The Financial Advisor Guide to Long Term Care Self Study Course # 17 OVERVIEW Over the next decade, approximately 47 million baby boomers in North America will be facing the role of caregiver to a parent, relative or elderly friend - an odyssey that will change many of their lives. At the same time, countless thousands of seniors will face the dilemma of caring for a chronically ill spouse.
Most of us are familiar with the type of health insurance that pays for doctor visits and hospital bills. However, the type of insurance that pays for nursing home stays and home health care is entirely different.
Long term care is a step beyond medical and nursing care. It includes all the assistance you could possibly need if you ever have a chronic illness or a disability that leaves you unable to care for yourself for a prolonged period. Individuals can receive long term care at home, in an assisted living facility or in a nursing home. Long term care is assistance with any activities of daily living, which can include bathing, dressing, transferring, eating and continence.
Older people use the majority of long term care services; however, a younger person who has suffered a serious illness or been in an accident can also use long term care. Anyone with a long physical illness or injury, a disability or cognitive impairment will, many times, require long term care. This care is different than traditional medical care and is meant to help one live as he or she is currently and may not, necessarily, help to improve or correct medical problems. Long term care can take place in a number of places and can require varying levels of care. These long term care services may include help with Activities of Daily Living (ADL’s) in a nursing home, home health care, assisted living facilities and adult day care centers. It may also include a care management service that would evaluate your needs and then coordinate and monitor the delivery of care.
A person with a physical illness or disability will often need "hands-on" assistance with ADL’s. A person with a cognitive impairment will usually need supervision or verbal
2 Long Term Care SSC #17 Pro-Seminars International © 11/08 reminders to do everyday activities or, perhaps, in order to keep them from doing harm to themselves or others.
The ways that long term care is provided will differ with the type and level of care that is needed. What are the odds that you will need long term care at some point in the future? At age 55, the odds are 1 in 10 At age 65, the odds are 4 in 10 At age 75, the odds are 6 in 10 Past age 75, the odds are 7 in 10 The above statistics come from Statistics Canada.
With the average couple, one or both spouses will need some long term care at some point. Statistics show that one in two people past the age of sixty-five will spend some time in a nursing home. Approximately 1/3 of LTC cases are people under age sixty. Every long term care insurance policy is different, so it is crucial to read the fine print before you recommend a policy or a company to your prospects and clients.
Your clients should be informed before they buy a Long Term Care policy of the following information: What conditions must be met in order to collect benefits? For example, some policies require prior hospitalization before coverage for long term care services. Does it pay for any type of nursing home costs or just the costs of nursing homes that provide skilled care? When will it pay for custodial home care or hospice care? What types of facilities are covered? Some policies will only pay for care in facilities that meet their definitions of skilled, intermediate, or custodial care. Some company definitions will be more restrictive than others. Are there built-in benefit increases to allow for inflation or is the benefit amount pre- fixed? Are there provisions that would provide some coverage should your policy lapse in future years? Are expenses outside your local area covered? What is specifically excluded from coverage? Will your premiums go up, as you get older? Will you have to continue paying premiums if you go into a nursing home? Is the policy guaranteed renewable? Such a provision means that the company cannot cancel the policy for any reason except nonpayment of premiums Long Term Care SSC #17 3 Pro-Seminars International © 11/08 In this module, we will provide the answers to these questions. Long Term Care insurance offers Long term peace of mind to an older segment of your market. INTRODUCTION Long Term Care: A New Market Today's insurance markets are a constantly changing field. This is especially true in the area of Long Term Care Insurance.
Canada’s senior population is continually growing. Because increasing age also tends to bring with it increasing physical, mental and emotional needs, the insurance industry has begun to realize that there is a growing need for specialized insurance policies. The insurance industry is not alone in coming to this conclusion. Both federal and provincial governments have also realized it. This realization, along with consumer pressure, has brought about legislation specific to senior citizens and their particular needs.
Seniors are one of the fastest growing population groups in Canada. In 2000, there were an estimated 3.8 million Canadians aged 65 and over, up 62% from 2.4 million in 1981. In fact, the senior population has grown about twice as fast as the overall population since the early 1980s. As a result, more than one out of every 8 Canadians is now a senior. In 2000, 13% of the population were seniors, up from 10% in 1981 and 8% in 1971; it was also more than two and a half times the figure in 1921, when only 5% of people living in Canada were seniors.
The rapid growth in the size of the senior population is also expected to continue well into the future, particularly when those born during the baby boom years from 1946 to 1966 begin turning age 65 early in the second decade of the new century. Statistics Canada has projected, for example, that by 2021 there will be almost 7 million seniors, who will represent 19% of the total population, and that by 2041 there will be over 9 million seniors, who will make up an estimated 25% of the population.
In 2000, there were over 400,000 Canadians aged 85 and over, up from 140,000 in 1971 and only 21,000 in 1921. In fact, about one in 10 Canadian seniors is now 85 or over, up from one in 20 in the early 1920's.
4 Long Term Care SSC #17 Pro-Seminars International © 11/08 As with the overall senior population, the number of people in the oldest age groups is also expected to increase rapidly in the approaching decades.
Statistics Canada has projected, for example, that there will be almost 2 million Canadians aged 85 and over in 2051, almost five times the current figure. In fact, by the middle of the new century, there will be more people aged 85 and over in Canada than there were aged 65 and over in the 1970s.
The largest share of those in the 85 and over category are still in their eighties. Still, in 1996, there were 85,000 Canadians aged 90-94, almost 13,000 aged 95-99, and over 3,000 aged 100 and over. As well, women represent a substantial majority of the oldest segment of the population. Indeed, women made up 70% of all people aged 85 and over in 2000, whereas they represented 60% of those aged 75-84 and 53% of the population aged 65-74. The growth in the size of the population in the very oldest age categories is of importance because people in this age range generally have greater needs than younger seniors for such things as social support and health care. In 1996, for example, seniors aged 85 and over made up almost half (46%) of all seniors in health-related institutions, whereas they represented only about 10% of the total senior population.
Using the Phrase Long term Care Although the phrase long term care can mean many things, it is most likely to be used when referring to nursing home care. Although some may object to this term being used to mean nursing home care, it is the term consumers most often use. Realizing this, agents must be careful to define terms when presenting policies that may not necessarily give coverage for a nursing home or Long term facility.
Of course, Long term care actually refers to any type of care utilized for an extended period. If the term long term care is used, it should be defined precisely by the agent or broker.
Market Specialization Because this market is rapidly changing, agents are likely to begin specializing in this field. It will be increasingly difficult for the field agent or broker to "do it all”.
Long Term Care SSC #17 5 Pro-Seminars International © 11/08 An agent who only sells an occasional Long Term Care policy will have a difficult time keeping up with the continuing changes in this field. Some experts recommend that agents become specialists, selling primarily products such as Critical Illness, Long term Care and supplemental plans for existing provincial Health Insurance. They believe that it just will not be possible for an agent or broker to work both the underage and the senior market effectively and for the good of the consumer.
Defining Long term Care What, exactly, is long term care? Not all people give the same definition, but generally, long term care is considered care provided to persons with chronic diseases or disabilities that need medical or personal care in some form for an extended period. Long term care does not apply to either hospital care or hospital benefits.
A New Focus - Protecting Assets Now that consumers are interested in protecting their assets from financial ruin caused by health care issues, we will see long term care (of various types) become a major focus. Society as a whole realizes that taxpayers cannot afford to care for the growing number of elderly citizens. It is in the best interest of society in general to promote the selling of long term care insurance products.
No one is immune to chronic illnesses or accidental injuries. Even young people can need nursing care for an extended period. This is especially true with the AIDS epidemic. However, for the most part, the senior population desires benefits for long term care. The chance of needing some form of medical care for an extended period does primarily affect those over the age of 60. We can see by the previous statistics that the over age 65 population in Canada will grow significantly over the next few years.
Growing Life Expectancy – We Are Now Living Longer Not only are there older people; older people are also living longer. This is why the need for long term care is growing so rapidly. Part of the desire for long term care has to do with the length of our lives. We are living longer and longer. The life expectancy of Canadian seniors has risen substantially over the course of the last century.
6 Long Term Care SSC #17 Pro-Seminars International © 11/08 As of 1997, a 65-year-old person had an estimated remaining life expectancy of 18.3 years, roughly half a year more than in 1991, three years more than in 1971, and five years more than in 1921. The life expectancy of seniors, of course, declines with age. Still, someone aged 90 in 1997 could expect to live close to 5 more years, on average, while the figure was 6.3 years for someone in their 85th year, and almost 9 years for someone aged 80. These figures were all higher than they had been at the beginning of the 1990s, with the largest gains occurring among younger seniors.
By the year 2000, life expectancy reached 85 years of age. Of course, many people reach that age (and older) now. Living longer does not necessarily mean that good health is enjoyed. Usually increasing age brings with it increasing medical problems. The problems of older age bring about the need for long term care in some form.
As we said, most people associate long term care with nursing homes. Consumers often call some form of nursing home insurance Long Term Care Insurance. Even so, long term care often means other situations, such as care at home, in community organizations or a combination of several types of services.
THE EVOLUTION OF LONG TERM CARE An Industry Emerges Long term care insurance policies are a new addition to the insurance industry. As with nearly all products, they evolved because a need (and consequently a market) became obvious. As an insurance policy, long term care benefits are new. Such policies were introduced in the late 1970s in the United States, and only a few years ago in Canada to meet the needs that were rapidly developing in the nursing home industry. Since the beginning, the policies have changed dramatically (for the benefit of the consumer), and they continue to change as advancements are being made in the Health Care industry. At some point, everyone must face the fact that they or a close friend or family member will end up needing long term care. Such care is expensive. Even those that remain primarily healthy will eventually develop physical or mental frailties or impairments due to advancing age.
