Retirement Answer Man

Today as we close out the long term care planning month, Steve Cain returns to the show to discuss hybrid long-term care insurance policies. On the previous episode (#313), Steve Cain gave us the key facts about traditional long-term care insurance and today we explore some alternatives to the traditional long-term care insurance route. This episode will help you understand different options in the long-term care insurance realm. I’ll also answer some listener questions and have our retirement coach, B.W., 

The subject of long-term care can be a tough one to address

This entire month we have discussed how to cope with long-term care risk. While this is not the most exciting or even upbeat topic to learn about it is something to consider. It’s important to address potential risks while we are still of sound mind rather than while we are dealing with them. Examining your options now will lead to better decision making and peace of mind. Listen to this conversation with Steve Cain to arm yourself with knowledge so that you can better weigh your options when it comes to long-term care. 

Hybrid long-term care insurance policies manage risk from a different angle 

The long term care insurance industry has had a lot of trouble in the past and they don’t have the best reputation. But the hybrid long-term care insurance policies are an alternative to the traditional long-term care insurance policies. These policies don’t really have a proper name and can be called a number of things like; hybrid, life with long-term care, asset-based long-term care, or combination long-term care. Even though they don’t have a decent name in place they are an exciting change from traditional long-term care insurance. These policies are life insurance-based products with long-term care riders or additions. Unlike traditional long-term care policies, with these, you are more likely to get something in return for your money. 

There are different types of options in hybrid long-term care

There are many different types of hybrid long-term care options on the market. One is a long-term care solution that is actually rolled into a life insurance policy. Essentially it is whole term life insurance with a separate long-term care component. This insurance has separate buckets of money designated for different purposes. It is a bit more expensive than a traditional long-term care insurance policy but the benefits are guaranteed. Listen in to hear more about this type of hybrid long term care insurance policy and a few others. 

Who needs long-term care insurance?

Long-term care insurance isn’t for everybody. There are some who are affluent enough to be able to self-insure, many more won’t be able to afford this type of insurance. But there are plenty in between those extremes that can consider this type of insurance. There are many different types of insurance and ways to plan for your potential long-term care needs. The key is to have a plan. Be sure to include your family in this discussion, since long-term care is an issue that affects the whole family. 

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

PRACTICAL PLANNING SEGMENT

  • [3:05] Hybrid policies approach long-term care insurance from a different angle
  • [6:30] The long-term care solution atop a life insurance policy 
  • [16:38] What is the return to the premium option?
  • [19:22] Can you repurpose your traditional life insurance policy?
  • [24:35] Who needs long-term care?

COACHES CORNER

  • [27:25] What to do when you are thrown into the role of caregiver

LISTENER QUESTIONS

  • [36:00] A question about annuities
  • [44:10] How to handle holding onto stuff in retirement
  • [49:44] How to evaluate a portfolio manager

TODAY’S SMART SPRINT

  • [60:03] Think about your potential long-term care needs 

Resources Mentioned In This Episode

BOOK - Winning the Losers Game by Charles Ellis

To check out the annuity series start here

Steve Cain

Steve Cain on Twitter@SteveCainLTC

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center

Direct download: RAM314.mp3
Category:general -- posted at: 6:00am CST

You may know that I am not a fan of traditional long-term care insurance. But that is why we are exploring this topic together. It is important for me to reexamine my biases periodically to see how they hold up. On this episode of Retirement Answer Man, Steve Cain, from LTCI joins me to examine traditional long-term care insurance. I have plenty of questions for him so that we can learn how traditional long-term care insurance works and examine our own risks. Join me by listening to this conversation to learn more about long-term care insurance so that you’ll have the tools to determine if it is right for you. 

How to plan for risk 

There are 5 basic strategies to address a risk and shockingly, ignoring the risk is not one of them. No one likes to think about long-term care, but instead of burying our heads in the sand we need to think about how we will confront this risk. These are the 5 strategies that risk management professionals consider. 

  1. Retain the risk - this means dealing with it yourself
  2. Avoid the risk - not really a possibility in this situation
  3. Mitigate the risk - lower the odds of the risk
  4. Share the risk - use insurance to help to share the risk
  5. Transfer the risk by using insurance to own all of the risk.

Keep these strategies in mind as you listen to the show so that you can begin to consider which one you’ll want to use to consider long-term care.

Is traditional long-term care insurance right for you?

