Elder Law and special needs attorney Jim Koewler talks about long-term care insurance. Insurance takes the burden from you. You want to look at a stable company and stick with it for life. These are companies you don’t see in the news, don’t take risks, and have a history. One that underwrites on a long-term care model is best, rather than a disability model.
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The following podcast is by Mr. Jim Koewler, elder law and special needs attorney, helping and protecting those who need long-term care. And Welcome back everyone to Answers for Elder’s podcast network with the wonderful Jim Koewler from the Koewler Law Firm. Intervals are another one here, in Ohio. Yeah, and not be I’m not called wonderful very often. I’m not sure I deserve but thank you. You know, you’re like one of my favorite people in the world. So, yeah, you need more friends. No, now, I’ll keep you. So I want to know. We’ve been talking in our last segment about just this whole planning for long-term care. It’s again one of those things that we don’t necessarily think about and a lot of us kind of avoid it because nobody really wants to talk about getting old. And you know, I’ll is a very powerful drug. Yes, it is. Williums got nothing on denial. Very, very true. And the thing I think that’s really interesting about this whole process of, you know, long-term care is that, you know, number one, we don’t want to talk about aging, we don’t want to talk about these difficult things, but then we all realize we can’t do things we used to do twenty years ago. You know, we can’t do a lot of things and when I look at you know, I’m it. I’m really different than what I used to be twenty years ago, and it’s just because obviously aging is setting in. Not that I’m in bad shape or anything, but it is certainly, you know, aging does forty anymore. No, I already anything, you know, and I look at I remember, you know, so many things that I used to do with that and survive on like three-four hours of sleep at night consistently. Can’t do that anymore. You know, I see my twenty four year old daughter, soon to be twenty five, and I’m just want to beat the crap out around with jealousy, you know. Yeah, I know. Is that quite twenty eight year old son? You know, just why can’t I mean twenty four or twenty eight anymore? Yeah, exactly. So we were talking in our previous segment just about the whole planning for long-term care. We talked about trusts and we talked a little bit about, you know, kind of positioning yourself for the best process. I want to continue that conversation with you, Jim and we had touched on a couple other points. What else do we not know yet? One More Time? Was that Suzanne? And else do we not know yet about this planning process? Right? So in the last podcast I mentioned there’s three ways to plan a had for long-term care. Do Nothing, which is what most people do and has some downsides. You could be a crisis case later. You can buy insurance, and there’s at least three different ways I can think of to that insurance. Or you can give stuff away now, while you’re still healthy, and crush your fingers for five years that you don’t need long-term care before the five years runs out, and because that’s when whatever you gave away is no longer viewed by Medicaid as possibly transferred. They look back five years. Okay, so let’s talk about insurance. First, insurance is pushing the financial I mean, no one’s going to take the care issues away from you. Unfortunately. We wish that someone would do the long-term care for us so we were still healthy, but that’s not how the world works, right, but it to take the financial burden, at least part of it, off of you and your family. You can buy insurance. The single biggest indicator on who will buy long-term care insurance is who has been through the long-term care process with family members. Someone who has been through long-term care with a family member is ninety-five percent more likely to buy. Maybe that’s ninety-five percent of the market of people who buy long Term Care Insurance. I believe they’ve been through this crap. Okay, so I wish more people would go get it, but they make the choice they make, and that’s okay. It’s their choice to make. So what to look for a Long Term Care Insurance? The easiest one to talk about is long-term care insurance. Insurance standing alone by itself. So that is the only risk that it is that you were protecting here is the cost of long-term care. You’re not combining it with health, I’m sorry, with life insurance. You’re not combining with some annuity investment type thing. Okay, those are the other two big ways to ensure for long-term care costs. So when looking at Long Term Care Insurance, you want to look at a company that’s stable. You want with insurance. It’s going to be over a long-term life insurance is over a long term long term care insurance is over a long term. Okay, you buy it when you buy it and you want it to cover you for the rest of your life. You don’t want to jump from policy to policy like you can with auto and home and property casually. Now. It’s like you need you will be more expensive and if you jump insurance companies, whatever you gave them before is gone and the new rate is going to be on your current age and your current level of health. So you want to pick an insurance company and stick with it for the rest of your life. So you want big and boring. That is what a good insurance company looks like. Big, or even huge and boring. Okay, I like that. You want them not to take stupid risks like the banks did in o eight. Okay, yeah, you want an insurance company that is you look at their investment portfolio, you read about them and you don’t see them in the news. Okay, yeah, so big. You also want, in the long term care insurance industry with some history. You don’t want somebody who jumped in and said, Oh, I can make some money here in insurance company, I can make some money here. Okay, because we know the companies that have done that and we see them go away very quickly. And guess what? Your insurance goes away to. Sure, and the biggest one that I like, although this is very hard to see from a consumer standpoint, is an insurance company that underwrites long-term care risks on a long-term care model. Some insurance companies, especially the ones that sell on low price. So long-term care insurance on low price, under right, based on a disability model, replacing your income when you can’t work. That is a summer but not close enough, way to underwrite and have a good balance sheet on an individual, in short, person you know, and a policyholder down the road, because it is a different thing to ensure. Wow, okay, cuz caught