Establishing and Creating the Plan for Care John V. Fontana CLTC

1
Establishing and Creating the Plan for
CareJohn V. FontanaCLTC

2
The Goal of the Planning Process

• Is to teach you
• How to ask the right questions.
• How to establish a discussion with a client based
  on reasonable beliefs.

3
The Fact Finder Accomplishes a Number of
Objectives

• Establishes credibility by focusing on a plan not
  the sale of a product.
• Helps to qualify your clients both financially
  and physically.

4
Asking the right questions...

• Helps you understand the clients concerns,
  emotions and feelings.
• Establishes your clients motives for purchasing
  LTCi as part of their plan.
• KEY POINT
• Your clients want to be heard.

5
Your clients will exchange a check for a feeling.
6
A recent survey by the USA Today...
Asked 3,500 top CEOs from a cross section of
industries how they assess the professionalism
and knowledge of a financial advisors.
Without exception...
7

• The kind of questions
• that they ask

8
Fact-finding questions...

• Is it important for you to stay at home without
  placing a burden on your family?
• Are you concerned that a chronic illness will
  threaten your commitment to continue to provide
  for your spouse and family?

9
Fact-finding questions...

• Is it important to control the quality of care
  that you receive and where it is delivered?
• Is it important to preserve your assets and
  income?
• Will you have a continuing financial obligation
  to any of your children or grandchildren during
  retirement years?

10
Fact-finding questions...

• Is it important to distribute your assets to your
  children according to your will or prenuptial
  agreement?
• Before I got here you probably had a conversation
  on long-term care, would you share your thoughts
  with me?
• When you hear the words long-term care what do
  you think of ?

11
Key point...
After asking these questions repeat any of the
motives that your client has for considering
LTCi. These are your clients concerns and it is
your responsibility to find a solution to
them. Let them know that you are listening.
12
Fact-finding questions...

• Have you had any prior experience with someone
  who needed LTC?
• What happened?
• How long did the illness last?
• What impact did it have on the caregiver?
• What impact did it have on the familys finances?

13
Fact-finding questions...

• Was any income allocated to pay for care?
• What impact did reallocating income have on the
  familys ability to keep prior financial
  commitments?
• Did it lead to an unintended invasion of their
  retirement portfolio?

14
Fact-finding questions...

• What did it do to the financial viability of the
  surviving spouse/children/family?
• Did he/she understand the consequences not having
  a plan would have on his familys physical,
  emotional and financial wellbeing?

15
What does your money mean to you? Security/Lif
estyle Happiness/Piece of Mind Comfort/Freedom
16
Fact-finding questions...

• Whats important to you?
• Whats important to you in retirement?
• What responsibilities do you anticipate taking
  into retirement?
• Will you have a continuing financial obligation
  to any of your children or grandchildren during
  retirement years?

17
New definition
Long-term care is not a place
its an event
Post-retirement disability Functional disability
18
Functional disability

• Physical
• Activities of Daily Living (ADLs)
• Bathing, dressing, transferring, eating,
  toileting, continence
• Stand-by help with 2
• OR
• Mental
• Cognitive Impairment
• Alzheimers, dementia, stroke, head injury
• Requiring supervision

19
Long-term care is a continuum of care, housing
and services people and their families may need
because of a chronic illness. Its assistance
with so called activities of daily living
(explain) or supervision caused by severe
cognitive impairment. The goal whenever possible,
is for you to remain at home allowing your family
to oversee your plan of care.
20
Why is Long-Term Carea Problem?
We are living longer!
21
Unchanging Realities

• People will live a long life
• Disability in retirement is a reasonable
  possibility
• Care is expensive
• Clients cant afford it
• Ever
• and continue to keep their financial promises

22
Step 1 Establishing the need for LTC because of
longevity
LTC is a problem today because people are
living longer. Wouldnt you agree? If you take
reasonable steps to take care of yourself, you
are likely to live a long life. Even if you dont
take care of yourself some new medicine or
procedure is likely to be developed that will
extend your life. When you live a long life you
could need care. Could this happen to you?
23
Key point...

