If your client needed money today to pay for unexpected long-term care expenses, which asset(s) would you use? And with the average private nursing home room costing $7,698 per month and over $92,000 per year,² how long could that asset last?
Their “rainy day” account, or cash equivalents, may be the first place you look. Although these assets may cover some – or even all – of the long-term care expenses they may incur, how would using these assets impact their other finances?
Repositioning Assets to Pay for Care
If your clients are like most people, over their lifetime, they have accumulated a variety of assets. These assets have a unique purpose in developing their financial and long-term strategy, and typically fit into one of five categories:
Meet Katherine and Michael. They chose to reposition $100,000 of their cash equivalents to purchase a single premium SecureCare policy for Katherine. This will help protect more of their portfolio from potentially unfavorable liquidation in the event Katherine needs long-term care.
Katherine decides she wants her policy to provide long-term care benefits for six years. In addition, she includes the 3 percent compound interest Long-Term Care Inflation Protection Agreement, ensuring the policy’s benefits will increase over time.
Katherine’s SecureCare Policy Benefits
*Product not available in CA but similar solutions are.
If Katherine wants her money back, after five years, she will recieve:
$100,000 Premium Refund
If Katherine wants her
She can request a complete premium refund beggining in the sixth policy year.
When Katherine dies,
$100,000 Death Benefit
If she dies prior to needing care:
Her beneficiaries will receive a guaranteed death benefit of $100,000.
Even if she accelerates her entire death benefit to pay for long-term care expenses:
Katherine’s beneficiaries will still receive the guaranteed minimum death benefit of $10,000 or 10 percent of the policy’s face amount, which is less.
If Katherine needs long-term care at age 80 she may receive:
$534,185 Total LTC Benefit
If she needs long-term care at age 80:
After meeting the policy’s benefit requirements, Katherine will receive the maximum monthly long-term care benefit of $6,882. The monthly benefit increases every year by the 3 percent compound inflation option she chose, equaling $534,185 in total benefits.