Long Term Care: Self Insurance - YouTube

Today's cardinal lesson is talking about those  of you who are self-insured for long-term care,  

and my feeling about self-insurance for  long-term care is it's by default, not by design,  

and what I mean by that, and what I put in my  book when we're discussing this is there is a  

way to put together a plan for self-insurance  where you're going to put aside the money,  

it's going to be over there and appropriated so  that when you, and if you, do need care, that  

there's funds there that you can easily draw on to  pay for the care, I mean that's a plan by design  

for self-insurance and many people who say they're  self-insured, even if they're just saying it to  

themselves, it's really by default, is they're  just in this category of the 90% of America  

that could qualify for a plan, and should buy a  plan, they don't have one, and not the 10% who  

actually have a plan for long-term care, so 90%  of people are uninsured, or they're self-insured  

essentially, so I want to talk about that a  little bit, and I want to help you and show you an  

example of how you could get your self-insurance  by design. So this is just one of many solutions  

that we offer here at Cardinal for long-term  care, and this is about as simple as it gets,  

is if you took a $100,000 of your money  and earmarked it for long-term care,  

that could be home health care, that could be  nursing home care, that could be assisted living,  

it could be a lot of things, and you would earmark  that and put it over there and call it “this is my  

long-term care savings account”, okay, you can do  that with this product, you just simply deposited  

an insurance company, it's not gone in insurance  premiums, it's there and you could go draw it out,  

but the intent is to put it there and leave it  there for the rest of your life. Now why would  

you do that? Well first and foremost, you're going  to get a little bit of interest on that money, so,  

you know, that that would be one reason, but  you're getting interest now on your money,  

so you would be doing that because this $100,000,  if you needed long-term care, would be turned into  

$300,000 of insurance, it's almost  miraculously, I mean, you've got $100,0000  

that you've deposited and then, if you need  long-term care, the insurance company is going to  

pay out up to $300,000 in benefits. Say, well, how  do they do that? Well they simply use the interest  

that you earn, that they owe you,  to pay for an insurance policy  

that's all mixed into the same one of  providing an extra $200,000 of insurance,  

so for just for the purposes of explaining  this, the$100,000 is going to sit there as  

long as you're alive, you know for the purposes  of this, we're going to just say you're going to  

earn no interest or all your interest is going to  go to pay for the premium for this triple factor,  

or to turn $100,000 into $300,000, but  what you're going to get for that is  

you know $300,000 of benefits. So if you're a  couple that does this, you can cover two people,  

you're going to have access to $3,333 a month  for up to 90 months of care for home care,  

nursing home care, assisted living, and  you could even both be using this at once,  

so it'd be paying out $6,600. Now the  first $100,000 is just your own money,  

they're just paying you back what you deposited  with them, so the insurance company is a little  

bit protected in this, but just the fact that  you have that over there and it's secure,  

it works well. A single person can buy  this and they're going to get more,  

and that $300,000 is going to be paid out over a  shorter period of time, so this works either way,  

and it also, you don't need to stay  stuck on a $100,000 because if this thing  

is not, if this is not enough, as you're just  saying well $4,000 a month, or $3,000 a month is  

not enough, and conceivably it's not, you could  just put more money in buying it, so it really  

isn't much of an upper limit on this, you can  put substantial money in here, but this is a nice  

round number that people would have in retirement  savings, it's really earmarked for this anyhow.  

So now this product has very easy health  questions, I mean if you've got dementia now,  

or you've got parkinson's now, you're not  eligible for this, okay, so there are some people,  

but we actually have other products that  you are eligible for, so on this solution,  

you know, when you've got a very serious  condition that's going to cause you probably  

to need some care and that's already a foregone  conclusion, the insurance company is not going  

to offer you this arrangement, but if you had  cancer a few years ago and you're in remission,  

you can get this, if you've had, if you have  diabetes and it's fairly well under control,  

you can get this, I mean there's several  conditions, and you don't have to take a physical,  

so it's pretty simple what we call underwriting.  Now if you deposit this money and you never need  

it, or you just need a little bit of it during  your lifetime, then this money is going to just  

pass on to your kids, or your spouse, or  whoever you've left down as a beneficiary,  

so it's not like you're just giving the money away  or you're paying the money in premiums. This is  

just one form of hybrid long-term care insurance  yet. I just want to talk to your 85 year old self  

for a minute and just think about, I do  a lot of this in my practice, where I'm  

meeting with people's parents typically, where I'm  meeting with the adult children of a very elderly  

client, we have an attorney that practices with  us, and we also have a CPA that practices with us,  

and so a lot of times we're in there right at  the point of care where somebody has lived a  

long life and now they're just had a stroke,  and we're kind of in crisis, and we're sitting  

down figuring out what we're going to do, and some  of these people have some very substantial money  

and we're in figuring out how we're going to pay  for care and, getting someone in that situation,  

or a couple in that situation, when they're 85, 90  years old, they're in poor health, they're needing  

care, to let loose of their own money to pay for  care and to pay for home health care is a very  

difficult thing to do, and it's just because they  have long-term care by default, I mean, they know  

they got the money, and they know they're going  to have to spend it and pay for care, but actually  

getting them to do that is very difficult and  very unnerving, whereas if there's a plan,  

and a plan by design, this becomes much easier.  I'm Hans Scheil and I thank you for listening.