Protecting your most important asset:

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• Protecting your most important asset
• Your family

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The agenda

• Why a plan for long-term care must be considered
  and what the consequences are if you dont
• Developing a plan to protect your family and
  finances
• What will pay for that plan

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My goals are to

• Give you insight into the consequences your
  needing care over a period of years could have,
  not on you, but those you love
• Speak to the consequences an illness will have on
  your best thought out retirement plan
• Discuss the options for protecting both your
  family and finances should you need care over a
  period of time

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• Living a long life could
• well be in your future
• Planning for it is now a necessity

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I believe that reasonable people

• Understand they could live a long life
• Believe that its possible they could become
  frail and need care if they age
• Are willing to consider taking action if they
  understand that needing care could have serious
  consequences to their family and retirement
  portfolio

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• That said, Ive had
• clients tell me

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• Thats true but
• What if I dont live a long life? Very few in my
  family made it past their 70s
• Or
• Even if I do live a long life, what if I dont
  need care? Everyone in my family was healthy
  until the day they died

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• To which I have responded
• You very well may be right
• The risk of dying at an early age may be high and
  or
• The risk of needing care may be low because of
  your family history

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But have you thought about the consequences to
those you love if you ever did live a long life
and needed care over a period of years?
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• Not that it will happen
• to you, but heres what
• causes the need for
• extended care

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• A chronic debilitating medical condition
• Is an illness or illnesses that can be managed,
  not cured. They compromise your ability to get
  through the most basic daily functions
• A cognitive impairment
• Is a marked deterioration in your intellect
  making it difficult if not impossible for you to
  safely interact with your environment
• Both conditions require custodial, not medical,
  care

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and heres what they do to the emotional and
physical wellbeing of your family
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• By definition, long-term care is a safety issue
  which means that providing care or supervising
  movement quickly becomes all consuming
• This 24 hour responsibility has a direct impact
  on the caregivers emotional and physical
  wellbeing which inevitably
• Forces a child to step in causing her to
  re-orientate her life

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Put simply, if you ever need care over a period
of years your life wont end
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Someone elses life will likely end
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A thought
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• Did you notice there was no mention about nursing
  home care?
• Thats because the real damage to the family
  begins not when a placement is made
• But when the decision is made to keep the person
  they love at home

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Does anyone know why families struggle, often
against the odds, to keep someone at home?
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Because making a placement breaks your heart
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• How a plan can
• protect your family

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The plan has 2 objectives

• The first is to allow you to remain in the
  community without risking the emotional and
  physical wellbeing of those who will provide your
  care
• The second is to preserve your retirement plan so
  it can execute for the purposes you intended
  which generally include
• Generating income to support your lifestyle
• Minimizing taxes
• Insuring the financial viability of your
  surviving spouse

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Paying for your plan

• How paying for care can
• impact your retirement portfolio

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During working years

• A portfolio is created and funded that will
  accomplish two critical goals
• Help defray the cost of college
• And assure lifestyle during retirement
• During working years your ability to guarantee
  there will be enough income to fund the portfolio
  as well as meet normal expenses

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• Is guaranteed by
• an insurance portfolio

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Asset Portfolio Income Protection
Portfolio

• Automobile ?
• Family ?
• Wealth ?
• House ?
• Salary ?

• Auto insurance
• Life health insurance
• More life insurance
• Home owners insurance
• Disability income

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• The question at
• retirement becomes

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What is protecting your retirement portfolio
which will be generating income?
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Alan Camille are 43 years old. They have 2
children
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• Their combined income is 200,000 per year
• The house is worth 850,000. It has a mortgage of
  200,000
• Their retirement portfolio is just under 500,000
• One child is in private school, the other in
  college
• In addition they belong to a club, have modest
  credit card debt and purchase a car every 5 years

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• Alan dies suddenly
• of a heart attack

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• What has been allocated from the
• retirement portfolio and/or equity in
• the house to pay for the continuing
• obligations his wife will face?

