Talking to your clients about prolonged illness and mortality can be difficult, but you know having these discussions is a necessity. After all, one of your key roles is to ensure that there's a plan in place to protect your clients' retirement savings from potentially costly medical expenses.
Here, I've compiled a list of 10 long-term care questions you can ask to help guide your clients through these challenging conversations.
1) What, if any, is your personal experience with long-term care? Some of your clients likely have a relative or close friend who has needed long-term care. What many clients may not know, however, is the likelihood that they or someone they know will need care. Here are some sobering long-term care statistics you may want to highlight:
- The number of individuals needing long-term care is on the rise: By 2050, 27 million people will be using paid long-term care services in any setting (e.g., at home, residential care).
- Among the population aged 65 and older, 35 percent will eventually enter a nursing home.
- Most long-term care is provided by friends and relatives: 65.7 million informal and family caregivers provide care to someone who is ill, disabled, or aged in the U.S.
2) Did you know that the cost of long-term care varies depending on where you live? In 2016, the national median monthly cost for an assisted-living facility was $3,628. For nursing homes, this cost was $6,844. But keep in mind that these are national averages. Your clients should know that these expenses vary by location. Be sure to help them determine the cost (per day, month, or year) of a nursing home or home health care in their area as they develop a plan to pay for this potential need.
3) Do you have someone (e.g., children or other family) who will help take care of you? Many individuals hope to rely on family members in the event of a health care emergency. But what if family is far away or just doesn't have the skills to take care of someone with a disability? Then what?
Sometimes, professional assistance is the only option. In this case, long-term care insurance can provide the funds needed for your clients to receive professional care for however long it is required.
4) Where will you live when you retire? For many clients, their vision of retirement includes moving to another state or even to another country. But have they calculated what it would cost to receive care in their retirement destination?
5) Would your income stream change if you were to become disabled? Here, help your clients determine if their income would increase, decrease, or remain the same.
6) What is your medical history, including your family's medical background? You'll want to discuss longevity and specific conditions that may run in the family (e.g., Alzheimer's disease, Parkinson's disease, or dementia). It's important to stress that the best time to make the decision regarding long-term care insurance is when clients are young enough and healthy enough to do it.
7) What other assets do you have to help pay for long-term care? Depending on what other assets they have at their disposal, clients may need a policy that would pay for the total cost of long-term care or just one that would pay enough to help co-insure the risk. Other assets may include:
- A pension
- A retirement account
- Savings or investments
8) Do you have dependents? If your clients have a disabled spouse, child, or sibling, for example, what would happen to them if your clients were to become disabled?
9) What do you need from a long-term care policy? Features like nursing home care and home health care may be valuable for some, but it's vital that clients do the research on long-term care policies and the companies that sell them. Factors like whether a policy will pay for coverage outside the U.S. and the length of the coverage period (e.g., for as long as needed or a set period of time) should also be discussed.
10) Will Medicare and Medicaid help pay for long-term care? There are many ins and outs to discuss in terms of what Medicaid and Medicare will and will not cover. Here are just a few key points you may want to cover:
- Medicaid eligibility is based on modified adjusted gross income and, as such, may require your clients to spend their assets down to extremely low levels before Medicaid will pay the bill.
- Medicare may pay a portion of the first 100 days in a nursing home, but nothing after that. Plus, it covers only "skilled" care at home, while most care needed at home is actually "custodial."
Plan for Peace of Mind
Although not every client will have the need for long-term care, it's important to have a plan in place for this possibility. Long-term care planning can help your clients achieve the ultimate peace of mind—the knowledge that their financial stability and wishes for their wealth will not be undone by an unforeseen long-term care event.
How often do you talk with clients about long-term care planning? What other questions do you ask? Share by commenting below.
Editor's Note: This post was originally published in October 2014, but we've updated it to bring you more relevant and timely information.