Long Term Care SSC #17 7 Pro-Seminars International © 11/08 A Growing Market Seniors are generally far more likely than those in younger age groups to be hospitalized. Seniors, for example, were three times more likely than those aged 45-64 to be hospitalized in 1998-99. Hospitalization rates also rise substantially among older seniors, with people aged 75 and over 70% more likely than those 65-74 to be hospitalized that year.
Seniors also tend to stay in hospital for considerably longer periods than younger people. In 1998-99, the average hospital visit of seniors lasted 14 days, compared with less than 10 days per visit among all age groups under age 65. Older seniors stay in hospital for longer periods than their younger counterparts, with older senior women averaging the longest hospital stays. In 1998-99, women aged 75 and over stayed in hospital an average of 18 days per visit, compared with 14 days for their male counterparts.
These statistics are not new. They have been known for some time. What changed were family structures, abilities and the types of care now available.
Several decades ago, the elderly did occasionally end up in a nursing home. Social acceptance of such an event was vastly different however. Fifty years ago, the proper thing was to be cared for either at home or in a hospital. Those who ended up in a nursing home were considered "dumped" by their children and other family members. It was thought that children who truly loved their parents and grandparents would make sure their remaining years were spent in their own homes or the homes of relatives. Fifty years ago many things were different.
Changing Social Acceptance Why has nursing home admissions become socially acceptable today? Part of the answer lies in the quality of care now received. There were always some facilities that were excellent, but there were also many that were miserable. Those that were miserable eventually received much media attention. This brought about negative publicity and with that publicity came improvement. These improvements continue today.
8 Long Term Care SSC #17 Pro-Seminars International © 11/08 Women Entered The Work Force Changes in our families made nursing home acceptance important. Daughters gradually became unavailable. During World War II, many women entered the workplace. Even when the war ended, many of the women remained workers. Beyond that, as our country's economic climate changed, women found it necessary for them to work. The two-income family is now part of our culture. Families can no longer spare one of the wage earners, even when it involves caring for elderly or ill parents.
The following conditions are making the use of nursing homes an increasing reality: Longer life. Healthier living. The loss of women full time in the homes.
Some interesting statistics when it comes to women in the workforce Senior women are considerably more likely than senior men to have low incomes. In 1998, 25% of all women aged 65 and over lived in a low-income situation, compared with 13% of their male counterparts.
The incidence of low income, however, has fallen sharply among both senior women and men in the past decade and a half. Between 1980 and 1998, for example, the share of senior women with low incomes fell from 40% to 25%, while the figure for men dropped from 27% to 13%.
There is a particularly wide gap in the likelihood of unattached senior women and men having low incomes. In 1998, about half of these women (48%) lived in a low-income situation, compared with 35% of unattached senior men. The incidence of low income among both unattached senior women and men, however, has dropped sharply since the early 1980s. Among women, the figure fell from 72% to 48% between 1980 and 1998, while among men it dropped from 61% to 35%.
One of the most dramatic labour force trends in Canada in the last several decades has been the decline in the workforce participation of men aged 55-64. Between 1976 and 1995, for example, the proportion of these men with jobs fell from 73% to 54%.
Long Term Care SSC #17 9 Pro-Seminars International © 11/08 The share of men aged 55-64 with jobs, however, has rebounded somewhat in the past few years, rising from 54% in 1995 to 58% in 2000.
In contrast to their male counterparts, the share of women aged 55-64 participating in the paid workforce has risen since the mid-1970s. In 2000, 39% of these women were part of the paid workforce, up from 30% in 1976. Women in this age range, however, are still considerably less likely than their male counterparts to be employed outside the home.
Finding Someone To Provide Home Care When a family member requires Home Care, the next step is often trying to find a person who will come to the home to care for the parent or ill person at a rate that is affordable. Finding a person the family is comfortable with is not always easy. Although children often plan to help pay for the care, they have a family and personal obligations, so the cost has to be within their budget. The beneficiary may have some savings, but seldom is it enough to last for any lengthy period.
As we previously stated, it can be difficult to find a person the family is comfortable with to hire. Even when a suitable person is found to come into the home, the chances are it will be for no more than an eight-hour shift. Family members must fill in the other times personally. This often becomes a tremendous chore. Inevitably, one or two children end up doing most of the work. Those that are most likely to be willing to give their time are daughters. This is not to say that sons are not willing to help, some do. Women simply tend to be most comfortable in the "care-giving" role. The physical aspects of caring for an ill or disabled person are not always pleasant. It involves bed changing, physical body washing, and other aspects that men are not always prepared to handle. As the children become mentally and physically stressed to the limit, a nursing home eventually becomes more appealing. This often brings about an additional burden: guilt. Even though the children realize that a nursing home makes sense, they may feel they are letting their parents down. Even if a person could be found, the cost is usually prohibitive.
10 Long Term Care SSC #17 Pro-Seminars International © 11/08 Unrealistic Promises Some parents have put an additional burden on their children. They have asked their children to promise not to institutionalize them under any conditions. Of course, most children (having no idea of the realities) agree and make promises that are nearly impossible to keep. The parents probably have no idea themselves of what they are requesting. If they knew, they may not have asked for such promises in the first place.
Understanding the stress that comes with an ill parent, Doctors often advise the use of a nursing home or some other community based facility rather than home care. Physicians and other health care providers know that over-involved children may not make sound decisions regarding their parent's care. They realize that children may feel guilty, or sometimes even angry, about their parent's situation. In fact, they realize from experience that when one or two children become less involved, other children are likely to become more involved. If all children become involved, decision-making is more likely to be sound and carry less individualized guilt.
WHO IS MOST LIKELY TO NEED LONG TERM CARE? This is really voicing the question that most people fear: “Will I end up in a nursing home?” There will always be debate over who needs Long Term Care Insurance. There are those who seem to advocate it for everyone and those who think almost nobody needs it. Some simply seem to feel that no policy is truly written to benefit the consumer. As with most things, the middle ground will probably be the answer: some will and some will not need the care provided in a nursing home.
Changing Times Long term care services were not always needed. Only a few decades ago families stayed closer together physically and were available to care for their elderly or sick members. Times, of course, have changed. Mothers, daughters and granddaughters now have busy lives outside of the home. They are seldom available for around-the- clock care even for those they feel very close to. As times have changed, so too have the options available.
Long Term Care SSC #17 11 Pro-Seminars International © 11/08 One of the options chosen today is a policy to cover most of the costs of a Facility Care Benefit (nursing home) as well as Home Care confinement. An insurance policy is not the only course of action, but it is one of the best.
A Health Issue While Canadians are becoming more educated on the possibilities of future care in a nursing home, many still believe it will happen to that mysterious "other person.” The truth is, it can happen to anyone, regardless of gender, creed, race, financial standing or family structure. Although it is often made out to be a social issue, the need for nursing home care is actually a health issue.
Who’s Problem? Perhaps the big question is "Whose problem is this?” Paying for long term care is often thought to be the government's problem because too many people have the mistaken belief that the government will pay for their nursing home needs when the time arises. Those with this mistaken belief often end up in poverty.
Perhaps we would be most accurate if we replied, "It is every taxpayer's problem.” In the end, it is the taxpayers who will put in the hours to earn the money to pay the taxes needed to foot the Long term care costs.
We know that Facility Care is expensive. No one seems to argue this point. We also know that we are facing tremendous social changes. Most Canadians think of this crisis in terms of taxation, but it goes way beyond that. Our government uses tax dollars to fund a wide range of social programs, not just medical care for the elderly. Those other programs will certainly be affected, too, if there are not enough dollars to go around.
Changes In Health We have also seen the types of illness change as people become older. Certainly frailty is a major component, but also conditions, such as Alzheimer's disease, was less common when people were dying younger. As our population becomes older, conditions such as Alzheimer's becomes more prevalent. Caring for conditions such as this at home is extremely difficult.
12 Long Term Care SSC #17 Pro-Seminars International © 11/08 We occasionally hear stories of a family member "dumping" an elderly person. They state stress and physical limitations as the reasons for doing so. The public may consider these stories as examples of selfishness, but that is not necessarily so. It is extremely difficult to cope day-in, day-out with a chronically ill and often disoriented person. Actually, a very high percentage of the frail elderly are cared for in some fashion at home, at least initially. Anyone who has not tried to cope with this situation is in no position to judge anyone else who is trying to. Financial Depletion When a nursing home confinement finally happens, it takes less than a year to deplete a couple's entire life savings. Who could handle $1,000 or more per month in nursing home fees? Rates do vary according to many factors, but the cost is high. If there is no Long term care insurance in place that is adequate, any government coverage will only allow the elderly individual to MAYBE end up in a ward setting. This would cause the total loss of any individual rights. By that time, of course, the individual is impoverished.
There are no easy answers. When the money is gone, any available government support is the only answer left. Yet, other taxpayers do not want to pay the cost for those who did not adequately plan. Their argument is valid.
Some Typical Cost Estimates of Long term Care:
PUBLIC FACILITIES Room with one bed $1800.00 per month Room with two beds 1500.00 per month Room with three or more beds. $800.00 – $1200.00 per month.
Ranges from $1000.00 to $5000.00 PRIVATE FACILITIES per month.
These costs can vary by individual Provinces and locations. Please check with the proper authorities.
Long Term Care SSC #17 13 Pro-Seminars International © 11/08 Women Worse Off Than Men Women fare worse than men when it comes to finances. Although women are in the workforce now, those currently experiencing medical problems often do not have an adequate work background. Therefore, they may have no financial assets. Women make up 80 percent of the poor elderly. When their husbands died, they often lost their financial foothold. This is everyone's concern because women also make up the majority of nursing home residents.
Some professionals feel that the fact women are now in the workforce means very little as far as financial gains go. When compared to men's earnings, the inequalities still exist. While the woman's earnings may help in their day-to-day living, it will have little effect on her retirement.
Men tend to be cared for at home by their spouses. Even so, his illness will cause additional expenses that were not planned for. That may include specially hired nurses, or even remodeling a bathroom to accommodate a wheelchair. Income from monthly sources and the interest earnings from savings, which were previously adequate, may no longer be. As it becomes necessary to dip into principal, the interest earnings that are generated begin to shrink. Eventually she will be widowed. By the time this happens, her savings will be fully or partially depleted, leaving her with little to survive on.