it. The replacing income, you know. The income is true, long-term care cost you don’t know. Income tends to go up at the same rate more or less as cost. It’s overall the because ser price index, for example, not always, but yet always, certainly not always. Okay, health costs and long-term care costs have consistently gone up at a higher in higher inflation rate, like a hundred fifty percent or two hundred percent, consistently. So an insurance company an entrance policy on long-term care from a pilot from a company that uses a careful underwriting scheme aimed at long term care is probably going to be more expensive than one from a different company. Yeah, okay. So there are companies that have a history. These are the ones who use the disability underwriting model. And I also want to sell you on price. And I think it’s when they stick with the disability underwriting model they want to get you in ten, twelve, fifteen years down the road, maybe sooner, maybe longer, you’re going to get a leader saying we need you to either drop your policy, increase your premiums or cut your coverage, and that’s probably when you need it the most. You’re not usually there yet. Okay, most people get that letter. Aren’t there yet, but you’re approaching. Let’s face it, your tames down the road. If you bought it at forty year now, in your S, you hope you don’t need long term care at S. it’s not common. If you bought it your s r now and your s against still not common at need long term care start seven, seven days late s yeah, but you are, you know, you’re looking at this and going, okay, what do I do? Yeah, and they they are companies that have a history of doing that and as much as I want to, I’m not going to name names here because, frankly, some of them I haven’t. I have friends who work there or sell those things and I’ll tell them to their face. I don’t. I’m not going to recommend as much of I like you. I’m not going to recommend you exactly I’m I don’t. I don’t cut corners there. I don’t pull punches, but I also am not going to wrap them out. I don’t think that’s appropriate in the setting. Sure, but so you want one that you may choke on the number. Okay, you may choke on the price book they give you, and so no is an okay answer. But at least you looked and then if you don’t like that, maybe then you can go to a Lord Chris One. Okay. One of the things that is over time been a good indicator of a well-underwritten long-term care insurance policy is the the entrance company is a mutual company rather than a stock company. A companies are owned by their policyholders. Korsh stock companies are owned by stock stockholders. Okay, so with a mutual company they are two groups of people the company needs to keep happy, the owner, but the owner’s policyholders, the insurance and the employees. In a stock company, there’s three groups of people they got to keep happy and split the money among employees, policyholders and only those who make claims at the time, and the stockholders who are always bitching that they’re not making enough money off their stock. Sure, okay, so I’m a big Fan of mutual companies for both life insurance and long-term care insurance because they do tend to be big, they do tend to be boring as dirt, but they tend to be around and steady over the decades and some of them more than a century. Okay, there is value there in that for insurance. Insurance should not be the exciting part of your investment portfolio. You want to be the boring part of you want exciting, go invest in Tesla, but don’t and don’t buy insurance from a company that is following Tesla stock, and that’s how your dint of it, ends are picked. Got It. Okay, it’s my other question. You just said made a comment about most people buy it when they’re forty. How about those that haven’t bought it? Think? Well, you know, I’m in my late S, early S. I still don’t have a plan, should add, and obviously the premium is higher. What is does that change when you get older if you don’t? Yes, but but there’s a tradeoff. Okay, again, circling back to whether to buy insurance or not. If you are losing sleep ring about long-term care costs in your future, and that’s usually because you’ve been through the this crap with somebody, true, then it’s certainly worth at least getting some quotes. Quotes are free, right. Okay, if you choke on the number, you’re choking the number, but at least you looked. But remember, people who buy long term care insurants in their s are mostly paying for it over decades longer than people who buy it in their S. right. So people who buy it in their s s have to because the insured writ the insured. Risks are the same. True. Okay, for the forty-year-old who’s now, for the former forty-year-old policy holder who bought it thirty years ago and it’s now seventy, and the the new potential policy holder who’s buying it right now for the first time. The long term care risks are roughly the same, but the time horizon to pay the entrance company to cover your butt is shorter. So at seventy you should be paying more and you have simply have to look to see whether it fits your Ye, have to look at if that makes sense. And obviously those other thing, and this is huge. Okay, if you’re forty, you usually don’t yet have any symptoms that make the insurance company through. You have a real pre exert resolutions. Yeah, Hey, at seventy, I know people who have been turned down from long term care insurance because the under thee the company representative who was coming to do the interview, the medical questions whatever. So I kane leading in the corner. That is an indication that you are at risk of getting long term care sooner than they care to cover. Yeah, okay, so as you age, your ability to get coverage at all is going down. Sure, sure, that makes total sense, Jim, and I’m so excited. I’m glad that we’ve had this conversation because I know there’s a lot of us out there that are worried about and I sit there and I think about you know, how many of people in my age group the boomers right now, with where the economy has been and all that stuff, are end up with. Have Nothing, you know? Yeah, and we’re going to be in a crisis as a country, yeah, ten years as a result, and I think about that. So anyway, thank you so much for sharing these thoughts with us and we look forward to more segments with you in the future. Thanks for Suzanne. I’ll be back. State of Ohio residents, you have a friend to help you navigate long-term care while protecting your assets. You can reach Jim at www dot protecting seniors dot com or just email him at j Koewler afe. That’s j Koewler AFE at protecting Seniors dot com.
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Originally published November 09, 2022