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Nothing

• Alan purchased life insurance
• Alan didnt think he would die during working
  years. In fact, statistically he was correct
• He knew, however, that even though the risk might
  be low, the consequences would be catastrophic to
  his family
• Alan purchased life insurance for the same reason
  everyone purchases life insurance

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• He loved his family

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The couple make it to 78
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• Their house is paid off and worth 1,500,000.
  Their portfolio, worth 1,500,000, generates
  75,000. When added to their social security they
  gross 100,000 per year
• His passion is golf. Camille rides horses. Both
  love to travel and they have a house in Florida
• They have a child who has not made the best
  decisions and are helping to pay for their
  grandchildrens education

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• Camille is diagnosed
• with Alzheimers

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• What has been allocated from
• the retirement portfolio and their income to pay
  for her care over the next 8 to 10 years?

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• All of it
• Where else can the
• funds come from?

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• Alan is now faced with how to pay for his wifes
  custodial care. He looks into

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• Medicare, but finds it won't pay for custodial
  care
• The VA, but again is told its not an option
  given his assets and income
• Medicaid and this time he learns it will pay for
  custodial care, but almost exclusively in a
  nursing home. Alan promises himself its the last
  option but wants to know what would happen if he
  needed the program. He finds out

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• That to qualify for benefits he would have to
  give his assets away
• The problem is that they consist of low cost
  based investments and qualified funds the gifting
  of which would create substantial taxes. In other
  words
• Medicaid is not free

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• In an effort to preserve his income and assets he
  provides the care himself creating an unintended
  consequence that will end up devastating his
  children
• His heath starts to fail to the point where a
  child has no choice but to step in and assist
• What does that do to her health and the
  relationship with siblings who do not help out?

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• Camille has Alzheimers

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• Her husband and
• children suffer from it

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Finding the right solution

• Looking at long-term care insurance as an
  essential tool which protects your family and
  retirement portfolio

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• How many believe the product protects them if
  they need care over a period of years?

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• It doesnt

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It protects your family

• It allows your spouse to maintain her
  relationship with you as a spouse who supervises
  rather than provides care
• And by doing so
• It allows your children to maintain their lives
  which has the added benefit of
• Keeping them close by keeping them apart

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• and it makes this possible not
• by protecting assets, but rather
• by providing a stream of income
• which pays for that care

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And that creates The Cascade Effect
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• By paying for care
• ?
• Your primary source of income generated by your
  retirement portfolio is guaranteed which means
• ?
• Your ability to support your lifestyle which
  includes commitments to your family and community
  is guaranteed

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• Since care is covered it guarantees that
  investments which were not allocated to pay for
  care remain in place. This has two desired
  results
• ?
• It eliminates unnecessary taxes and
• ?
• Preserves your estate for your surviving spouse
  and children who may depend on an inheritance

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• But Ive been told I have
• enough assets to pay for the
• cost of long-term care

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From this point, I would like you to consider
that income, not assets pay for care
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• 1,000,000 50,000
• 1,500,000 75,000
• 2,000,000 100,000
• 2,500,000 125,000

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And most if not all of that income is committed
to lifestyle
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Take a sheet of paper

• Draw a line down the middle
• On the left write Estimated Income
• On the right Estimated Expenses
• Your income is 85,000
• What do you think your expenses are?

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Where is the income going to come from to pay for
care?
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One more thought about using assets to pay for
care
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• Taxes on liquidating low cost based assets and
  qualified funds
• What if the market is down when assets have to be
  sold?
• How much of your portfolio is liquid
• What happens to income if assets have to be used?

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• Maybe, but Ive been told that if I
• need care I wont have much of a
• lifestyle, so the money saved can
• be used to pay for care

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• It stopped being your
• lifestyle, the day you got
• married and had children

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Some final thoughts
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• Successful people who love someone, purchase life
  insurance not because they think they are going
  to die during working years
• They buy it because of the consequences to those
  they love if they ever did
• Successful people who love someone purchase
  long-term care insurance not because they expect
  to need care

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They buy it because of the consequences to those
they love if they ever did