Various studies have found that half of the women who are widowed were not poor before their husbands became ill and died. Loss of income from pensions, which ended with his death, and costs before his death (including nursing home confinements) leave the women poor.
As in other age groups, senior men have higher incomes than their female counterparts. In 1998, senior men had an average income of $26,800, almost $10,000 more than the figure for women in this age range, who had an average income of $16,900. The incomes of both senior women and men, however, have risen since the early 1980s. Between 1981 and 1998, the average annual income of senior men rose 21%, once the effects of inflation have been accounted for, while the figure for senior women was up 22% in the same period.
14 Long Term Care SSC #17 Pro-Seminars International © 11/08 Those who live in families account for most of the difference in incomes of senior men and women. In 1998, senior men in families had an average income of $26,800, almost twice the figure for comparable senior women ($14,300). In contrast, the average income of unattached senior men was only 30% greater than that of unattached senior women: $26,500 versus $20,400.
The Only Option For Many People Nursing homes and other alternative care facilities often is the only avenue for those who are experiencing a debilitating condition that partially or fully causes failing eyesight, hearing loss, memory loss, or even partial paralysis. Whatever the reason, as we age, such conditions become more likely. Because of this, people must ask themselves: "Who will take care of me if I cannot take care of myself?" We would like to think that our spouse and children, perhaps even our friends, would quickly volunteer. In reality, even if they are willing to care for us, it is not always possible.
If you took a random poll, it is likely that very few people would have any idea how to go about handling the numerous questions, paperwork, and costs that come with entering a nursing home. Most simply do not want to know about it, but even if they did, finding the answers would not be an easy task.
Becoming Poor The majority of people who enter a nursing home end up poor even if they were not so when first admitted to the facility. That is not surprising considering the cost of such care.
Judging Need Based On Family History How does a person know whether they are at risk for long term care and should, therefore, buy a LTC policy? There is no sure way to know, of course, but a person can get some clues from their relatives. Certain medical conditions that run in the family are prevalent in nursing home residents. This would include any medical condition that does not necessarily kill, but does disable. Severe arthritis is a prime example of such a condition. In fact, arthritis and heart disease are the two most common causes for long
Long Term Care SSC #17 15 Pro-Seminars International © 11/08 term care. Of course, when more than one physical problem exists, the need for care rises. According to a 1994 report, long term care is needed "when a chronic condition, trauma, or illness limits their ability to perform independently activities essential to maintaining themselves or their households, or puts them at risk of behavior that may harm themselves or others.” It is important to note that the report did not say that the individual needed to be in a nursing home; merely that some form of long term care is indicated. Taxpayer’s Burden Unfortunately, the various governments are transferring Health Care costs to the individuals. In some circles, there seems to still be the mentality that the government had some sort of obligation to fund the care of the elderly in nursing homes. This attitude began changing when it became obvious that "government sponsored" actually meant "taxpayer sponsored." As a result, downloading of responsibilities is still a hot topic, both for and against.
FUNDING LONG TERM CARE THROUGH AN INSURANCE POLICY COULD PROVIDE PEACE OF MIND This brings us to the insurance policy. Not all insurance policies are adequate for long term nursing home care. The consumer must choose wisely.
Long Term Care policies provide a peace of mind that may not be easily found elsewhere when it comes to long term care worries. The term “peace of mind” has nearly been worn out by insurance companies trying to sell their products, yet it remains a valid factor. Although the provisions will vary from company to company, each policy must follow certain guidelines. Because of this, there will be similarities among the policies. Each policy will have benefits, exclusions and limitations that are standard.
The Age 40 And Under Market Surprisingly, most companies do not sell, or even offer to sell, to the younger ages. Many policies were not available to anyone under the age of 40 or even 50. That is beginning to change. Since prices are always lower for the younger ages, buying early is attractive to those consumers who understand the need. In addition to understanding the pitfalls of growing older, the younger population is aware of how AIDS could affect them or their family members.
16 Long Term Care SSC #17 Pro-Seminars International © 11/08 The insurance industry is also aware of the possible financial effects that AIDS could bring to the Long term care costs in this country. Many experts feel that the insurers are hesitant to offer Long Term Care policies to the under age 40 group for this reason. Insurers have good reason to worry. AIDS is a disease that could cause younger people to overtake the elderly in the need for long term care. It is thought that underwriting may begin to use similar testing for long term care that is currently used for life insurance products--a blood test. This may apply only to the under age 40 group or it may be applied uniformly to avoid discrimination claims. However, underwriters may want initiate such medical procedures as part of the application process in the coming years.
Affording The Cost Of Insurance For most consumers, insurance policies are the only option available to them. Life Insurance companies have done much to offer exceptional policies, but the cost is not always affordable to those who need it most (older people with some physical ailments). Clearly, we must begin to consider such protection much earlier when age and health offer the best buys. It has been estimated that 84 percent of those people who wait until they are age 70 or older cannot afford the premiums of adequate protection.
LTC Policies: A Different Type Of Market Place Long term care products are different from other markets. While this brings about some advantages, such as daytime work versus nighttime, it also brings about new responsibilities. While most people in retirement are well educated in the marketplace from years of experience buying products, some have lost some of their mental capabilities. This might be due to medications or medical conditions. Anytime an agent or broker suspects that the consumer is unable to make a logical decision, he or she should discontinue the sales process. Besides the fact that the policy could be rescinded on medical grounds, there may also be family members who feel very protective. Legal ramifications could develop.
The senior marketplace tends to be a slower sales process. There will be lots of questions and perhaps a "think about it" period. As previously mentioned, the senior population is increasing at a quick pace. This is a tremendous potential for agents and
Long Term Care SSC #17 17 Pro-Seminars International © 11/08 brokers, but it also brings with it tremendous responsibility. The costs of Long term care will continue to rise and these costs need to be brought to the attention of the consumer. At the same time, agents and brokers need to be responsible in the selling field.
Agent and Broker Ignorance One problem with Long term Care insurance policies is simple ignorance on the part of many insurance agents and brokers. Even the companies issuing these policies are still struggling with policy language because it is so new. Certainly, the agents in the field have reflected this.
Consumers are sometimes given misleading or downright wrong information regarding the coverage they were buying. This is purely because of the need for education and training in this sector of the insurance industry. As more and more LTC policies are being marketed, the information is becoming more exact. This is due to the new awareness of this product
Agents & Brokers Recommend Buying Long term Care Policies Some agents and brokers recommend buying Long term care policies to protect against a nursing home confinement because they know Government benefits and other Health Care policies will not help pay the facility or home care nursing bills.
WHAT ARE LONG TERM CARE POLICIES? Long term Care Policy Defined A Long Term Care policy is a contract that provides benefits for an extended period in some location other than a hospital. The exact benefits will vary, but each contract will have a policy schedule that states precisely what is covered. It will include the elimination period, the maximum daily benefit for home and adult day care, the maximum nursing home benefit and the maximum lifetime benefit.
Policy Contents A contract for insurance is made up of specific items. Those items include the original application (a copy of which will be enclosed with the issued policy), the policy itself, and any attached papers. The policy contract is a legally binding contract between the applicant and the insurance company. No one, including the agent, can change any part
18 Long Term Care SSC #17 Pro-Seminars International © 11/08 of the policy or waive any of its provisions unless the change is approved in writing on the policy or on an attached endorsement by one of the company officers.
Basis of Issuance The company issues the policy based on the answers to the questions in the original application. Any intentionally incorrect or omitted information on the part of the applicant or agent can cause the policy to be rescinded or cause benefits to be denied.
After 2 Years After the policy has been in force for two years, only fraudulent misstatements in the application can be used to void the policy or deny a claim.
Responding To The Marketplace The insurance industry has responded to the needs of the marketplace by developing various types of policies designed to pay benefits, under specific circumstances, for types of care associated with growing older. Although the types of policies vary, they are usually grouped together under the heading of long term care.
As we know, persons of any age can require long term care, not just the elderly. However, these types of policies are designed with the elderly in mind. Their role is to cover the costs of a variety of things, primarily the nursing home. They do not include coverage for the hospital or hospital related services. Nor do they cover the cost of doctor visits, or other types of care generally connected with the benefits provided under Provincial Health Plans.
Who Will Not Pay - Provincial Health Plans or other Health Care plans? Perhaps the first step is to say what is not long term care coverage. Unfortunately, for many years senior citizens thought they had coverage for a nursing home stay when, in fact, they did not. This false sense of security was most often applied to Provincial Health Care plans, Group Insurance and individual Health plans. These plans do a good job on hospital and doctor bills, but neither covers the cost of a long term nursing home stay. Let us look at the benefits provided by these Provincial Health Care plans and other Health Care Plans.
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Ontario Health Insurance Plan For illustration purposes, we have chosen to use OHIP to show what will be covered from Provincial Health Care Plans. Please realize that Provincial Health Plans will vary from province to province.
Am I eligible for Ontario health insurance? You must have Ontario health insurance to use Ministry of Health and long term Care funded health care services.
You are eligible for the Ontario Health Insurance Plan (OHIP) if you meet the following qualifications: You are a Canadian citizen, landed immigrant, convention refugee, or are registered as an Indian under the Indian Act. You have submitted an Application for Landing and have satisfied the medical requirements for landing. You are a foreign worker who holds a valid employment authorization, which names a Canadian employer and your prospective occupation, and is valid for at least six months. You are a foreign clergy member who will be providing services to a religious congregation for at least six months. You are the spouse, same sex partner, or dependent child of a foreign clergy member or eligible foreign worker who is to be employed in Ontario for a period of at least three consecutive years. You hold an employment authorization under the Live-In Caregivers in Canada Programme or the Foreign Domestic movement. You have been issued an employment authorization under the Caribbean Commonwealth and Mexican Seasonal Agricultural Workers Program administered by the federal department of Citizenship and Immigration. You make your permanent and principal home in Ontario. You are present in Ontario for at least 153 days in any 12-month period.
