose. Now, this is the purpose. These three columns over here. The amount of long-term care benefit on an annual basis and a monthly basis. This is designed for six full years of payments.

If we look out 60-year-old male needing care at age 85, a total of $740,000 in long-term care benefit from this policy, that’s $114,000 per year or 9,540 per month. If care is needed at 82, $677,000. If care is needed at 94, it’s almost a million dollars in total benefit. Now, we have this column over here. This is the internal rate of return. Internal rate of return. Again, I want to stress that because somebody inevitably is going to comment, “Well, Troy, I can make more than 7% or 8% in the stock market.”

First, you don’t know that to be true. You could make it to 95, average 10% a year. The market crashes, you lose half your money. Now what? The purpose of this is it’s safe money. It’s set aside specifically for long-term care purposes. We don’t compare apples to oranges. We don’t compare safe, fully-guaranteed money to 100% risky money. That’s not a valid comparison. This just shows us if long-term care planning is important to us. If we want to use our 100,000 today to provide this much guaranteed fully-known benefit, despite or regardless of what the market does to protect our estate.

We don’t have to use our dollars. We use the insurance company’s dollars or maybe we’re afraid of running out of money or maybe we have a history of some type of long-term care that makes it more likely. This is simply a tool that’s available in the marketplace to help meet that need for the people who care about this type of planning. For us in our process, we talk to everyone about healthcare planning and long-term care planning.

Now, I want to look at a female, age 60, the same $100,000 deposited. We have the annual premium, just one time, 100,00. First and foremost, the surrender value is less and the death benefit is less. The reason for that is women are much more likely to need long-term care because they typically live longer. Remember, the healthier you are and the longer you live, the more likely it is you will need long-term care, so it’s a little bit more expensive this policy than the rest.

Same thing, it’s a fully guaranteed no concerns about premiums going up, you’ll never get that notice in the mail, you make this deposit today. These are the terms essentially and conditions of the financial payouts. We are here at age 85, $628,000 of total benefit at $97,000 per year, and $8,103 per month. If she needs care maybe at age 95, $130,000 per year, $10,889 per month, a total benefit pool of $845,246.

It’s important to understand that is not only the benefit that you receive, but it’s a tax-free benefit in most scenarios. Of course, you’d want to talk to your CPA or tax advisor to get the specifics whenever it comes time to use that benefit. One last thing I want to share with you here is whenever we’ve helped clients get into the right structure and policy for them, when we’re doing the reviews with them in ongoing years or subsequent years.

This is the one thing that we always hear that I’m so glad I got this, I’m so glad I did this, this gives me such peace of mind that I’ve made X amount of investment, and I have four, five, six, seven, eight times what I’ve put in fully guaranteed later in life. If they have concerns about running out of money, or they’re concerned about long-term care costs, or the increasing medical costs in this country.

Something like this, for everyone we’ve ever sat with, has always said, “Troy, this is something I’m very, very happy that I have in place, and as the time goes on, I become happier and happier that it’s something that I did years ago.” For those of you who are curious, I was not able to help that gentleman I told you about in the beginning of this video. If he would have had something like this, he would have never got those notices saying your premiums are going up 100% per year, three years in a row.

The final dollar amount was if he got sick, they were going to give him $36,000 per year, but to keep it in force, he had to pay them $30,000 upfront. Something like this, he would never get those notices, would have never shared this story with you, and I haven’t seen him since that day but I hope he does still listen to me on the Retirement Income Show. I really hope you liked this video. Our goal is to continue to deliver you amazing content, educate you about retirement, keep you more connected to your money, and make you abreast of what’s going on out there. What tools and strategies are available that can help your retirement be more successful.

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