Long-Term Care Insurance with Jason Totedo

*The following is the output of transcribing from an audio recording. Although the transcription is largely accurate, in some cases it is incomplete or inaccurate due to inaudible passages or transcription errors.

Well, good afternoon everyone. It’s Saturday afternoon and it’s Answers for Elder’s radio. We are here with a very, very special guest, Mr. Jason Totedo from AGP wealth advisors. Jason, welcome to the program good afternoon. Thanks for having me. You know, Jason, I’m so glad you’re here today because a lot of questions that people have and navigating senior care is the whole financial piece and I know your firm works with so many seniors and different in different scenarios and you know, one of the things that we always go back to is when we’re taking care of our own senior parent, we realize the enormous cost of what elder care really is. And I know that I get this common question all the time from people. Should I get long Term Care Insurance? A lot of people don’t even know what it is. So first of all, Jason, tell me about long term care insurance. What specifically does it do? Well, I would agree with you this is one of the things that on the tip of a lot of our clients minds in terms of how to handle that. What does it look like and what does it cover? So there’s a lot of different aspects of it. There’s what you call a standalone long term care policy, which is just covers long term care. It’s much like a traditional auto or homeowners insurance policy. You use it or you lose those premiums. God, and that’s one way to do it and there’s a certain sort of risks associated with that. It’s gotten a lot of exposure. When medium, what does it mean when you say you use it or you lose those premiums? What does that mean? Much like an auto insurance policy, you pay into it on a monthly or quarterly basis and you hope you never have to use it. Got It, okay, so it would be. Basically, it’s it’s an insurance policy. So what does long term care actually cover? Again, there’s a broad range of possibilities there. What we like to work with our clients on is one that structures a pay out given a series of life events that you cannot perform. Okay, and to the extent that you cannot perform those, then you have the ability to get assisted living, whether it be in a community. We prefer to have for a lot of our clients, have those resources come into their home. Well, that’s what the majority of seniors want. They want to stay in their homes. So obviously having those ability to, you know, say hey, I need home care to come into my house and help me with my ADLs, my assistance of daily living, things like that, then I have the ability to tap into that long term care policy and actually get those things provided. Is that correct? That is correct. Okay. So so in in talking to to so many people, they say, well, you know, if I go into retirement living, Long Term Care Insurance will pay for that. And I happen to know that that’s where the misconception, I think, is in the in the consumers eyes, traditional retirement living, that that does not have the assisted living peace attached to it. It’s my understanding, Jason, and I am sure you’ll clarify that, that is is not a retire that is not a long term care aspect. Is that correct? Correct? I think that the distinction there is whether it’s a retirement living or assisted care right where you have health care provided for you, as you said, across those dimensions of daily living. Okay, so if I go into a retirement living, let’s say, for example, I’m a senior and I pretty much independent, but I decide you know I’m going to go into independent retirement living where I don’t need daily live living help, but I’m going to be there in the community. Will my long term care policy cover anything? In most cases it would not. Correct. So then, once that my needs progress and I may need more care, explain to me than Jason how how would the long term care policy kick in? In the the case of a traditional standalone long term care policy, you would have a certain amount of benefits, normally quantified on a daily basis, so anywhere between a hundred, two, three hundred dollars a day to cover some portion of the cost of that. Where we like to get our clients to think about it is to switch that paradigm from what does it cost for the insurance two more what does that family member need? Correct and by having whether it be stand alone care, we actually prefer clients to utilize what’s called accelerated benefit rider, which is a long term care access as a carding how that works. That’s interesting. Yeah, so think about it as access for long term care that’s embedded inside of a life insurance policy. So I’m sorry, sure a lot of our listeners today are familiar with these types of structures. Sure, not that they’re simple, but they’re getting a lot of exposure because of some of the pros and cons relative to a stand alone long term care. So think about it this way. You have a three hundred thousand dollar life insurance policy that offers you this long term care access, Hmm, during life and you can draw on ninety percent of that while living if you need it. Sure so. It’s a traditional life insurance policy that offers the additional flexibility to utilize it during life if you need it for long term care. Average stay in the long term cares about thirty three months. Range is anywhere between ten to fifteen thousand dollars in this area. As you move to some of the outskirts and different parts of the country, it can be more or less. But this is not a