20 Long Term Care SSC #17 Pro-Seminars International © 11/08 You pay no premiums for Ontario health coverage. Your coverage is based on your citizenship and Ontario residency and is not determined by whether you have a job or are unemployed, or whether or where you pay your income tax.
Visits to Long term Care Facilities What does OHIP cover? All medically necessary visits for assessment and treatment of residents in Long term care facilities are covered by OHIP.
In addition, routine visits are also covered as follows: To eight visits per month for patients in chronic care and convalescent hospitals. To four visits per month for patients in nursing homes and other institutions covered by Long Term Care legislation.
What is not covered? OHIP does not cover routine visits in excess of the limits described above. As well, it is a condition of payment that all visits include a direct physical encounter between the physician and the patient. This includes any appropriate physical examination and ongoing monitoring of the patient's condition.
Why? Physicians make routine visits to residents of Long Term Care facilities and nursing homes. Currently they are paid for this service. However, more routine visits than the above limits are considered excessive.
Formerly, physicians were permitted to visit a Long Term Care facility and be paid for reviewing the medical records. Physicians are now required to visit patients face-to- face, before payment is made to them.
“ The Government Will Take Care of Me.” Probably every agent and broker has heard a prospect tell them that the province or federal government will either pay for their nursing home care or assist in some way. Unfortunately, some people believe that is the reason they have been paying taxes for most of their lives--so the government will take care of them in retirement. In reality, this Long Term Care SSC #17 21 Pro-Seminars International © 11/08 is not the case. Our Provincial Health plans were not designed for the medical needs of the elderly.
Wrestling With The Government Budget Both the federal and provincial governments have attempted to control the rising costs in health care in some way. These programs have been faced with budget problems and cuts. Part of the problem has to do with the increasing population in the older ages, while part of it has to do with the sharply rising costs of medical care.
While Health and Welfare Canada has a single administrator (the federal government), Provincial Health plans have 12 separate administrators (the provinces), because each province is in charge of their own program. This makes it difficult to curb fraud and abuse of the system, so some funds do end up being wasted.
Who Else Will Not Pay For The Nursing Home? Most Employee Benefit plans do not cover any type of long stay nursing home care. Nor do the majority of union plans and retirement medical plans contribute to this coverage largely. The cost would simply be prohibitive for them to do so.
WHAT TYPE OF FACILITIES ARE COVERED Facility Care This benefit will be paid when any health or personal care services are required on a long term basis in a Long Term facility when ordered by a physician. This could be as a result of an injury or sickness, or not being able to perform two or more activities any of the daily living functions. Entry into these facilities could also be based on a cognitive impairment or when any chronic illness makes it medically necessary
Home Care This benefit is usually in addition to Facility Care. The Policyowner will be reimbursed for the cost of a medically necessary Long term, care program for the insured if recommended by a physician and provided by a licensed nurse or authorized employee of a Health Care Agency. Again, the criterion for this benefit is the same as Facility Care.
22 Long Term Care SSC #17 Pro-Seminars International © 11/08 Please Note – At the time of this writing, all policies do not reimburse for Home Care, although RBC Insurance does. Some policies pay the full daily benefit amount. However, unused daily benefit with RBC can be carried over to extend the benefit period
Home Care is available in daily monetary units, and is paid after the Elimination Period has been satisfied. This benefit cannot be purchased by itself; it has to be in conjunction with a Facility Care product. Liberty Health now offers a stand-alone Home Care Insurance policy.
The Insurance Companies will usually be the second payer after any costs that are reimbursed by any government program or any other individual health care policy that the insured may own. Any benefit will be paid directly to the Policyowner. We would recommend that you review these sections with your clients when speaking with them about Long term Care Insurance, and what type of facilities are covered.
GENERAL BENEFIT INFORMATION The benefits actually received under the terms of the policy contract will depend to some degree on the benefit options chosen at the time of application. As we have stated, those benefits selected are typically stated on the Policy Schedule page in the policy.
A step-by-step look at the policy Although there will be policy variations, between different companies, there will also be similarities.
Policy Elimination Period When benefits actually begin will depend upon some options selected. One option affecting this would be the elimination period. The elimination period is a type of deductible. Instead of being expressed as a dollar deductible, however, it is expressed in days for time not covered. For example, in a major medical plan we will see a deductible amount of $0, $50 or $100. This amount must be paid by the insured before the insurance company will begin paying for health care claims. In a Long term Care policy, the deductible will be expressed as elimination days. A policyholder who selects 30 elimination days will not receive benefits (payment)
Long Term Care SSC #17 23 Pro-Seminars International © 11/08 from the insurance company until the insured begins receiving covered benefits on the 31st day. The first 30 days are not covered. Benefits begin to be payable on the 31st day for covered services. Eligibility must be established before benefits would be received. It is not uncommon to have a 60 or 90- day elimination period if the client wants to.
Policy Termination It would be hard to imagine anyone terminating a policy when benefits are in process. It would be more likely that termination would happen during a period of good health. Even so, if termination did occur during eligibility of benefits, the insurance company may continue to provide benefits, subject to all policy provisions, until the earliest of: The date the period of care ceases When any benefits have been paid during any one period of care for the Maximum Benefit Period.
Non-Forfeiture Benefit This benefit is usually a part of the Facility Care contract. The policy will not terminate, instead will become a paid-up policy that will allow for a reduced facility care benefit. The non-forfeiture benefit is usually not included with the Home Care benefit.
Waiver of Premium It is now common for Long Term Care policies to have a waiver of premium in their Long Term Care policies. A waiver of premium has to do with renewal premiums when the policyholder has been institutionalized or is receiving benefits under the policy. When the policyholder has received benefits under the policy for the number of days specified in the policy (usually the waiting or elimination period), their renewal premiums will be waived.
Many policies will not refund premium that has already been paid (for annual cases), which is why it may be renewal premiums that are waived. This benefit is included at no charge with some companies.
24 Long Term Care SSC #17 Pro-Seminars International © 11/08 Policy Pricing Policy prices will depend, to a large degree, on the age of the applicant. The older the applicant - the more expensive the policy. The less time the insurance company has to collect premiums, the greater the company's risk exposure is. Therefore, the price for the policy is higher. There are two ways to price policies: by each birthday and by age banding.
Pricing By Application Age The listed ages will continue until a cut-off age is reached. The cut-off age is the point at which the company will no longer accept the risk. Commonly that cut-off age is 80. By age 79, the price of the policy can be quite high, perhaps even beyond the financial ability of most consumers.
Age Banding When the policy uses age banding, they will typically group ages in counts of five: When age banding is used a consumer between the age bands are priced the same. For example, an applicant aged 69 would pay the same premium amount as an applicant aged 65 would. On the other hand, the 65 year old may get a better buy if he or she purchased from a company that priced by each birthday year.
Premium Increases Premiums may increase for Long term care policies. Traditionally, they have not tended to do so, but if the insurance company's experience fails to follow it assumptions, an adjustment may have to be made in the premium charged. Some policies have been set up to increase on a regular basis, similar to the way term life insurance increases. This is becoming less popular, however, because consumers have not tended to want increasing premium levels. As a result, they have tended to buy the policies that set premium rates with the application age. Those companies that set rates at the age of application can still experience a rate increase, but it will be based upon the age of the consumer at the time of application, not at their current age.
Long Term Care SSC #17 25 Pro-Seminars International © 11/08 Price Factors The actual premium amount will vary depending upon multiple factors. We have already mentioned age at the time of application. The benefit options chosen will also affect how much the policy costs. Obviously the higher the benefits, the higher the cost.
Policy options will be discussed further on in the module, but basically the consumer can choose from a wide variety of options, including an inflation rider option, the daily benefit amount, home health care benefits and the deductible (called a waiting period or elimination period). Some companies may offer additional options. Premium can also be affected by whether or not the applicant smokes and whether or not both spouses are applying. Some insurance companies offer discounts if both spouses take out a policy
Premium Modes How premiums are paid can also vary. Most companies allow the applicant to pay by the year, semi-annually, quarterly or through a monthly debit from their bank account. The most common method is monthly payments through your client’s bank. This makes good sense, since a person could easily overlook the payment of their premium if they were sick.
The consumer can reduce their premium cost A consumer can reduce their premium cost: By reducing the length of benefit payments (from lifetime to 4 years, for example). By reducing the daily benefit amount. By dropping some additional benefits, such as home health care options.
Limited Payment Period RBC and Clarica offer limited premium payment periods. Manulife and Liberty Health offer life pays (pay until you claim or die). This is a competitive advantage for those companies offering limited pay periods.
For example, if the issue ages are: 40 to 45 – premiums are payable to age 65 46 to 65 – premiums are payable for 20 years. 26 Long Term Care SSC #17 Pro-Seminars International © 11/08 66 to 75 – premiums are payable to age 85. 76 to 80 – premiums are payable for 10 years.
Return of Premium (ROP) If a policyowner dies before receiving the benefit, the Return of Premium will reimburse all premiums paid for Facility Care (this includes any premiums paid for Policy fees and the ROP portion of the premium).
This optional benefit will pay any eligible monies to the beneficiary. One company’s stipulation for this option is that the policy has to remain in force for five years. This could vary from company to company.
Exclusions/Limitations As we have said, no policy covers everything. All policies, including Long Term Care have a section in the contract, which lists items not covered. Many professionals feel you learn the most about a policy from this section.
Some exclusions are traditional. Policies will not pay for any loss that: Can result from any self-inflicted injury or illness, while sane or insane. Occurs while employed in the military or navel service of any country. Results from way, or any act of war. Will result from chronic alcoholism or chemical dependency unless the dependency was as a direct result of treatment by a physician. Results from any nervous or mental disorders.
Of course, the policy will not pay either for services provided before the effective date of the policy.
