Tracey Edgar, RN, BSN, CLTC,

Decisions. We make them all the time—all day, every day. Whether it’s as trivial as choosing what to eat for lunch or as important as whom to marry, what career path to take or where to live, we are inundated with decisions. While some choices are certainly easier than others, each carries its own consequences. As we navigate life the choices we make create opportunity costs, and some of those can have serious implications for our future. Making decisions now about our health care, finances and our futures are increasingly important.

As the population ages and medical technologies advance we are living longer. This increases the chances that we will need long term care services in the future, and higher demand is leading to higher costs. These consequences pose many questions that can lead to deep conversations with clients. Who will bear the burden of providing the care? How will your clients pay for it, and where will they receive it? What would happen if the most important member of the family economy were to pass away during their working years? How will that affect the family? How will the family find its way around the sudden loss of income when there was never a plan discussed, no options or choices given, and no plan was put in place?

Decisions in our industry are significant. Customers choose whether to buy long term care insurance, and financial professionals choose whether to present protection products, such as life insurance or LTCI. Financial professionals may not bring up the subjects of long term care or death planning with the families they serve because doing so can create an uncomfortable conversation. Or the financial professional could present all the options, but then the family members hesitate in making a choice. However, by delaying, over time their inaction is still a decision—one with consequences.

Many individuals wait until they need long term care to decide what their care plan will be. As a former emergency room nurse, I saw this all the time. People would come into the ER after having just had a stroke or other sudden medical issue and had no plan in place to deal with the next steps. This creates a burden on the family, as they will have to figure out what to do after the emergency event. Having a plan in place before a significant medical problem is best.

Oftentimes financial professionals help a family liquidate savings that were intended for retirement. Why do many families realize after the sudden death of their loved one that there was no life insurance, and they are now finding it difficult to make ends meet? It may be because they were presented with two choices. Presented with the choice for life and long term care coverage or to forego these options. Perhaps they chose the latter. Or, was it that their financial professional decided not to present them with the options? So, they ended up with the default plan—nothing.

Although this subject can be sobering, let’s choose to look at the facts. Did you know that, according to LIMRA research, 44 percent of families say they would face financial hardship in six months if the primary wage earner were to die?¹ Right now 60 million American households are either underinsured or uninsured, and only 54 percent of Americans have life insurance coverage. And that is down from 63 percent a decade ago. Why is this happening? The average deficit caused by the death of a loved one to the family is $200,000. How is it that more financial services and insurance professionals are not stepping in to fill this gap and having the uncomfortable protection conversations?

These facts and the consequences that ensue should be even more poignant now than they were just one year ago. We have the choice now to be aware of what a unique time in our history we’re in right now. During this pandemic the subject of death is in full view. It has taken the lives of hundreds of thousands of people, and most people know of at least one person who has passed away or been extremely ill from the deadly virus. People are more aware of the need to prepare, and so consumer demand has grown. In 2020, around one-third of Americans say the pandemic was the primary reason they began shopping for life insurance.²

The life insurance industry is responding to the coverage gap by creating better understanding through social media, videos, news releases and other means to generate more energy around planning. Our industry’s leading organizations have put together the “Help Protect Our Families” year-long campaign to build awareness and education about Americans who are underinsured. LL Global in conjunction with the ACLI, Finseca, Life Happens, Million Dollar Round Table, NAILBA, NAIFA and more than 60 working group participants are joining resources for this campaign. It brings to light the coverage gap, the 30 million uninsured Americans and nearly another 30 million who are underinsured. These Americans face the consequences of either not being protected at all or finding they are underinsured and don’t have adequate coverage. As our collective awareness rises, we will realize we have some important choices to make.

We must all make a personal commitment to have these difficult dialogues, even if they are uncomfortable and complex. We must choose to communicate and connect with our clients during this pandemic. This past year has likely changed their level of awareness and heightened the need for life insurance products and long term care services, and they may be more receptive to having a deeper discussion. To guide our clients and not overwhelm them, we can break down the larger conversation into manageable but meaningful connections. As we make the choice to have these critical conversations, we can help our clients make choices that will yield better protection for the futures of all American families.

References:

1. https://www.limra.com/helpprotectourfamilies.
2. https://www.limra.com/helpprotectourfamilies.

When financial professionals talk about living benefits, we’re usually talking about product options. But often, these products also can provide the very real—if less tangible—benefits of peace of mind and security in knowing that a retirement strategy is solid.

These benefits start with planning, an area we know is lacking. A recent survey asked 2,017 U.S. adults age 18 and over whether they’d expect a family member or close friend to oversee or provide assistance with care if they needed it for an extended period of time (more than 90 days).

