Establishing and Creatingthe Plan for CareJohn Fontana
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The Goal of the Planning Process
Is to teach you …
How to ask the right questions.
How to establish a discussion with a clientbased on reasonable beliefs.
How to establish and finance a plan ofcare.
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The Fact Finder Accomplishes a Number of Objectives
Establishes credibility by focusing on a plan notthe sale of a product.
Gathers the critical information necessary torecommend ideas on who will provide the careand where it will be delivered.
Creates the parameters for recommending thecorrect type of policy and benefits.
Helps to qualify your clients both financially andphysically.
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Asking the right questions...
Helps you understand the clientsconcerns, emotions and feelings.
Establishes your clients motives forpurchasing LTCi.
KEY POINT:
Your clients want to be heard.
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Your clients will exchangea check for a feeling.
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Fact-finding questions...
Have you had any prior experience withsomeone who needed LTC?
Is it important for you to maintain yourindependence in the community withoutplacing a burden on your family?
Are you concerned that a chronic illnesswill threaten your commitment tocontinue to provide for your spouse?
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Fact-finding questions...
Is it important to control the quality ofcare that you receive and where it isdelivered?
Is it important to preserve your assets andincome?
Will you have a continuing financialobligation to any of your children orgrandchildren that have personal problemsor are physically or mentally challenged?
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Fact-finding questions...
If you are in a second marriage is itimportant to distribute your assets to yourchildren according to your will or prenuptialagreement?
Before I got here you probably had aconversation on long-term care, would youshare your thoughts with me?
When you hear the words long-term carewhat do you think of ?
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Key point...
After asking these questions repeat any ofthe motives that your client has forconsidering LTCi. These are your clientsconcerns and it is your responsibility tofind a solution to them.
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“What does your money mean to you?”
Security/Lifestyle
Happiness/Piece of Mind
Comfort/Freedom
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New definition …
Long-term care is not a place …
… it’s an event
Post-retirement disability
Functional disability
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“Functional disability”
Physical
Activities of Daily Living (ADLs)
Bathing, dressing, transferring, eating,toileting, continence
“Stand-by” help with 2
OR
Mental
Cognitive Impairment
Alzheimer’s, dementia, stroke, head injury
Requiring supervision
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Long-term care is a continuum of care,housing and services people and theirfamilies may need because of a chronicillness. It’s assistance with so calledactivities of daily living (explain) orsupervision caused by severe cognitiveimpairment. The goal is, wheneverpossible, to have the individual remainwithin the universe that he/she hascreated.
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Why is Long-Term Carea Problem?
We are living
longer!
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Unchanging Realities
People will live a long life
Disability in retirement is a reasonablepossibility
Care is expensive
Clients can’t afford it
Ever
… and continue to keep their financialpromises
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Step 1: Establishing the need forLTC because of longevity…
“ LTC is a problem today because peopleare living longer. Wouldn’t you agree? Ifyou take reasonable steps to take care ofyourself, you are likely to live a long life.Even if you don’t take care of yourselfsome new medicine or procedure is likelyto be developed that will extend yourlife. When you live a long life you couldneed care. Could this happen to you?”
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Key point...
It is important that your client agrees thathe/she will live a long life AND when theydo live a long life then there is a reasonablelikelihood that they will need care.
Never assume that the client understands.Listen to what they say. Listen to theirconviction or lack of it.
After they agree ask...
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Key question
What consequences will providing
care for an extended period of time
have on your family’s
emotional, physical and financial
well-being?
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Consequences to families…
Stress of care giving hikes older adult mortalityrates.
Caregiver can become as chronically ill as thepatient.
Caregivers suffer from stress related illnesses.
Long-term care tends to tear families apartbecause the responsibilities of providing care is notshared equally.
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Engaging the client...Step 2
“ When you live a long life and need careyour family will do everything in theirpower to keep you out of a facility.”
If the client is married look at hisspouse and ask:
“ If your husband needed LTC would youdo everything that you could to keep himout of a facility?”