The policy will also list their pre-existing condition limitation. Consumers and agents are expected to truthfully ask all questions on the application. The insurance company will not pay for pre-existing conditions which were not disclosed on the application, unless the services were received more than six months (example) after the effective date on the policy, assuming that there was a pre-existing period listed in the contract. If the
Long Term Care SSC #17 27 Pro-Seminars International © 11/08 medical condition not disclosed on the application is serious enough, the policy may actually be rescinded (voided).
Most Long Term Care policies ask at the point of application for medical conditions that currently exist or previously existed. It is important that the applicant correctly and to the best of their knowledge answer all questions. It is equally important that the agent record those answers.
Age Misstatement Although this now happens less often, some applicants may still misstate their age. In the past, it was thought to happen because someone did not want to admit to his or her true age. Today, it is more likely to happen as a way of saving premium costs. If a 70- year old person lists their age as 69, the premium savings can be substantial. Few companies would rescind (void) a policy due to age misstatement, unless that puts the applicant into an age bracket that is not issued at all (such as 80 years old). The company would, however, require that the additional premium be paid. If the correct age would have meant that the policy would not have been issued at all, then the premium that was paid will be returned to the consumer and the policy voided. Most companies would do the same for Long term Care as they would for Life Insurance policies when it comes to misstatement of age. The benefit would be either increased or decreased to the amount that would have been provided by any premium paid.
Grace Periods What happens when premiums are not paid? Eventually the policy will terminate. Policies do have a 31-day grace period. This means that the policyholder has 31 days past the actual premium due date in which to make payment. The policy would remain in force during this 31-day period. Companies may as they see fit, extend the grace period to a maximum of six months if it receives satisfactory proof that a cognitive impairment or mental disorder contributed to or caused the individual to unintentionally miss any premium payments. If this happens, all outstanding premiums must be brought up to date in order to consider this option.
28 Long Term Care SSC #17 Pro-Seminars International © 11/08 Policy Reinstatement Under some circumstances, a lapsed policy may be reinstated. Sometimes, simply paying the premium due is enough to reinstate the policy. Reinstatement can be applied for at any time within ninety days from the date of termination.
In other cases, a new application for reinstatement must be submitted and perhaps even underwritten. Any back premium will still be due. Why would a person reinstate rather than simply apply for a new policy? Primarily to keep the issue-age the same, when the policyholder was probably younger.
Like so many insurance contracts, Long Term Care policies can be intimidating. Only when the agent completely understands the product should they venture into the field with their blank applications.
Guaranteed Renewable As long as any required premium is being paid, the policy is guaranteed to be renewable on an annual basis. With some companies, the renewal premium is guaranteed not to increase during the first five policy years, however the companies reserve the right to change the renewal premium under certain conditions, to a lifetime maximum.
Renewability Most Long Term Care policies are now guaranteed renewable for life, although the premiums are subject to change, as mentioned previously. When a policy is guaranteed renewable for life, that means that the insured's policy will remain in effect during their lifetime, as long as premiums are paid in a timely manner. Some Companies will guarantee that your premiums will not increase for the first five years.
Daily Benefits Many policies will have a maximum amount payable per day when the insured qualifies to receive the benefits of the Long term Policy. This amount is usually available in “units” of $10 per day to a maximum dollar amount. This varies within the industry.
Long Term Care SSC #17 29 Pro-Seminars International © 11/08 A Free Look (Reviewing The Policy) Buying a Long Term Care policy is not an easy decision. Most people desire a time to review the actual policy and think it over. Companies issuing Long Term Care policies allow a period to do just that. It is commonly called the "free look" period.
That means that if the consumer, within that period, changes their mind and returns the policy to either the agent or the issuing company, all of their premium must be returned to them. The consumer need not say why they have changed their mind. The refund will be issued within a reasonably time.
If the consumer requests a refund of their money during the "free look" period, the policy is voided. This means the policy is considered as never having been issued. It also means the insurance company is not liable for any claims.
Every insurance contract will advise the consumer to completely review their issued policy. Although the wording may vary, the contract will state that issuance was based upon the answers given by the applicant to the questions in the original application. A copy of the original application may be included in the issued policy. If the answers given by the applicant were incorrect or untrue, the company has the right to deny benefits or rescind the policy within the first two years after it was issued. Every policyholder should take the time to review his or her newly issued policy. If they discover any item that was listed incorrectly by the writing agent, the insured should immediately contact the insurance company and get the item corrected.
Integration of Benefits Reimbursement for Long term Care policies are calculated by first taking into consideration any government or other private plan benefits. With most companies, you do not have to be in receipt of government benefits to be eligible for any payments, but proof that the client has applied for these benefits has to be provided. For the Home Care benefits, reimbursement will be made taking into consideration any benefits payable from government or other private programs. The actual home care expenses will be reduced by these benefits first, and the balance will be paid to the insured up to the stated maximums. Unless a stand-alone policy is in place.
30 Long Term Care SSC #17 Pro-Seminars International © 11/08 NOTE: Notice To Buyer No policy covers everything. This is true of Long Term Care policies, too. Possibly under a heading of "Notice To Buyer”, the insurance company will make some statement to this effect. This statement may be a general statement made by the insurance company. This notice advises the insured to carefully review the policy's limitations. This should be done within the free look period so that the policyholder can return their policy for a refund if they are dissatisfied with those limitations.
POLICY SCHEDULE All policies will have a policy schedule. The policy schedule will list the insured's name. This page also states the options that were purchased by the applicant at the time of application.
These options may include: 1) The elimination period (deductible expressed as days not covered). 2) The maximum daily home and adult day health care benefit. 3) The maximum daily nursing home facility benefit. 4) The maximum lifetime benefit.
Any additional benefits purchased will also be listed. This would include inflation benefit riders, listing how the benefits increase etc. Also listed on this page would be the amount of premium due annually and the amount of premium paid with the application. The amount paid with the application may be different than the annual premium, since the policyholder may have paid quarterly or semi-annually. Finally, the Policy Schedule page will list the policy number and the policy effective date. The first renewal date may also be listed, which will reflect how the first premium was paid (quarterly, semi-annually or annually).
POLICY DEFINITIONS Compared to other types of insurance, Long Term Care plans are new. Since they have only been around since the 1970's in the United States and only a few years in Canada, many consumers may not have a good understanding of them. This includes the terms that may be used to state specific benefits.
Long Term Care SSC #17 31 Pro-Seminars International © 11/08 The exact listing of the page heading may vary, but probably it will state "definitions" somewhere. Whatever the page heading, it will state exactly what the policy terms mean or give the page number in the policy where the definition is listed.
Some of the definitions will seem obvious. For example – You, Your or Yourself would be The insured named in the Policy Schedule. All definitions are important, even those that seem obvious. The following is a list of commonly used definitions: 1. Home & Community Based Care : Care required and provided in a home convalescent unit under a plan of treatment; in an alternate care facility; or in adult day health care. 2. Home Convalescent Unit: (a) the insured's home (b) a private home (c) a home for the retired (d) a home for the aged (e) a place which provides residential care; or (f) a section of a nursing facility providing only residential care. It does not mean a hospital. 3. Plan of Treatment: A program of care and treatment provided by a home health care agency. Each company may include additional information such as: (a) It must be initiated by and approved in writing by your physician before the start of home and community based care; and (b) It must be confirmed in writing at least once every 60 days. 4. Home Health Care Agency: An entity that provides home health care services and has an agreement as a provider of home health care services under the Medicare program or is licensed by state law as a Home Health Care Agency. 5. Adult Day Health Care: A community based group program that provides health, social and related support services in a facility that is licensed or certified by the state as an Adult Day Health Care Center for impaired adults. It does not mean 24-hour care. 6. Alternate Care Facility: A facility that is engaged primarily in providing ongoing care and related services to inpatients in one location and meets all of the following criteria: (a) provides 24 hour a day care and services sufficient to support needs resulting from the inability to perform Activities of Daily Living or cognitive impairment; (b) has a trained and ready to respond employee on duty at all times to provide that care; (c) provides 3 meals a day and accommodates special dietary
32 Long Term Care SSC #17 Pro-Seminars International © 11/08 needs; (d) is licensed or accredited by the appropriate agency, where required, to provide such care; (e) has formal arrangements for the services of a physician or nurse to furnish medical care in case of emergency; and (f) has appropriate methods and procedures for handling and administering drugs and biologicals. Many types of facilities would meet this criterion. 7. Medical Help System: A communication system, located in the insured's home, used to summon medical attention in case of a medical emergency. 8. Informal Caregiver: The person who has the primary responsibility of caring for the patient in their residence. A person who is paid for caring for the patient cannot be an informal caregiver. 9. Informal Care: Custodial care provided by an informal caregiver, making it unnecessary for the insured to be in a Long term care facility or to receive such custodial care in the residence from a paid provider. 10. Caregiver Training: Training provided by a home health care agency, Long Term Care facility, or a hospital and received by the informal caregiver to care for the insured in his or her home. 11. Respite Care: Care including companion care or live-in care, provided by or through a home health care agency, to temporarily relieve the informal caregiver in the home convalescent unit. 12. Long term Care Facility: A place which: (a) is licensed by the province where it is located; (b) provides skilled, intermediate, or custodial nursing care on an inpatient basis under the supervision of a physician; (c) has 24-hour-a-day nursing services provided by or under the supervision of a registered nurse (RN), licensed vocational nurse (LVN) or a licensed practical nurse (LPN); (d) keeps a daily medical record of each patient; and (e) may be either a freestanding facility or a distinct part of a facility such as a ward, wing, unit, or swing-bed of a hospital or other institution. A Long term care facility is not a hospital, clinic, boarding home, and a place, which operates primarily for the treatment of alcoholics or drug addicts, or a hospice. Even so, care may be provided in these facilities subject to the conditions of the Alternate Plan of Care Benefit provision, if one exists in the policy. 13. Medical Necessity: Care or services which are: (a) provided for acute or chronic conditions; (b) consistent with accepted medical standards for the insured's condition; (c) not designed primarily for the convenience of the insured or the
Long Term Care SSC #17 33 Pro-Seminars International © 11/08 insured's family; and (d) recommended by a physician who has no ownership in the Long term care facility or alternate care facility in which the insured is receiving care. 14. Inability to Perform Activities of Daily Living: The insured's dependence on someone else because of the need, due to injury, sickness or frailty of age, for regular human assistance or supervision in performing Activities of Daily Living.