More than two-thirds of Americans (71 percent) say if they had an illness or injury that required care assistance for an extended period of time (long term care), they would expect a family member or close friend to oversee and/or provide that care. However, only 50 percent say they’ve had a conversation with family members or close friends about who will provide or oversee their long term care in the event they needed it.

Only six percent of Americans say they’ve had this conversation with a financial professional. Most likely, it’s because financial professionals aren’t starting these conversations, even though they have a unique perspective on helping families prepare financially for this possibility.

Having conversations with clients about whom they expect will help take care of them as they age opens the door to important questions. Does the person know about the expectations? Do they have a career or other family members they’re caring for? What kind of legal and financial preparations might be necessary to help the caregiver provide the kind of care your client wants, in the place they want to receive it?

Once you’ve started the conversation about care, clients will likely realize the need to prepare financially. Solutions offering living benefits—solutions like asset-based long term care (ABLTC) protection—can help protect retirement income from the drain of unexpected expenses while providing a death benefit if long term care benefits aren’t fully used. With ABLTC protection premiums are guaranteed, and may include protection of two people with one policy and the option for lifetime benefits.

One of the benefits of ABLTC is its flexibility. The benefits can allow people to choose how and where they want to receive care. Long term care protection can help them avoid spending down personal assets to pay for their long term care. With a lifetime benefit option they can’t outlive the benefits.

Some life insurance-based long term care solutions can also cover both spouses under one single policy. This shared benefit typically can cost less and provide more protection than purchasing two individual policies and offers flexibility. Some extension of benefits options allow a surviving spouse long term care benefits even if the original death benefit is exhausted. If a need for long term care arises for both spouses simultaneously, each is eligible for their own monthly benefit limit. This means the full long term care benefit is still available, but for a shorter period of time.

Going Beyond the Averages
Many financial professionals are aware that, on average, people need two to four years of long term care. Many of their clients can manage this expense; however, the average numbers don’t cover the catastrophic financial gap that can result if care is needed for longer—in some cases, much longer. Often, the burden of that financial and care provision gap can rest, at least partially, with family caregivers. But most people don’t plan for the emotional and physical toll providing care is likely to take on family members who provide care.

For people with Alzheimer’s and other dementias alone, in 2018, 16.3 million family members and friends provided 18.5 billion hours of unpaid care. Nearly one-fourth of caregivers of people with Alzheimer’s and other dementias are “sandwich generation” caregivers — caring for aging relatives with the disease while also supporting their children and/or grandchildren.

Among caregivers of those with Alzheimer’s or other dementias who are employed, 18 percent had to go from working full time to part time; 16 percent had to take a leave of absence; and eight percent turned down a promotion due to the burden of caregiving. More than one in six Alzheimer’s and dementia caregivers say they had to quit work entirely either to become a caregiver in the first place or because their caregiving duties became too burdensome.

Numbers like this demonstrate that care provided by family members isn’t free, as there is absolutely a cost to anyone trying to provide care on their own. Long term care insurance wasn’t designed to replace what families do for their loved ones in need of care; It’s designed to provide a network of benefits that can help them provide care better and longer than they might be able to on their own.

Long term care protection can allow a person needing care to access their benefits for care the family member isn’t licensed to provide—skilled nursing visits for instance. Long term care benefits can also help hire someone to fill in during vacations or to do tasks the family member can’t. Basically, long term care protection can allow a person receiving care to do so with dignity, and allow the family member to care about their loved one versus provide care for them.

Planning for any possibility is its own living benefit. Helping clients achieve peace of mind that the retirement income they’ve prepared for will be used for its intended purpose—retirement—is a wonderful benefit that any of us in the financial services industry can give.

References:

• This survey was conducted online within the United States by The Harris Poll on behalf of OneAmerica from December 12-16, 2019, among 2,017 U.S. adults ages 18 and older. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact Tammy Lieber at tammy.lieber@oneamerica.com.
• Alzheimer’s Disease Caregivers, Alzheimer’s Association, March 2019, accessed at https://act.alz.org/site/DocServer/caregivers_fact_sheet.pdf?docID=3022.

The reality is that very few people are prepared for the cost of caring for someone living with Alzheimer’s.

Before I began my career in the insurance industry I was an emergency room nurse. I cared for people with a wide variety of medical conditions and saw how those conditions affected families for months or even years after they left the hospital. Many people think of long term care as an old person’s issue but, over and over, I saw firsthand that it is everyone’s issue.

Because of those experiences, I still maintain my nursing license and follow medical research and trends that promise to improve quality of life for people with medical conditions. Those experiences also fuel my passion every day for helping people prepare for situations they hope they never have to face.

