Financial advisors and planners provide many different services such as investment management, retirement planning, and estate planning. Along with these services, they may sell other services, one of those being long-term care insurance to protect your assets from future costs of long-term health care such as in-home aid or nursing home costs.
Your local insurance agent can sell many different types of insurance, long-term care insurance being one of them. Typically, local insurance agents will represent just one company for an umbrella of products.
An independent insurance agency, that has a specialty in long-term care insurance, acts as a neutral resource in working with all major insurance companies. Agencies have an increased array of knowledge and experience in long-term care planning and the underwriting process of insurance policies.
A Long-Term Care Specialist is an insurance agent who has substantial experience in Long-Term Care Insurance, underwriting, policy design, and claims experience. Specialists represent all or most of the leading insurance companies that offer long-term care insurance. They typically have five or more years of experience in the field, although some have as many as 20 years of experience.
Many clients will turn to their financial advisor about long-term care planning so they can protect their assets from the high costs of care they might need later in life. Often, advisors give out information that is incorrect and can drastically affect the cost and/or usefulness of the insurance policy when the time comes for care.
It’s good practice to leverage a team of specialists to plan for your future (or current) retirement. A financial advisor can help you grow assets and a Long-Term Care specialist can safeguard those assets from the financial costs and burdens of aging. Separating this advice helps you plan for a successful retirement. Long-Term Care Insurance is very complicated for agents and advisors, and each insurer has its unique underwriting standards, featured benefits, and price points. Additionally, consumers should be taking advantage of the federal/state partnership program to obtain additional dollar-for-dollar asset protection that many states offer for qualified long-term care policy holders. This program requires certification to sell such policies. The fact is financial advisors and agents are not experienced in this area.
At McCann Insurance Services, we have 20 years of experience in helping people all over the country plan for the financial costs and burdens of aging. Matt McCann, a nationally known expert in long-term care, is one of a few specialists, nationwide, endorsed by the American Association for Long-Term Care Insurance (AALTCI). AALTCI is a national consumer advocacy and trade organization.
We have worked with many clients over the past twenty years, and we have experienced the problematic situations clients are left in or the misinformed advice they have received from their agent or their financial advisor. For example, consider these examples of how working with someone who is not a true specialist can be problematic.
A 51-year-old single male from Missouri saw both his parents need long-term care. The cost of care had a dramatic impact on his parent’s savings and his sister helped part-time being a caregiver. He spoke with the guy that did his home and auto insurance and they convinced him to buy a plan which ran $6055.50 a year in premium.
Luckily, he had done his own due diligence and found us. Upon reviewing his health, finances, future retirement plans, and heard his concerns, we found an outstanding partnership qualified plan from a major company. His annual premium would only be around $1,200 a year. We also found out he has been living with his longtime partner. The company we chose allowed for a partner/spousal discount which reduced the premium to a little over $1,000 a year.
This would have been a costly mistake if he had not done his own research, saving him $5,000 a year.
A couple from Texas, ages 57 and 54, were told by their financial advisor to plan for long-term care. This is something they had been thinking about, as they knew longevity ran in their family. They knew the risk of needing long-term care at some point in their lifetime was high. They wanted to protect their lifestyle and not burden their three adult children and their families.
The advisor suggested they buy a single premium life insurance policy with a rider for long-term care (note these are different from “hybrid” policies which provide standard triggers for long-term care along with a death benefit). The cost was going to be $135,000, but it did have a death benefit. After letting their advisor know they would think about it, they did an internet search for get more information.
We discovered this life insurance policy had a rider with language in it that would only pay for long-term care if their impairment was expected to be permanent and lead to death. This is not unusual. Many policies require that not only you require help with at least 2 of the 6 primary activities of daily living or supervision due to cognitive impairment, but recovery is not expected once this point has been reached. This reduces the risk to the insurance company dramatically. You also see these plans typically reduce the death benefit by an amount higher than any rider benefits paid out over the duration of the claim. This often creates a substantial element of uncertainty for policy owners as the exact amount of benefit is unknown.
The bottom line was this was one costly life insurance policy.
We recommended a Texas Partnership Certified Long-Term Care Insurance policy with a shared care benefit. They received outstanding benefits that were a fraction of the cost of the life insurance policy. It provided an inflation benefits, case management, and the shared benefit. The shared benefit allows a spouse to use money from the other spouse’s policy in the event they exhausted their benefit account. Additionally, if one spouse dies the premium disappears 100% and 100% of the unused inflated benefit goes to the surviving spouse.
