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Schmalberg Associates
A Value-Added Broker: Long-Term Care, Disability Income, Life Insurance & Annuities We Appreciate Your Business and Always Work Hard for You!
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Accountants, Financial Planners and Elder Care Attorneys: Long-Term Care Planning Primer
Your firm offers financial planning, estate planning and asset conservation services. Do you include long-term care planning with these services? If not, are you interested in providing long-term care planning/insurance services for your clients?
We offer the experience and professionalism that you require. This includes the sophisticated computer technology and application software necessary to ensure that client needs are addressed accurately and promptly.
Increasing numbers of CPAs, CFPs and Elder Care Attorneys have come to the conclusion that they have the fiduciary responsibility to include long-term care planning as part of their professional services. They also desire to ensure that their clients will have the necessary funding to pay for long-term care in the setting of their choice.
Financially savvy people understand the importance of utilizing long-term care insurance to protect their retirement funds and estate assets. This is due to the fact that long-term care costs are already very expensive and continue to escalate every year.
Cost of Care The Mature Market Institute reported that the average cost of long-term care was $300 per day in the New York metropolitan area in 2004. Inflation is projected to increase the cost at a rate of 5% compounded yearly. The unprotected risk over the next 10 years would be $1,377,278 per person.
The need for long-term care can arise quite unexpectedly, often creating a large financial outlay. In many cases such a financial burden could
To protect against such losses, long-term care planning and insurance must be included in the client’s global financial planning strategy. As can be seen from the unprotected risk amount, even the very affluent would take a hard financial hit to their assets.
Therefore, no retirement plan or estate plan is complete without drafting a long-term care plan which includes · where the services will be provided, · who will provide the services and · the insurance policy that will cover the costs.
Long-term care (LTC) services include the custodial care along with the associated personal care, medical care, housing and other necessary assistance needed when an individual's cognitive and/or physical capacity diminishes below the level of self-sufficiency. Custodial care is defined as assistance with one's activities of daily living (toileting, bathing, dressing, eating, transferring, ambulating and continence) or supervision necessitated by a severe cognitive impairment. Long-term care insurance is intended to pay for this custodial care and the associated services.
Health insurance addresses physicians’ services and procedures, hospitalization due to injury or illness, and medications—but does not include the prolonged custodial care discussed above.
Disability income (DI) replacement insurance is designed to replace a portion of an individual’s adjusted gross income when he cannot perform the substantial duties of his occupation due to injury or illness. This amount is intended to enable the insured to meet his normal monthly expenses—not pay for long-term care services as well.
Reimbursement versus Cash Benefit Plans Long-term care insurance policies are generally reimbursement benefit plans or cash benefit plans. Reimbursement plans typically repay the policyholder out-of-pocket expenses or directly pay the service providers for the exact cost of service up to a daily or monthly maximum benefit amount. Cash benefit plans pay the policyholder the maximum monthly benefit amount each month in advance, regardless of the actual cost of services. The policyholder is free to use the monthly cash benefit as he or she sees fit.
LTCi as a Complement to DI Therefore, in addition to paying for long-term care services, the monthly cash benefit can complement an individual’s disability income replacement plan since it is designed to be used at the policyholder’s discretion. This financial tool is frequently utilized by individuals seeking higher levels of financial security due to:
However, although long-term care insurance cash benefits may be used to complement DI, adequate resources should also be allocated to insure anticipated long-term care costs.
International Coverage Not all LTCi carriers extend international coverage or will pay the full monthly benefit for the entire benefit period outside the United States. Therefore, if your client is considering retirement outside the United States, it is important to select an LTCi carrier which pays 100 percent of the monthly benefit for the complete benefit period internationally. In addition we recommend a “cash in advance” benefit plan if you plan to reside in any foreign country. Having cash in advance is an advantage since it might prove difficult to arrange for foreign LTC providers to await payment from a U.S. insurance company.
Schmalberg Associates is prepared to help. Please be assured that your clients are your clients and will remain your clients. Long-term care insurance is a sophisticated product and we have no desire to make a quick sale. We rather pride ourselves in offering a comprehensive service to help you ensure that the needs of each client are properly addressed.
We have the time and expertise to answer questions and address any concerns you may have. References are available upon request.
For additional information call us at (718) 467-3860.
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Notice: All information on this site is subject to change without notice.
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