15. Activities of Daily Living: These will vary from company to company and from policy to policy. The tax qualified plans will vary from the non-qualified plans. The activities listed are very important because they determine the conditions under which payment will be made. Policies that list eleven conditions are more favorable for the policyholder than those that list only five.
The older one gets, the more likely the need for some sort of care. This is not necessarily due to illness or injury; it can be due to simple old age. Typically, however, the need is a combination of illness and old age. Most facility care policies underwrite using, in some form, a set of activities of daily living. While the activities used can vary, they commonly include some variation of the following:
Activities of Daily Living (Could be a combination of any of the following): Eating Bathing Toileting Getting in and out of bed without assistance Mobility in general
In addition, underwriters may ask about and consider the following potential ADL’s Traveling outside of the home Keeping track of household finances Meal preparation Housework or outside chores Telephone use
34 Long Term Care SSC #17 Pro-Seminars International © 11/08 Taking oral medications appropriately The general opinion is that active people will not be as likely to need nursing home care. Physically they will be in better condition. A person's ability to perform these daily activities gives the underwriters an indication of their general health and mental well being. Forty percent of those over the age of 65 report having one or more of these impairments. One such impairment is not an indication that the individual will end up in a nursing home, but a combination of them is a reliable indicator. 16. Cognitive Impairment: Deterioration in the insured's intellectual capacity, which requires regular supervision to protect themselves and others. This often must be determined by clinical diagnosis or tests. Cognitive impairment may be the result of Alzheimer's disease, senile dementia, or other nervous or mental disorders of organic origin. 17. Pre-existing Condition: A health condition for which the insured received treatment or advice within the previous 6 months before application for coverage. 18. Effective Date of Coverage: The date listed on the Policy Schedule page, which states the first date of coverage under the policy. It is not necessarily the date of policy application. 19. Elimination Period: The number of days in which covered Long Term Care facility or home and community-based services are provided to the insured before the policy begins to pay benefits. This period will be shown on the Policy Schedule page. Maximum Lifetime Benefit: The total amount the insurance company will pay during the insured's lifetime for all benefits covered by the policy. This will be shown on the Policy Schedule page.
The previous definitions were listed in the order they are most likely to be seen in the policy. Some policies do alphabetize them. . Reviewing the Completed Application For Accuracy One way for consumers to protect themselves on all types of policies is by providing open and complete information. Consumers should go one step further: they should review the copy of their application in the policy to make sure that their agents and brokers have recorded all medical information correctly and completely.
Long Term Care SSC #17 35 Pro-Seminars International © 11/08 SOME FURTHER CONSIDERATIONS & IMPROVEMENTS TO LTC Medical Necessity Perhaps the biggest improvements we have seen, although not all policies contain it, are coverage for simple medical necessity. This means that if a doctor or medical authority states institutionalization is medically necessary, the policy pays. There is no other requirement, which must be met from a medical standpoint.
Changing Attitudes Long term care products are the current insurance frontier. There are many opportunities for rewarding sales in a market that needs this product. To succeed, however, the agent or broker must make it their responsibility to be fully educated. Education is not something that is done once and forgotten about. Changes continue to occur at a rapid pace and the successful Financial Services representative knows that on-going education is essential to professionalism.
Making A Logical Assessment Although there is no guarantee that any particular individual will or will not go to a nursing home, it is possible to make a professional assessment. We know that a certain percentage of people will end up receiving Long term care in a nursing facility; we simply do not know precisely who those people will be. If, however, arthritis and heart disease runs in a person's family, they are more likely to have those same conditions than someone whose family has no history of such physical problems. As a result, they are more likely to need nursing home care, thus nursing home insurance. The older the individual is, the more likely that he or she will be showing early signs of physical problems to come. Underwriters look at these early signs to make their determination regarding the issuance of a policy. An individual can look at the early signs, plus family history, to determine their need to buy a policy. A person who has no family to help
36 Long Term Care SSC #17 Pro-Seminars International © 11/08 them when a physical, emotional, or mental problems develop should especially consider purchasing a nursing home policy. Along this line, a child who lives distantly from his or her parents might want to encourage them to purchase a policy since he or she would be unable to help out with health care arrangements. Our style of living today simply prevents it. Long term care options cannot be considered from a social standpoint; they must be considered from a medical standpoint.
Case Managers Many government agencies and organizations have case managers. A case manager provides local help in assessing health care needs. They are often nurses, social workers, or individuals trained to assess another's needs. They identify appropriate services, monitor the care given, and in some cases follow up on any outgoing or incoming needs.
Case managers may carry other titles, even though they perform the same duties. They might be called care managers, case coordinators, service coordinators or service managers. Many insurance companies offer case managers with the sale of their Long term care policies. When they do, the policyholders can call a specified number to receive help and advice when a health care crisis emerges. The insurance company's case manager will help their policyholder find an appropriate care facility and sometimes even arrange for the admission. It should be pointed out that many organizations use case managers for a specific reason: to control costs. Even so, their services can be very valuable to the person who has never been in such a situation and does not know what to do or where to go to find help.
Personal Control Long Term Care insurance should be promoted for many reasons. Whatever the individual’s reason for purchasing LTC Insurance, the bottom line is that this is a very cost effect method of protecting financial assets. If the policy is adequate, it can do so. Many people have another reason for wanting insurance protection: they have paid their own bills all of their lives. The idea of being on the "government dole" is very repulsive to them. Some people want a nursing home policy for the personal control it gives them; if they are paying their own way, they feel they have more say in their care. Whatever the reason, more and more policies are being sold.
Long Term Care SSC #17 37 Pro-Seminars International © 11/08 Premiums Must Be Affordable For The Duration Some consumers simply cannot afford the cost of long term care insurance. It makes little sense to take out a policy only to drop it a year or two later. Either the premium cost must be affordable from the income generated each year, or it must be affordable from the investments accumulated. This is something that the consumer must decide for himself or herself. For the insurance agent, it can be very difficult to know if the consumer can afford the premiums, unless a Total Need Analysis is explored with the insured. The agent / broker must rely primarily on the decisions of the consumer. However, if it is evident that the assets of the consumer, excluding their home, is less than $30,000 certainly it makes no sense to put a Long term care policy in place. Even assets totaling up to $50,000 are probably not enough to warrant a Long Term Care policy. However, each case is different.
Marital Status In addition, a consideration is marital status. Older married women often have far less income personally than their husbands or single counterparts do. Some income, especially pensions, may end when their husband dies. However, these women are also the most likely to end up needing long term care. Very often, they spend part of their last years caring for an invalid husband. When their turn comes, there is no one available to care for them. Of course, this is also generally true for single women or men. If no one is available to give their care, the nursing home is the best solution to their health care needs.
Agents and brokers are likely to be the first source of information on the availability of long term care protection using insurance policies.
SOME TERMINOLOGY THAT YOU WILL FIND WITH DIFFERENT COMPANIES Every industry seems to have their own terms. This is true of the long term care industry, too. For the consumer, the terms can be confusing. For the agent, their understanding is mandatory. The agent must also be able to explain them. The terms, once understood are basic. Some terms tend to be universal. Each insurance company will have terms that are specific to their policies.
38 Long Term Care SSC #17 Pro-Seminars International © 11/08 Community based care is care delivered in the patient's home, such as therapy. It can be custodial or personal care, day care, chore aid services, or nutritional services, whether provided in the home or at a communal dining setting, such as a senior center. It can also be respite care, adult day care services or other similar services furnished in a home-like setting or some type of setting, which does not provide overnight care. This care could be skilled, intermediate or custodial care and personal care. Institutional care is care provided in a hospital, skilled or intermediate nursing home or some other type of facility certified or licensed by the province primarily giving diagnostic, preventive, therapeutic, rehabilitative, maintenance or personal care services. Such a facility provides 24-hour nursing services on its premises or in facilities available to the institution on a formal prearranged basis.
Adult day care means a program of community based social and health-related services provided during the day in a community group setting for the purpose of supporting frail, impaired persons who could benefit from care in a group setting away from the patient's home. This may be a greater benefit for the home caregiver, which is often a spouse or child. With the patient gone for the day, the caregiver can relax; catch up on sleep, or simply run needed errands.
Acute care is care provided for patients who are not medically stable. Because they are not stable, they require frequent monitoring by health care professionals.
Chronic care, sometimes called maintenance care, is a type of care that is necessary to support an existing level of health and is intended to preserve that level from further failure or decline. Because it is caused by a chronic health condition, the care is usually necessary for a long, drawn out or lingering disease or condition and there is little chance of a complete recovery. Sometimes the condition does improve, but it is unusual for it to completely go away. This type of care may be provided in an institution, the patient's home or in a community setting. This type of care may be skilled, intermediate or custodial, depending upon the person's personal health care needs.
Convalescent care or rehabilitative care is non-acute care. A doctor must prescribe it and the care is received during the period of recovery from an illness or injury when
Long Term Care SSC #17 39 Pro-Seminars International © 11/08 improvement is anticipated. The care received may be skilled, intermediate, or custodial. It may also be a mix of the three levels of care. The care may be received in an institution, at home, or in a community setting.
Custodial care, sometimes called personal care, is care, which is mainly for meeting daily living requirements, such as bathing, dressing, eating or taking oral medications. Persons without medical training or skills may provide custodial care. This level of care is intended to maintain and support an existing level of health or to preserve the patient from further decline. A case manager in consultation with the physician, while normally prescribed by a doctor, may also recommend this type of care. It is not recommended simply for the convenience of the insured or the insured's family.