• It is important that your client agrees that
  he/she will live a long life AND when they do
  live a long life then there is a reasonable
  likelihood that they will need care.
• Never assume that the client understands. Listen
  to what they say. Listen to their conviction or
  lack of it.
• After they agree ask...

24
Key question
What consequences will providing care for an
extended period of time have on your familys
emotional, physical and financial well-being?
25
Consequences to families

• Stress of care giving hikes older adult mortality
  rates.
• Caregiver can become as chronically ill as the
  patient.
• Caregivers suffer from stress related illnesses.
• Long-term care tends to tear families apart
  because the responsibilities of providing care is
  not shared equally.

26
Engaging the client... Step 2
When you live a long life and need care your
family will do everything in their power to help
take care of you. If the client is married
look at his spouse and ask If your husband
needed LTC would you do everything that you could
to keep him out of a facility?
27
If you need care your wife will take care of
you, but there is a cost to that care. Think of
it this way. She will be under a tremendous
amount of stress being a caregiver. What will
that stress do to her? How will that stress
affect her health? Whats your plan to protect
her?
28
LTC is a childrens problem
Your children will do everything in their power
to keep you out of a facility. What change will
that have on their lives? What affect will
the stress of care giving have on their health
and the relationships that they have with their
families? Brothers and sisters? Whats your plan
to protect your children?
29
Whats your plan to protect your family?
30
The plan is to stay in the community for as long
as possible without devastating your familys
emotional, physical and financial wellbeing
31
The plan depends on the family

• Single individuals
• Married with no children
• Married with children
• Second marriages

32
Plan of care

• Home Care
• Assisted living
• CCRC

QB
33
(No Transcript)
34
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

35
The client begins to realize...
Long-term Care is a Family or Friend Issue.
36
Key point...

• It is important that your client agrees that
  living a long life and needing care will have
  serious consequences to his friends or family
• Never assume that the client understands. Listen
  to what they say. Listen to their conviction or
  lack of it.
• Move on to Step 3.

37
Step 3What Pays for Long-Term Care?
MONEY
Qualified
Non-Qualified
38
I can self insure

• The cost of liquidating qualified funds to pay
  for care.
• The loss of investment opportunity on funds
  liquidated to pay for care.
• Assets that are difficult to convert without
  severe tax or market liability.
• Preservation of principal.

39
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 you need care?
40
Key point...

• Retirees live on income
• not principal.

41

• 1,000,000 40,000
• 1,500,000 60,000
• 2,000,000 80,000
• 3,000,000 120,000

42
What percentage of that income is committed to
your lifestyle?
43
110
44
Would you like to pay for your care with
income and principal or interest?
45
(No Transcript)
46
(No Transcript)
47
(No Transcript)
48
(No Transcript)
49
5,000
180,000
3,000,000
120,000
50

• I cant assure you that if you need care over a
  period of years, that your income stream will be
  sufficient to support your lifestyle and pay for
  care at the same time.

51
Unintended invasion of principal
52
What have you allocated from your income and
retirement portfolio to pay for your plan of
care?
53
Long-Term Care Insurance
BENEFITS will pay for

• Partnership
• Home care benefits
• Assisted Living Facilities
• Care Co-ordination
• Shared Care

54
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

55
Long-term care insurance

• Provides income to be used to pay for care your
  family will find most time consuming and
  stressful.
• Provides income that allows your spouse to
  maintain her relationship with you and supervise
  your care.
• Provides income that allows your children to
  maintain their relationship with you and
  supervise your care.

56
Life insurance ? Disability income ? Annuities ? LTCi ?
Guarantees income ? Guarantees income ? Guarantees income ? Guarantees income ?
Which preserves lifestyle Which preserves lifestyle Which preserves lifestyle Which preserves lifestyle
57
Long-Term Care Insurance allows your retirement
plan to execute for the purpose which it was
intended RETIREMENT

58
Take the loss you can afford.
59
Planning for care 3 Choices

• Make a bet (avoid hope)
• Have a plan with an allocation of income and
  assets (unintended invasion of principal)
• Have a plan with a transfer of risk