YOU CAN'T STOP THE CLOCK

No one really wants to grow old, but everyone wants to live a long life. We now have more people living longer than ever before. Two-thirds of all the people in history who have lived to age 65 are alive today. And do you know what the fastest-growing segment of our population is? It's people 85 years of age and older.

The older we are, the more we push out the age when we think people are old. We are all in denial about aging.

But it's time for Baby Boomers to grow up and pay attention. It's time to stop this denial. We know that almost 50% of people over age 65 will require long-term care. Some will require if for only a short time, but some will require it for years. Yet for some reason these facts don't seem to matter. Is your denial so strong that you are doing nothing to prepare for a debilitating illness?

Maybe it won't happen to you. But there is a 1 in 2 chance that it will. Do you want to bet your financial stability and that of your family on those odds?

How are you prepared to deal with this scenario? You are in your 60's and your spouse gets diagnosed with Alzheimer's Disease. At present, 4.5 million Americans have this disease and it is estimated that in 40 years this number will triple. One in ten Americans in their 60's will have Alzheimer's and over 50% of those over age 85.

Dementias require care at home and then care in a facility. Have you thought about how you will handle this emotionally? Have you thought about how you will handle this financially? The burden can be huge.

What if you were diagnosed tomorrow with Parkinson's Disease? There will come a time when you will require more care than a family member or friend can provide. How will this extended care be paid for?

Main Concerns

Not too long ago, the number one concern of our seniors was dying. Now their main concern is that they will outlive their assets. People are worried about what's going to happen to them financially. And they have good cause for worry. Because of technology, we will all be living longer. Unfortunately, this is a double-edged sword. Today, people who live into their 100's are a small minority and they achieve this through good genetics. In the future, many of us will live into our 100's but only due to biotechnology. We will achieve ripe old ages but may be chronically ill. This means the need for long-term care will only increase.

People's second concern is whether they will be able to maintain their independence. It ties back to the financial part. They want to remain independent and not be dependent, especially on their children.

These concerns are inter-related, and we need an inter-related approach to dealing with them.

ITS ALL ABOUT THE MONEY

Without a sufficient amount of money, life becomes very difficult. Can you imagine the feeling of planning financially for your retirement years and suddenly you or your mate requires very expensive health care that you are not prepared or able to pay for? There are people today, people you may know, that are paying between $6000 and $9000 a month in the Bay area for long-term care. Even if you can easily afford that amount, do you really want to spend your money in this way?

And remember, that's today's costs. What about the future? Conservative estimates are that facility costs are going up 5% a year. Consider what costs will be in 20 years, 30 years and even 40 years from now.

Look at these cost estimates from the New England Journal of Medicine, remembering that our costs are even higher:

LENGTH TODAY'S FUTURE COSTS	Today's Cost	Future Costs 14 Years	Future Costs 28 Years
1 years	$55,000	$109,000	$216,000
2 years	$110.000	$218,000	$431,000
3 years	$165,000	$327,000	$647,000
4 years	$220,000	$435,500	$862,000
5 years	$275,000	$544,500	$1,100,000
10 years	$550,000	$1,100,000	$2,200,000

SOLVING THE PROBLEM

There are different ways of approaching this gap in health care coverage. And make no mistake, this is a real gap. It is not covered by Medicare or Medicare supplements. It is not covered by your Major Medical Plan, whether private or an HMO. Unless you have addressed this issue with a product designed specifically to handle long-term care, you are not protected.

TRADITIONAL LONG-TERM CAE INSURANCE

Let's look at some possible solutions. The first is a product that has been around for more than thirty years. This is the traditional Long-Term Care Insurance. You design a plan, within a wide variety of choices, considering your needs and your family health history.

WHAT IS THE COST

The cost of the plan depends on your age, your health and the benefits you choose. After deciding on the type of coverage you want, we then look at a wide array of highly rated companies, finding you the benefits you want for the least amount of annual premium. When choosing benefits, these are the type of issues you must consider:

1. Benefit Period. This is the amount of time that the Insurance Company will pay you benefits if you should require them. You can choose as little as two years worth of benefits or as much as unlimited coverage.