Home care services, sometimes called personal care services, are services of a personal nature which includes, but is not limited to, homemaker services, assistance with the activities of daily living, respite care, and any other non-medical services which are provided to ill, disabled or infirm persons. These services are designed to enable the patient to remain in their own homes for as long as possible if they desire to and can safely do so. The insurer (insurance company) can require that such care be provided by a certified agency and/or that such care be administered in accordance with a plan of treatment developed by or with the assistance of health care professionals.
Home health care means some type of care or treatment that is provided in the patient's home. It includes nursing services, home health aide services, physical therapy, occupational therapy, speech therapy, respiratory therapy, nutritional services, medical or social services, and medical supplies or equipment services.
Intermediate care is technical nursing care which requires selected nursing procedures for which the degree of care and evaluation is less than that provided for skilled care, but greater than that provided for under custodial care. This level of care provides a planned continuous program of nursing care that is preventive or rehabilitative in nature.
Respite care is short-term care that is required in order to maintain the health or safety of the patient and to give temporary relief to the primary caretaker from his or her care-
40 Long Term Care SSC #17 Pro-Seminars International © 11/08 taking duties. This is very important because a caregiver needs time for himself or herself, if they are to remain physically able to continue giving care.
Skilled care is care for an illness or injury that requires the training or skills of a licensed professional nurse. The care must be prescribed by a physician and must be medically necessary for the condition or illness of the patient. Such care must be available on a 24-hour basis.
One period of confinement means a consecutive stay of institutional care received as an inpatient in a health care institution or successive confinements due to the same or related causes. The patient may be discharged from and readmitted to the institution within a period of time of not more than 90 days or three times the maximum number of days of institutional care provided by the policy to a maximum of 180 days, whichever provides the covered person with the greater benefit. Actual times can especially vary from policy to policy.
Managed long term care delivery system means a system or network of providers arranged or controlled by some type of managed long term care plan. These systems provide a wide range of long term care services with provisions for effective utilization controls.
Managed Long Term Care plans are plans, which, on a prepaid basis, assume the responsibility and the risk for delivery of covered Long term care services set forth in the benefit agreement. The services received by the plan through its own staff are covered through capitation or other contractual arrangements. Health maintenance organizations and health care service contractors often offer these.
Home health aide is a person who is providing care under the supervision of a doctor, licensed professional nurse, physical therapist, occupational therapist or speech therapist. The care provided may include many things, including ambulation and exercise, assistance with self-administered medications, reporting changes in a covered person's conditions and needs, completing appropriate records, personal care and household services.
Long Term Care SSC #17 41 Pro-Seminars International © 11/08 Case manager, also called a case coordinator, is an individual qualified by training or experience to coordinate the overall medical, personal and social services needed on a long term basis. The types of services given by the case manager can vary, but they often include assessing the individual's condition to determine what services and resources are necessary and who might appropriately deliver them. The coordination of elements of a treatment or care plan and referral of patients and their families to the appropriate medical or social services personnel or agency are some functions of the Case Manager. Control coordination of patient services and continued monitoring of the patient to assess progress and assuring that services are correctly delivered are part of their duties. These activities and duties are performed under the supervision of appropriate medical personnel.
LONG TERM CARE ALTERNATIVES Not everyone agrees that the purchase of an insurance policy is the appropriate avenue. For some people, it is not prudent to purchase a Long Term Care insurance policy because the premiums are not affordable. However, for those who can afford the premiums, it may be worthwhile.
Investing to Fund Long term Care Any method of investment or Long term care funding that produces a pool of money could be considered as an alternative to an insurance policy. It would not matter whether the funding came from stock profits, an inheritance. Funding is funding. If it produces enough money to pay for long term care services, then it is an alternative to an insurance policy.
Now let us be realistic. Investing successfully is one thing and having the funds set aside purely for long term care is another. The problem is one of timing. Generally, the need for long term care comes as life is ending. The chance of putting money aside and using it for nothing else is small. It can be done; it just is not likely to be done. Having said that, we will look at the reasonably acceptable alternatives to a Long Term Care policy.
42 Long Term Care SSC #17 Pro-Seminars International © 11/08 Major Medical Coverage Does Not Cover LTC In addition, with few exceptions, private major medical insurance does not cover long term nursing home care. Only policies specifically designed to cover such expenses will do so. The general type of medical policies carried for major medical coverage exclude long term care benefits in a nursing home.
Receiving Long term care in an institution is expensive. The better the institution, the more expensive the care will be. It is also more expensive in some areas of the country than others. The time to find out what these costs will be is not when the care is actually needed. Costs should be explored in advance of medical need.
Few people could afford to (or would want to) pay for nursing home costs out of pocket. While some may be able to do so, it is not necessarily the wisest course of action. Some individuals do elect to fund only a portion of nursing home costs, expecting to pay the balance from current living budgets. There are multiple funding options; some are more sensible than others, however. There are also misconceptions regarding funding options, which need to be cleared up. This section will deal with the funding options available and with the misconceptions that commonly exist.
Financial Considerations The financial considerations of receiving long term nursing home care cannot be ignored. There are, of course, numerous books available on personal finance, but they seldom address the costs of long term care. Usually, the person entering the nursing home is past the point of financial planning, having already done so in his or her younger years. Their "financial planning" now involves hanging on to what they already have while still enjoying life. Typically, the person has some sort of nest egg put away; a nestegg, which the facility care confinement will eat up quickly.
When we look at the financial considerations, as they relate to the nursing home admission, we should be assuming that there is adequate protection for the other areas of their life, such as a sound Healthcare policy. At this time, we will not be addressing other complications that might arise, such as counseling for depression that a non-
Long Term Care SSC #17 43 Pro-Seminars International © 11/08 institutionalized spouse might require. This is something to look at on an individual basis.
Self-Pay Many households end up paying, at least initially, for the long term confinement of a member in a nursing home. Sometimes this "self-pay" is not intentional; they simply did not plan for this circumstance. In other cases, it was intentional. The household members felt they had the ability to do so if the need arose, or they simply did not believe that such a condition would ever exist for them personally. It would always happen to that mysterious "other person."
For those who did plan to self-pay, there was hopefully some thought put into it beforehand. Perhaps the individuals looked to their family heritage and did not see a history of health conditions that would make a nursing home confinement likely. In addition to a review of their family's health history, they also should have looked at the financial aspects of a long nursing home confinement. The financial devastation brought on by a nursing home confinement can be minimized to some degree. In some situations, it may even be avoided.
Another interesting statistic from Statistics Canada As with the rest of the population, seniors devote a large share of their overall spending to basics such as food, shelter, clothing, and transportation. In 1999 for example, 50% of all after tax expenditures by families headed by someone aged 65 and over went into these areas, about the same figure (47%) as families with head under age 65. That year, 17% of all senior family expenditures went to shelter costs, while 15% went to transportation costs, 14% was spent on food, and 4% to clothing. The majority of the after tax expenditures of unattached seniors (56%) also went to these basic items although, in their case, 29% of the dollars were spent for shelter.
At the same time, both senior families and unattached seniors devoted close to 10% of their total after tax spending on recreation-related activities including reading, tobacco and alcohol, and lotteries. Household operation and furnishing accounted for close to 10%, while health and personal care made up just over 5% of their spending.
44 Long Term Care SSC #17 Pro-Seminars International © 11/08 So how much money is really left over to take care of any long term care if required?
Are Reverse Mortgages the answer? Mortgages and banks are changing. Only a few years ago, using one's home to pay for a Long term care confinement would have meant selling it, getting the cash, and moving out for someone else to move in. Today, it can mean something much different. For the person or couple who owns their own home or have a low mortgage, they can use a reverse mortgage to fund a nursing home stay (or anything else). A reverse mortgage takes the value out of the home and gives it to the owners. It may be given in a variety of ways: monthly, quarterly, annually, or even in a lump sum, depending upon the loan contract. It must be understood that the owners are giving up their home, but in a unique way. The homeowners are actually signing a loan against the value of their home. In exchange, the lender receives the amount borrowed, loan interest and mortgage insurance costs when the house is sold. In the meantime, the homeowner has the value to use as necessary.
What is available will vary greatly, so the consumer may have to do a great deal of shopping to get the best opportunity. There are actually some drawbacks to using reverse mortgages that need to be completely understood. The loan must be paid back at some point. Many consider a reverse mortgage as a means of selling one's home while still living in it. This is true to a certain degree. What may not be understood is that the lending institution is not necessarily the entity buying the home. They may require that the homeowner's do the actual selling. Therefore, if the home sells for less than expected, the owners will be required to come up with the difference.
Reverse mortgages can end up costing more than a traditional loan. The interest is usually compounded, which means interest is charged on interest. If the contract allows a long time before repayment, the interest charged can be substantial. This should not be surprising. Those who lend on reverse mortgages must feel that they have some advantage for doing so. Otherwise, why would they do so? There are fees to apply for a reverse mortgage. Those fees will vary, so it is wise to shop around.
Sometimes locating a lender who will consider a reverse mortgage is not easy. Some traditional banks participate. There is also the CHIP program in many Provinces.
Long Term Care SSC #17 45 Pro-Seminars International © 11/08 Paying Family Members For some individuals, paid family members are a solution if a long term illness or injury arises. Usually their care needs are the result of physical, mental or emotional problems, which makes living alone dangerous. The family members must be willing to take on the job of caring around-the-clock for the elderly family member. Some families willingly accept this chore and are able to devote the necessary time to it. In some cases, help from outside agencies may be able to supplement the care the family gives.
Whether or not this outside help was covered by insurance policies or government aide will depend upon multiple factors. For the sake of planning, the family or individual should not depend upon payment from other sources.
Government Funding We have mentioned this avenue previously, but we should touch on it again. Unfortunately, Government funding is unlikely to be the major payer of a person's nursing home costs. We say "unfortunately" because the real payer is not the government, but rather the taxpayers. For every elderly person receiving Government funding, there are multiple taxpayers working to supply those funds.