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“If you need care your wife will take care ofyou, but there is a cost to that care.Think of it this way. She will be under atremendous amount of stress being acaregiver. What will that stress do to her?How will that stress affect her health?What’s your plan to protect her?”
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LTC is a children’s problem
“Your children will do everything in theirpower to keep you out of a facility. Whateffect will that have on their lives?”
“ What effect will the stress of care givinghave on their health and the relationshipsthat they have with their families? Brothersand sisters? What’s your plan to protectyour children?”
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What’s your plan to protectyour family?
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The plan is to stay in the
community for as long as possible
without devastating your family’s
emotional, physical and
financial wellbeing
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The plan depends on the family…
Single individuals
Married with no children
Married with children
Second marriages
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Plan of care…
Home Care
Assisted living
CCRC
QB
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How to fund the plan of care?
$20 per hour x 8 hours = $ 160 per day
$20 per hour x 10 hours = $ 200 per day
$20 per hour x 12 hours = $ 240 per day
$20 per hour x 24 hours = $ 480 per day
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The client begins to realize...
Long-term Care
is a
Family Issue.
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Key point...
It is important that your client agrees thatliving a long life and needing care willhave serious consequences to his family
Never assume that the client understands.Listen to what they say. Listen to theirconviction or lack of it.
Move on to Step #3.
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Step 3…What Pays forLong-Term Care?
MONEY
Qualified
Non-Qualified
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THEPOWERLONG-TERM CAREPlanning
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“I can self insure”
The cost of liquidating qualified funds to pay forcare.
The loss of investment opportunity on fundsliquidated to pay for care.
Assets that are difficult to convert without severetax or market liability.
Preservation of principal.
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People have continuing commitments…
. . .lifestyle of surviving spouse
. . .care for children or grandchildren
. . .protection of legacy assets
. . .to their place of worship
What happens if they need care?
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Key point...
Couples live on income
not principal.
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$1,000,000 = $ 40,000
$1,500,000 = $ 60,000
$2,000,000 = $ 80,000
$3,000,000 = $120,000
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What percentage of that
income do you think is
committed to lifestyle?
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110%110%
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“Would you like to pay for your carewith income and principal“Would you like to pay for your carewith income and principal
or interest?”or interest?”
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“Take the loss you can afford.”
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$3,000,000
$180,000
$120,000
$5,000
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“I can’t assure you that if you need careover a period of years, the income streamwill be sufficient to support your lifestyleand pay for care at the same time.”
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Unintended invasion of principal
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What have you allocated fromyour income and retirementportfolio to payfor your plan of care?
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Long-Term Care Insurance
Home care benefits
Assisted Living Facilities
Reimbursement, Indemnity or Cash
Limited pay options (10 Pay)
Care Co-ordination
Shared Care
BENEFITS will pay for
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How to fund the plan of care?
$20 per hour x 8 hours = $ 160 per day
$20 per hour x 10 hours = $ 200 per day
$20 per hour x 12 hours = $ 240 per day
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Long-term care insurance
Provides income to be used to pay for care yourfamily will find most time consuming andstressful.
Provides income that allows your spouse tomaintain her relationship with you and superviseyour care.
Provides income that allows your children tomaintain their relationship with you andsupervise your care
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Life
insurance
Disabilityincome
Annuities
LTCi
Guaranteesincome
Guaranteesincome
Guaranteesincome
Guaranteesincome
Whichpreserveslifestyle
Whichpreserveslifestyle
Whichpreserveslifestyle
Whichpreserveslifestyle
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Long-Term Care Insurance
allows your retirement plan
to execute for the purpose
which it was intended:
RETIREMENT
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Our clients goal is to live a life of significance…
Do they want to leave a legacy ofdependency after living a full and significantlife?
Do they want to cause financial andemotional stress to the families that theyhave spent their lives building and loving?
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Planning for care… 3 Choices
Make a bet (avoid & hope)
Have a plan with an allocation of incomeand assets (unintended invasion ofprincipal)
Have a plan with a transfer of risk
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What’s your planto protect your clients retirement income/portfolioand family?
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