Long Term Care Planning with Rick Stein, CLU, ChFC

Much of asset protection planning focuses on two of the three major retirement risks: investment risk and longevity risk. The question to be answered is how well does a predetermined spending plan work in the face of market volatility and unknown longevity?

The third major risk, which receives less coverage, is the category of spending shocks, or having to spend amounts significantly higher than planned. Being able to meet a predetermined spending plan alone is not sufficient. There must also be mechanisms in place to deal with the various contingencies that may arise during a long retirement.

Long-term care (LTC) spending represents one of the most severe spending shocks that can impact retirees. Long-term care is a general category for care related to physical, mental, social, and medical needs in the event of significant physical or mental declines. We spoke with industry expert Rick Stein, CLU, ChFC, to discuss common questions surrounding long term care.

Mr. Stein specializes in Estate Planning, Supplemental Income strategies, and Business Succession Planning. He has over 30 years of experience working with clients to structure and incorporate insurance as an integral component of their comprehensive wealth plan. His expertise in implementing insurance strategies has helped hundreds of clients to grow and protect their assets as part of their overall wealth transfer and legacy goals.

Watch the full interview below!

What defines a long-term care consideration?

  • There comes a time in life where we are not able to do our activities of daily living.
  • 6 metrics:
    1. Bathing. The ability to wash oneself and perform grooming exercises like shaving and brushing teeth.
    2. Dressing. The ability to get dressed by oneself without struggling with buttons and zippers.
    3. Eating. The ability to feed oneself.
    4. Transferring. Being able to either walk or move oneself from a bed to a wheelchair and back again.
    5. Toileting. The ability to get on and off the toilet.Continence. The ability to control one’s bladder and bowel functions.
  • If you cannot complete two out of six of those activities, you are deemed to be needing long term care.
    • OR if there is a mental disability to consider.
  • Long Term Care is also known as chronic care, or, not likely to improve with time.

What are the different types of care and how do they compare in cost?

  • Every family is different, but most prefer to stay in home with family members or spouse.
  • Care can range from a few hours of in-home care by a nurse, the full 24 hours a day, or complete monitoring in a facility.
  • Cost for in home: Ranges $25-$40 per hour.
  • Cost for facility: Ranges $6000-$9000 per month depending on severity and location.
  • Care typically progresses with age.

What is the probability that someone will need long-term care?

  • The average person has about a 70% chance they will need care.
  • It’s usually progressive with age.
    • HEALTHY people end up needing care because they live the longest.
    • Women are likely to need care more than men because of this reason.

What are some ways to pay for long-term care?

  • Traditional products and Hybrid-Life products
  • Allocating dollars at a discount: New hybrid products are asset-classed, t
    • The money isn’t lost like in a traditional product.
    • It can be given to other beneficiaries if you don’t need it for care.
  • This hybrid model is becoming increasingly popular

Watch the full interview with Rick Stein:

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