Since the husband owned his own business, they were able to deduct the premium as a business expense. The couple was thrilled to keep their $135,000 and paying a small premium with the tax benefits and the extra dollar-for-dollar asset protection offered by the Texas Partnership Program.
We spoke with a 63-year-old woman in Maine. She applied for a long-term care policy but was unsure she made the right decision. She went with a major life insurance company, but one that is very expensive. In addition, the agent, who mainly helped clients with life insurance and annuities, recommended a very high level of benefits.
After asking her about her background, we discovered she was planning to move to Alabama where her sister and her family lived. She had already bought the land where she planned to build a new home before she retired.
We found a very affordable plan from a major A-rated company, which was not just more affordable, but had recommended benefits which better fit her situation. This plan was designed to match the lower cost of care in Alabama, where she would soon live.
A couple from Oklahoma, ages 60 and 57, were about to apply for a Long-Term Care Policy which was an Oklahoma Partnership Policy with a major company. They wanted to speak with their financial advisor first. The financial advisor suggested a less expensive plan, which did not have any inflation benefits, but only an option to buy more insurance every three years. A policy without an inflation benefit made the plan ineligible for the Oklahoma Partnership’s dollar-for-dollar asset protection. It also, at their age, would require the couple to keep buying options to keep up with the higher cost of care every three years. Since the options available are based on “attained age” they would become even more expensive each time. Also, once they start receiving benefits, they would no longer have the option to purchase more.
Once they saw the benefit of inflation, the very affordable premium, and the extra peace-of-mind with having the partnership benefits, they ignored their financial advisor’s recommendation because they understood they were not a long-term care specialist.
A couple from Illinois, ages 55 and 52, were making plans to protect their future retirement from the costs of long-term care. Their specific concern was Alzheimer’s. The wife’s mother, father, and uncle all had Alzheimer’s. Their financial advisor, who asked almost no advance health questions or family history questions, recommended a major company for their policy. Once underwriting was completed, the wife was declined and the husband found his rate going from the quoted “preferred” rate to a “select” rate due to his health history.
The wife was declined because the company’s underwriting guidelines clearly stated that having two or more blood-related family members (parents and siblings) who had any dementia was uninsurable.
The financial advisor should have known, but like most financial advisors and general insurance agents, he did not understand the guidelines, nor did he even ask the questions.
Luckily, we found very affordable coverage with another company.
A couple from Georgia, ages 57 and 54, started to think about long-term care and how it would impact their family and their savings. They were prepared to apply for coverage when one wife heard a radio talk show host suggest waiting until they were age 60 to get Long-Term Care Insurance. She waited. Year’s later, when the husband was 60 they contacted us. However, the husband was uninsurable since he had been diagnosed with Parkinson’s. They were devastated. The wife did get a plan but her premium was high due to her older age and she lost her full spousal discount.
A 75-year-old woman from South Carolina always thought about who would take care of her when she became older. Once her husband passed-away she decided to look into Long-Term Care Insurance. She was told by multiple insurance agents that she was too old to get any new coverage. After speaking with us we found her a plan which provided two years of care which was affordable for her budget and she health qualified.
The fact is few insurance agents, and financial advisors, have the knowledge of underwriting, policy benefits, features, and policy design. Nor do they have any firsthand claims experience. Every insurance company has different underwriting standards, different rates, and even some benefit differences as well.
Additionally, if there is a problem during the underwriting process, most agents/financial advisors don’t have the experience to address the issues or deal with underwriters and doctor’s offices.
Matt McCann and his team are experts in Long-Term Care Planning. Matt understands Long-Term Care Insurance and uses his 20 years of experience to find the best coverage at the best value. This gives you and your family the peace-of-mind knowing they made a solid decision without over-insuring or spending more than what they should to safeguard assets and reduce the tremendous burdens that come with a long-term care event.
Keep in mind, premiums are regulated. Anyone talking to you about Company A will have the same rate schedule. The difference is the experience and policy design that Matt McCann and his team bring to you, so you can enjoy the peace-of-mind knowing you have the right plan to address the costs and burdens of aging.