Working toward the best while preparing for the worst—really, that’s the goal of all of us who help others prepare for retirement. And it’s a goal we share with the Alzheimer’s Association, which works every day to both fund Alzheimer’s related research and to improve the lives of those affected with Alzheimer’s and other dementias and their loved ones.

“Currently there are 5.8 million Americans living with Alzheimer’s, and that number is expected to increase as the population age 65 and older increases,” said Ruth Drew, director, information and support services, Alzheimer’s Association. “By 2050, nearly 14 million Americans will be living with the disease unless treatments are advanced.

“The reality is that very few people are prepared for the cost of caring for someone living with Alzheimer’s,” Drew said. “Many believe health insurance or Medicare will cover costs, but the costs of caring for someone living with Alzheimer’s often extend well beyond these coverages. The best time to plan for the long term care is to do so before you need it, but unfortunately many families do not have these important discussions until they’re in crisis.”

The Alzheimer’s Association website offers many useful tools, advice and information for those affected by the disease and their families. When you consider that every 65 seconds someone is diagnosed with Alzheimer’s disease, and that one in three seniors will die with the disease,1 you can quickly start to see how significant the financial impact of the disease can be to your clients and to their financial portfolios.

We’re working in collaboration with the Alzheimer’s Association because we like what it stands for—optimism for a better future—while helping families prepare for the reality of today.

“We know that people age 65 and older survive an average of four to eight years after a diagnosis of Alzheimer’s dementia, yet some live as long as 20 years with a diagnosis,” said Chris Coudret, CLU, ChFC, vice president of distribution and market strategy for Individual Life and Financial Services at OneAmerica^®. “Serving on the board of my local Alzheimer’s Association chapter is one way that I can stay involved in ways to help people plan for the possibility of this long term care need. At OneAmerica, we’re looking for ways to spread that spirit of involvement to even more of the people in our industry.”

This year at ILTCI in Chicago, we’re sharing our space with the Alzheimer’s Association to highlight their important work for those affected by Alzheimer’s disease and their caregivers. We’ll encourage people to share their stories in support the mission of the Alzheimer’s Association.

Ultimately, we hope that by becoming more familiar with the Alzheimer’s Association and its work, people in the financial profession will become more comfortable talking to their clients about the possibility of themselves or loved ones needing care for a long period of time and how they can best prepare financially for that possibility.
The costs of Alzheimer’s can be devastating financially. Most people, if asked, probably know this. But let’s face it—preparing for that possibility can seem hopeless, so they either put off planning for it or ignore it altogether.

If you’re helping people prepare for retirement by building a retirement income, but you haven’t talked about long term care planning to protect what you and they have built, then you’re only providing part of the picture—you haven’t fully prepared them. Having the right conversation about long term care protection—what it is and what it isn’t and building a plan—is such an important part of what you do.

Products like asset-based long-term care (ABLTC)—those that provide protection for long term care while still allowing people to maintain control of their assets—are one way to offer hope for people that they can manage those fears of “what could happen” in retirement. ABLTC products offer flexibility to fit a variety of situations—joint protection of two lives with one policy, multiple-pay options, even lifetime benefits—while also offering guarantees that stand-alone LTCI can’t.

Premiums for ABLTC are guaranteed, and should long term care benefits not be fully used, a death benefit passes to heirs. If they are needed, long term care benefits that continue for many years, or even a lifetime, can help protect against long term care needs such as the 10 or even 20 years of care that could be needed with diseases like Alzheimer’s or dementia. Long term care protection offered by these benefits can provide invaluable peace of mind, especially for families who come face to face with an Alzheimer’s diagnosis.

A particular area of focus and resources for the Alzheimer’s Association is directed toward caregivers, because of the enormous impact on them. According to the association, 16.1 million Americans are providing unpaid care to people with Alzheimer’s disease or other dementias, to the tune of an estimated 18.4 billion hours of care valued at approximately $232 billion. In 2018, the cost of care related to Alzheimer’s is estimated to cost the nation $277 billion. By 2050, that amount could rise to $1.1 trillion. When families are faced with the many decisions involved with caring for someone with Alzheimer’s, protection of their loved one’s retirement income can provide hope that care can be delivered as the patient wishes, where and by whom is best for the family’s situation.

To hear more about ways you can be involved with bringing hope to conversations about Alzheimer’s disease, I invite you to visit the Alzheimer’s Association in the OneAmerica booth at ILTCI in Chicago later this month and explore the many resources available on their website, http://alz.org.

Reference:
“2018 Alzheimer’s Disease Facts and Figures,” Alzheimer’s Association, https://www.alz.org/media/Documents/facts-and-figures-2018-r.pdf.