use it or lose it. Ideally the client wouldn’t need the long term care policy benefits right then that would be pass in a traditional life insurance framework to the next generation. So let’s just say, for example, somebody has a three hundredzero life insurnce policy and I that sounds like a lot of money right. But an elder care and this is just where I’m asking the question obviously, assisted living costs can run tenzero a month and you can run out of money very quickly. What happens if mom or dad outlives their money and they have long term care? Well, I think it’s two different pieces. Right, if they have they outlive their money. But specific were with respect to the medical coverage, you know there’s a state and federally funded programs which are not optimal. Right. It’s just that simple. It’s not optimal’s a lot of strain and stress on the medical system right now. And it’s if you have the resources and you have a trusted advisor. Someone like AGP Wealth Advisor can help give you some direction in terms of what options are available to you. There’s a lot more optimal ways to do it. When we think about it with our clients we think about three dimensions the timing of the need, the taxation of the money that you’re going to utilize for that need and then that specific transition period worthy the family member goes from not needing care to needing care. Sure and planning around those three T S, if you will, timing, taxation and that transitionary period, it’s able to be a lot more comfortable for everybody financially comfortable as well as just day to day living. So we are talking to Jason Totedo from AGP wealth advisors. Jason, I am so glad you’re here. So now just going on. Obviously, if I’m a boomer an adult child and I’m sitting back and I’ve just been through this with my parents, it’s like, what is the right age to purchase long Term Care Insurance? Should I do look at it when I’m in my s and my s what? What is the ideal age? Great Question. We like to think about insurance in the construct of an overall solution, whether it be a health insurance, life insurance, Long Term Care Insurance, disability income. So the answer slightly different depending on how you’re going to approach that holistic protection hm. But more simplistically, you know, either side of fifty years old is a good time to sort of begin to explore what you have, and it all starts with an understanding of what type of health you’re in and whether you are insurable. When I talk about insurance as part of a broader, comprehensive discussion with our clients across wealth, taxation and the state planning, the first question is often will how much is that going to cost? Sure, and it’s not a question that you can answer until you get a sense of what type of insurance options are available to you. Sure. So if you’re in great health, that’s one price point, average health is a second one and then, depending on where you are across that continuum, the cost can differ. But we really like to focus on the value and, as I mentioned, by having a proper insurance solution in place you’re able to look at what is my family member need versus my optically focusing on the cost of that solution. And so, obviously, with long term care, okay, you know in in looking at this, it’s like, obviously every single person is different. There’s no off theeself program that people will say, well, what tell me about what Long Term Care Insurance is? It really depends, obviously from what you’re saying is it really depends on the individual and varying factors, the sizing of appropriate policy, the benefits, the inflation riders that are associated with that. Is all a very customized solution. So we work with the client to really understand what it is they have available to them and what they’re trying to accomplish. And what they’re trying to protect against. A lot of people view selfinsurance as a solution. A lot of wealthy individuals that we work with so well, you know, we’ll just we’ll just sell our peace of land or will sell one or two of our rentals to cover this. What that unfortunately exposes them to is a timing market timing. Think about if you had a long term are incident leading up to the eight crisis. Sure, and you had to sell a couple pieces of real estate to fund that. Not Optimal, not great, poor timing. The taxation of that is not optimal. And then you think about, well, I have to sell and I have to close a piece of real estate while you have somebody in your family that needs care almost on an immediate basis. Sure, so you eliminate those three problems by having a proper plan in place. So the my my gathering from your conversation is it’s you should be talking about the stuff when you’re in your S. sounds like, you know, really thinking. You know what are what are your assets today, and obviously as you get older those needs can change. Now that’s another question. If I have a certain type of let’s just say I have a certain type of long term care policy. If my needs change from that policy, is it a way that I can change that in the future? Another great question. Part of what we see is a supplementing of existing policies, but specifically to question about when do we start? That’s why a comprehensive plan that allows you to map out those next ten, fifteen, twenty years of your life is really so valuable, because then you can assess the landscape and what blind spots do I have, what resources available, and that’s really what we do with our clients. Awesome, Jason. Thank you so much for being on the program today. Thank you again. Thanks for having us.