Deciding whether to use traditional long-term care insurance is a difficult decision. The long-term care insurance industry is still in its infancy and there are many factors to consider as a consumer. The industry doesn’t have the best reputation, but Steve Cain is here to help us consider whether traditional long-term care insurance is the best option for our potential long-term care needs

Will the long-term care insurance company be around when we really need it?

We’ve all seen the headlines, long-term care insurance companies raising their rates, or even worse, companies going out of business. How do we know if the insurance company is going to be around when we really need it? Despite the history of problems in the industry, Steve Cain feels that the newer generation of long-term care insurance policies are more stable than the first generations. He feels that the industry has evolved and adapted by learning from the mistakes of the past. Find out why Steve feels the newer insurance policies are more stable than those of the past. 

How are the policies structured?

To get a long-term care insurance policy you’ll have to go through several steps. The companies want to ensure that you won’t need long-term care for a number of years, so they do check your medical history. There are many factors to consider when choosing your policy. The amount you can afford is an important factor. But you’ll also want to consider your lifetime maximum benefit, the maximum benefit amount per month, and you’ll also want to factor for inflation. Find out what else you should consider before you think about getting long-term care insurance. 

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

WHAT DOES THAT MEAN SEGMENT

  • [3:00] Lifetime maximum benefit

PRACTICAL PLANNING SEGMENT

  • [7:53] The long term care insurance industry is in its infancy
  • [14:40] What happens to a policy when the company becomes insolvent?
  • [20:30] How does a long-term care policy get crafted?
  • [29:17] The elimination period used to be bigger than it is now
  • [37:14] What is the average premium?

LISTENER QUESTIONS SEGMENT

  • [40:44] Tax diversification in retirement
  • [47:44] A sequence of return risk question

TODAY’S SMART SPRINT SEGMENT

  • [51:30] Consider your long-term care risk

Resources Mentioned In This Episode

Steve Cain

Steve Cain on Twitter @SteveCainLTC

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center

Direct download: RAM313.mp3
Category:general -- posted at: 6:00am CST

There is a 50% chance that you’ll need long-term care at some point in your future so let’s learn how to mitigate your long-term care risk. Sure, you can always try the long-term care insurance route, but with it being an emerging industry, the underwriting doesn’t have enough data to provide the insurance that you need at a consistent cost you can afford. Long-term care insurance policies still aren’t as robust as home owner’s insurance policies. If you plan to self-insure against long-term care you’ll need to know the risk factors and what your personal risk of needing this type of costly care will be

How to determine your long-term care risk and build a financial framework

One of the scary parts about needing long-term care is that your resources are finite. At that point in life, you won’t be able to fill the gap by working if something happens to you. When self-insuring for long-term care you’ll need to start with the worst-case scenario. The worst-case scenario in a long-term care situation generally means dementia or Alzheimer’s. 

Alzheimer’s care can cost up to $350,000. So this worst-case scenario is how we’ll start to build our framework to self-insure. Next, you need to consider your risk factors to determine the likelihood of the worst-case scenario happening to you. After that, you’ll want to build a plan and stress-test it. Listen in to hear how I simulate financial plans and stress test them. 

What is the difference between dementia and Alzheimer’s? 

For years, Alzheimer’s and dementia were terms that were used interchangeably, but finally, we have gotten to the point where we clarify them. When discussing dementia, we are describing symptoms. But there are more than 200 diseases that can cause symptoms of dementia. Alzheimer’s is a specific disease that presents with symptoms of dementia. 

How to lower your risk for Alzheimer’s

Everyone wants to know what they can do to minimize their risks for Alzheimer’s. The good news is that dementia and memory loss doesn’t happen overnight. Since it is a long, slow process there are little changes we can make to combat the risks. Unfortunately, no one knows what to believe since there is so much fake science on the internet. That’s why Dr. Marc Milstein has joined me today. He is here to give us some actionable items that we can implement to lower our risk for Alzheimer’s. 