Government programs in the past have contributed or paid for health care for those people who could not afford to do so. As previously mentioned, downloading is occurring and the bulk of the financial commitment is being passed down to the individual. Even so, the elderly eat up the largest portion of any available Government funds due to their need for long term nursing home care.
Government Coverage Pays Skilled Care Only As we know, the Government does not handle the costs of long term nursing home care. The various government health plans do a good job with hospital and doctor bills, but the limited amount of skilled care offered by the different levels of government is not adequate and cannot be considered coverage on a long term basis.
46 Long Term Care SSC #17 Pro-Seminars International © 11/08 The only way that the professional agent or broker is going to know what type of Long term care that the client wants, is through the use of a proper Needs Analysis. This can be achieved by getting the information for the following to establish a net worth. This will enable a proper premium commitment to be shown.
Children As Caregivers Other than the spouse, daughters are most likely to provide some sort of care for their elderly parents. This might be as simple as cooking their meals or as complex as moving in and providing full time care. Sons are much less likely to provide physical care, although they may help in some other capacity. Few daughters have the ability to leave their own family responsibilities to care for ailing parents.
Since she cannot abandon her own family's needs, she must instead combine the duties of both. Doing so will mean eliminating virtually all of her own free time. She is likely to give up hobbies or special activities. Her own family will certainly feel the strain placed upon her. Few daughters can simultaneously care for their parents and their own family adequately, so feelings of guilt occur and sometimes depression becomes a factor as well.
ASSET INVENTORY Certain steps should be taken immediately:
An inventory of the person, or couple's, net worth should be made. It should include:
Monetary Investments: Cash on hand, checking accounts and savings accounts CDs (certificates of deposit), treasury notes and stocks Bonds (corporate, Treasury, municipal, or convertible) mutual funds RRSP’s, Company Retirement Funds & Pensions and Corporate profit sharing plans
Business & Real Estate Business partnerships including limited partnerships Real estate property, including investment-types
Long Term Care SSC #17 47 Pro-Seminars International © 11/08 Insurance Products Annuities Cash value life insurances Term life insurance Medical policies, such as any Healthcare and Government plans Any other insurance that is carried Personal Possessions The personal home and any vehicles Antiques, paintings and other artwork Jewelry and rare books Silverware, china or crystal Any other valuables
LIABILITY INVENTORY The previous lists are the person or couple's assets. Against this list must go the person's or couple's liabilities or debts. This might include, but would not be limited to: Any outstanding mortgages, including rentals Auto loans, including recreational vehicles Credit card balances Private or personal loans Any other debts
Do not overlook any loans for which the person or couple has acted as a co-signer. If the borrower defaults, the co-signer will be liable for the debt.
Net Worth When the resulting figure is known (assets minus liabilities), you will have the person's or couple's net worth.
Assets minus Liabilities = Net Worth
This resulting figure must be considered in terms of whether we are dealing with a single person or with a married couple. Some of the assets may be joint and some of them
48 Long Term Care SSC #17 Pro-Seminars International © 11/08 may belong exclusively to one spouse. The assets will also have to be viewed according to how the resident province views assets.
SOME LEGAL INFORMATION THAT SHOULD BE KNOWN Power of Attorney The non-institutionalized spouse should obtain a Power of Attorney. This is a legal document granting another person the ability to act in behalf of another specified person. Typically, it states certain conditions under which this may take place, and tends to end should the person become mentally incompetent.
Trusts A trust of some type may be applicable. There are many types of trusts, and many people willing to set them up. A trust document creates another "entity", which holds the title to the property rather than the person. There are many, many misconceptions when it comes to living trusts. If a revocable living trust is used, it is very unlikely that any assets will be protected in any capacity. It has become common for salespeople to say that a revocable living trust will protect the person from such things as creditors, lawsuits, and even taxes. Any asset that may be removed and used for the benefit of the grantor carries NO special protections. As we know, a revocable trust does allow assets to be used in any way desired. Therefore, a revocable living trust WILL NOT protect assets from a long term care nursing home confinement.
A trust may, however, help in other ways. Some types of trusts, such as the irrevocable trust may especially be beneficial. Only a professional in this field, preferably an attorney, should be consulted. Many banks have trust professionals that may be consulted and they often tend to give better advice than the mainstream council.
Wills Certainly, a will needs to be in place. In fact, a will is one of the very first documents that every person of legal age should have in force.
Long Term Care SSC #17 49 Pro-Seminars International © 11/08 Living Wills Other documents may also be used, depending upon the circumstances. A Living Will is a tool used to avoid prolonging life by artificial means. A living will states that the use of extraordinary means of life support systems may not be used to extend their life.
Guardianships Guardianships are often used to protect minors or handicapped individuals. Sometimes the individual being protected is the institutionalized spouse. This is especially true if the person's mental ability has diminished.
ELEMENTS OF A CONSUMER BUYING DECISION Some buying decisions are easy for consumers. A new car can be sat in, driven, and admired. A Long Term Care policy, on the other hand, is an abstract decision much like life insurance. It cannot be seen or touched in the same way a new car can. Decisions to purchase such protection are based not on current ability to use the product, but rather on a mere possibility of future needs. As a result, this type of buying decision is made differently.
So, who is the most likely LTC policy buyer? Who is most likely to make this type of buying decision? We are just now seeing the results of studies and surveys that were began several years ago. Statistically, it is said that women are more likely to buy than men; those over the age of 65 are more likely to buy than the younger ages; those who read extensively are more likely to buy than those who do not; and those who have purchased other types of insurance on a regular basis are more likely to buy than those who seldom buy insurance products.
On a more personal basis, those who make the decision to purchase long term care products must understand what they are buying. Not only will this keep the business on the books, it allows the consumer to have the peace of mind they are seeking. Anytime a consumer does not understand what they have purchased, there will be constant questioning and hesitation regarding the product.
Those who enjoy a good current standard of living;
50 Long Term Care SSC #17 Pro-Seminars International © 11/08 Those who live alone are more likely to buy than those living with a spouse, roommate, or family member. Those who are already insurance buyers having previously purchased other types of coverage, OR those who have a history of planning for their financial future. Those who are educated and already understand that they cannot plan on the government for help with their Long term care needs. Those who have a friend or relative who experienced a nursing home stay due to either medical ailments or simple old age.
Stressing Purchase At Younger Ages As every experienced LTC agent and broker knows, one of the biggest reasons a person who desires Long term care insurance might not buy a policy is the cost. Even when someone desires this coverage, if they cannot afford the premiums, there will not be a sale. Therefore, the agent needs to stress purchasing such a product at a young enough age when premiums are more affordable. Besides being less expensive, especially before age 65, health is also more likely to be acceptable by the insurance company's underwriting department.
Am I Covered? Most consumers simply want to know they will be covered for the costs of long term care services. Getting them to understand the conditions of coverage can be difficult. Getting consumers to remember what has been explained can be impossible. Therefore, an agent's best defense is to handle only those policies with the least limiting conditions of coverage.
Saying “Yes” To An LTC Policy Having reviewed the reasons why long term care products are needed, what actually goes into the buying decision?
There are several key elements: What is the consumer's greatest concern: home care, assisted living, and the nursing home? What does nursing home care cost in their town? Do they have family members who need to be part of the buying decision?
Long Term Care SSC #17 51 Pro-Seminars International © 11/08 How fast are prices rising in their part of the country? How long a duration time is desired: 3 years, 4 years, and lifetime? Is an inflation guard desired? Would the consumer be happier with an integrated plan so that all types of care are an option?
Still more elements of the buying decision Does the consumer simply want a basic Facility Care plan? Will the cost determine the benefits purchased? Is the consumer comfortable with the company presented?
There may be other issues involved since no two people are alike in their personal concerns. As an agent or broker, whatever the concerns are, each must be addressed. There is the perception that insurance agents use high-pressure techniques to "make" the consumer buy. While we believe that most agents do not perform this way, we also realize there are a few who do. As a result, all agents suffer the consequences. Unfortunately, consumers also suffer them. How? By being reluctant to purchase those products, which would greatly benefit them.
CONCLUSION Locating A Vacant Bed There is one last requirement not previously mentioned that is certainly important. The family must find an available bed in a facility willing to admit the person. If the beneficiary is being discharged from a hospital, this is not likely to be a problem. Typically, hospitals must find an available bed in order to discharge the patient. If, however, hospitalization was not a factor, it will be up to the family to find an appropriate facility willing to take on a senior patient.
#1 Caregiver - The Spouse The first and foremost caregiver is always the spouse. Since women tend to live longer and tend to marry older men, the first caregiver is usually the wife. Whether the first one to become ill happens to be the husband or wife, however, the healthy spouse will be the initial caregiver. The success of home care will depend upon the severity and type of illness. In some situations, the spouse will do very well. In other situations, the ill health 52 Long Term Care SSC #17 Pro-Seminars International © 11/08 of one may eventually cause the other spouse to become strained and ill themselves. Then, instead of one sick person, two need care.
Considering Time Elements Any individual who plans to rely upon their family for their care must understand that they are taking a chance. No matter how willing the family may be today, it will be difficult to access their availability in the years to come. Family situations change; emotions change; financial circumstances change (the potential caretaker may have to take a job, for example); and the family's willingness to take on the chore may change. In addition, taking in a family member affects everyone in the household, not just the actual caregiver. There must be ample room in the house and financial resources must be available. Everyone in the family is likely to give up something when an elderly person moves in.
Some people have attempted to use financial means to ensure care by a family member. Perhaps they tied their care into a will or trust; perhaps an agreement was drawn up. Whatever the case, there is still no guarantee that it will work. In addition, if the potential caregiver is providing care against their will, what kind of care will they actually be delivering? Most people try to avoid a nursing home because they think their care will be less than they desire. Their care would not be good even if a family member delivered it under some circumstances. In fact, even well intentioned family members have been known to deliver poor care. Nursing homes report that a substantial number of patients coming from private homes have bedsores and other physical problems.
In this course, we have used some statistics to show what demand that Long Term Care Insurance policies will have in the future. Do not overlook this very important area of financial planning.
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