2. Daily Benefit. This is how much the Insurance Company will pay you per day if you require care.

3. Inflation Rider. Your benefits need to be able to grow over time. You can choose a 5% simple or 5% compound inflation rider.

4. Elimination Period. Do you want a plan to begin covering you from day 1, or do you want to pay less and have a deductible period? The choices are most often 0 day elimination, 30 day elimination or 90 day elimination.

COVERAGE IS WIDE-RANGING

With properly designed Long-Term Care Insurance, you are assured equal coverage for care at home, a residential care facility or, as a last resort, a nursing home. With this either-or design, you don't need a crystal ball to see into the future when choosing your coverage.

Objections

People are not preparing for the real possibility of long term care costs. This is true for both the baby boomer generation as well as the present senior population that will need these services in the near future. The common objection, "that it will not happen to me," is not really based on reality, since we now know that around 50% of people will require some form of long-term care in their life. The second objection that people state is that they don't want to throw money away for insurance that they may never use. Though this statement is true for all types of insurance (auto, home, health and life), Long-Term Care Insurance brings up a strong emotional response; thus there is a greater level of denial about its usefulness and cost value. We are now able to address this issue in a way that meets peoples' needs, both emotionally as well as financially.

LET'S GET CREATIVE

Besides traditional Long-Term Care Insurance, there are alternatives that will guarantee that the client will either receive benefits from their policy or that the estate will receive all the money that they have invested in a policy.

TRADITIONAL LONG-TERM CARE INSURANCE WITH A RETURN OF PREMIUM RIDER (ROP)

One method is a traditional Long-Term Care Insurance plan with a Return of Premium rider. If you never use the benefits, or use less than the premiums you have paid, the premiums (less any paid-out benefits) are returned to your estate after your death.

The charge for this benefit is approximately 10% higher than a policy without this benefit. Purchasing a policy with a return of premium rider makes sense up to age 70, since the price of this rider increases tremendously after this age. This is an approach for someone who is not interested in a product with an investment value, but wants to pay the least premium possible and yet be guaranteed that they can either use their benefits or receive their premiums back.

If you do not choose to go the Long-Term Care Insurance route, here are some other viable options. These options are specifically geared towards those people who have decided to self-insure, earmarking some pool of money to be available if long-term care is needed. Note that it is important that one makes the decision to self-insure consciously and with a plan, not just by default.

INTERESTING OPTION

For those people who are planning to self-insure, life insurance and/or annuities with a Long-Term Care Insurance rider are means of repositioning money put aside for emergency expenses to increase its value in the event that Long-Term care is needed. The beauty of this is that if you have money sitting in an account earning little interest and this is money you are saving for emergencies or to pass on to your heirs, then you could be putting this money in a tax deferred vehicle which will increase dramatically the amount of your investment if you need long term care. If you never need care then the money is still yours. This strategy can be used to totally replace an existing Long-Term Care Insurance policy or may be a way to self-insure a portion of your long-term care needs while lowering the benefits on your traditional policy.

Life Insurance Plan

Here is an example of a Life Insurance Plan with a Long-Term Care rider as it might look for a 60 year old.

In this example the Long-Term Care benefit is growing at 5% annually.

You can close out this policy any time you choose and you will always receive back at minimum your original deposit. As long as you have the policy, it is earning interest and you have the insurance benefits.

Annuities

With the self-insurance strategies we are recommending, any monies that are not used for long-term care benefits will then be passed on to your heirs. This also deals with the objection of many people who are concerned that they will pay Long- Term Care Insurance premiums for years and never need to collect benefits.

We've attempted to keep the text in this brochure short and simple. But we realize that these are complicated issues that ultimately need to be gone into in more depth. We hope we've stimulated your interest enough that you would like to pursue this further. Please email us at or call at 415 460-5262. We will be happy to answer your questions or meet with you in person.