5 keys to lower your risk for Alzheimer’s

  1. Sleep is an essential piece of the puzzle. Without proper sleep, our brains build up a type of trash. Proper sleep washes away that trash build up each night. But constant disruption impedes the brain’s ability to get a good cleaning. 
  2. Learn difficult things. Any learning is great, but when you learn something difficult your brain really gets a workout. Challenge your brain in a different way: try learning a foreign language, a new sport, or a new instrument. Train your brain the way you would your muscles at the gym. 
  3. Hearing is important too. If someone is not hearing they are not learning and they are not engaged. Over time the person becomes isolated without even realizing it. Hearing loss is easily treatable with a hearing aid. It helps you stay engaged. 
  4. Stay engaged. Social interaction is good for the brain. 
  5. Treat inflammation. Inflammation is like a fire in the body. Many of us experience inflammation due to poor diet or autoimmune conditions. This inflammation can cause the brain to become inflamed and damaged as well. If you have an autoimmune condition then do whatever you can to lessen the inflammation. 

Listen to this fascinating interview with Dr. Marc Milstein to hear more about what you can do to lessen your chances of getting Alzheimer’s.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

WHAT DOES THAT MEAN SEGMENT

  • [1:30] What is underwriting?

PRACTICAL PLANNING SEGMENT

  • [3:33] Let’s build a framework
  • [8:45] Long-term care insurance is still an emerging industry
  • [12:43] How powerful is the Alzheimer’s gene?
  • [15:33] What is dementia?
  • [19:00] What can you do to take action to lower our risk of dementia and Alzheimer’s
  • [31:25] What is a good implementation plan?

Resources Mentioned In This Episode

DrMarcMilstein.com

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement

Direct download: RAM312.mp3
Category:general -- posted at: 6:00am CST

Long-term care is an issue that is really hard to grapple with and talk about. Yet it is an important one that we all need to think about. You may have dealt with it with your own parents or you may be dealing with it now. On this episode, Christine Benz, director of finance with Morningstar and author of 30 Minute Money Solutions, joins me to discuss long-term care, long-term care insurance, and what’s in store for the baby boomers who are now living longer than anyone in history. 

What are ADLs?

When discussing long-term care and long-term care insurance you may hear the term ADL thrown around. Checking someone’s ADLs is a great way to assess if someone is really up to independent living or if it is time to seek assisted living. ADL means activities of daily living. They include tasks such as; personal hygiene, dressing, eating and preparing food, maintaining continence, and mobility. Not only are these indicators an important way to decide if you or a loved one needs long-term care, but they are also used by insurance companies in the same capacity. 

What is a long-term care event?

Often when we think about long-term care we may immediately jump to thinking about dementia, but the reality is that long-term care is needed by people in many different situations. Since the daily care of an ailing elderly male is often shouldered by his spouse, women tend to have more need for long-term care than men. We also tend to think of a long-term care event as being a sudden thing, but more often than not, people graduate up through different levels of care. 

Let’s talk long-term care insurance

The obvious answer to the exorbitant costs of long-term care is to purchase insurance. But the reality is that it’s a broken marketplace. Long-term care insurance holders can suddenly find their rates increasing by 30%-50% or more after paying in for many years. Long-term care insurance is still a relatively new product and the insurers discovered that they initially underpriced their product. Learn about what the future of long-term care insurance may look like and some long-term care insurance alternatives by listening to this interview with Christine Benz. 

Long-term care is scary

Yes, the thought of needing long-term care is scary on many levels. The thought of becoming vulnerable and losing control of your functions at the end of life scares the wits out of us all. But the financial ramifications can be just as scary as well. One way to help ease your mind into this fearsome territory is to plan for it in advance. Listen to this series on long-term care to help you prepare for any eventuality. 

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

WHAT DOES THAT MEAN?

  • [2:45] What are ADL’s?

PRACTICAL PLANNING SEGMENT

  • [5:44] Christine Benz joins me to discuss long-term care
  • [8:07] What is a long-term care event?
  • [16:35] Let’s talk long-term care insurance
  • [19:40] We’re at the beginning of the wave of baby boomers

LISTENER QUESTIONS SEGMENT

  • [26:45] How can Charlotte minimize health insurance costs before Medicare kicks in?
  • [29:21] Can the inherited IRA RMD amounts over 10 years be different or do they have to be the same over that stretch of time?

TODAY’S SMART SPRINT SEGMENT

  • [31:56] Check out the link in 6-Shot Saturday that contains all the data that Christine Benz refers to

Resources Mentioned In This Episode

Healthcare Before Medicare (If you have questions about this topic, start here!)

BOOK - 30 Minute Money Solutions by Christine Benz

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center

Direct download: RAM311.mp3
Category:general -- posted at: 6:00am CST

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