“When's the right time to buy long-term care insurance? Here's the perfect time to buy long-term care insurance: When you're as young and as healthy as you're ever going to be, and somebody brings it to your attention. That's a winner right there. That's the time. It might be when you're 52 and it might be when you're 72. But it's never too late.”
Bryan Herdt, CSA, CMP a long-term care insurance agent and agency owner who has been selling long-term care insurance solutions for over twenty years.
This episode of The Matt Feret Show will give you a very comprehensive insider’s view into long-term care insurance. What it is, how many flavors there are, when to buy it, the differences in long-term care for people with insurance, what to buy, how to buy, caregivers and how to talk to your parents about long term care and long term care for veterans.
Listen to the episode on Apple Podcasts, Spotify, Deezer, Podcast Addict, Stitcher, Google Podcasts, Amazon Music, Alexa Flash Briefing, iHeart, Acast or on your favorite podcast platform. You can watch the interview on YouTube here.
Brought to you by Prepare for Medicare – The Insider’s Guide book series. Sign up for the Prepare for Medicare Newsletter, an exclusive subscription-only newsletter that delivers the inside scoop to help you stay up-to-date with your Medicare insurance coverage, highlight Medicare news you can use, and reminders for important dates throughout the year. When you sign up, you’ll immediately gain access to seven FREE Medicare checklists.
“The life expectancy of a caregiver is shorter than that of a care-needer. Caring for somebody that needs care kills people. Fact. So the greatest gift you could give your family is the tools to help make that event a little bit easier for them so that when you are no longer to perform your duty, you're not leaving this incredible burden on the people that you care about the most.”
“Everybody's healthy until they're not. That is the hardest part of long-term care planning because, Matt, as you know, it comes with a great amount of denial. This event is very difficult to talk about. People have a hard enough time talking about life insurance and the ratio for risk of that (death) is pretty good, right?
The emotion that is brought out in people about losing their independence and losing the ability to self-manage is horrifying enough that people will just... They'll just dismiss it. They'll just say I just don't see it happening to me. And honestly, still, that's probably one of the biggest reasons why more don't do proactive planning for long-term care.”
“A short term care product is really designed for people that really understand when you look at statistics on long-term care… really the risk is maybe about three years. Are there people that outlive a three year plan? Oh yes. Especially dementia and Alzheimer's. Average length of claim is maybe six to eight years.
But for men and women … the average claim is about maybe 2.7 years for men and maybe a little over three years for women. Some people say, "Look, I don't want a five foot plank over a 10-foot ditch. And I don't want a 20 foot one either. Can you build me something that's adequate that will give me a couple of years of benefits that will give me integrated care, integrated care, home care, assisted living, community care, skilled care. So no matter what level of care I need that money will pay out?"
Yes, and maybe the premium is more practical, and maybe the underwriting is a little bit more liberal because I do have a few speed bumps in my health. And I may not be able to qualify for a traditional long-term care plan. Yes, and the sales of short-term products have skyrocketed over the last 10 years.”
When we survey and we talk to our clients about why did (they) decided to buy long-term care insurance, their response is very interesting. Number one response we get, nine out of ten times: “I do not want to become an imposition on my family.”
Number two, you would think it would be, "I'd like to protect our assets." Nope. Number two is, “I want access to quality care.” That’s number two, because they've seen some direct or indirect experience with family or friends who have had to make a choice based on the quality of the care based on how much they could afford. That doesn't always go well. And if it does go well, it may only go well for a segment of time.
00:03:58 Bryan’s background and experience
00:04:54 The history of long term care
00:09:04 Evolution of long term care insurance
00:10:12 What is long term care insurance?
00:11:48 The percentage of people who will need long term care insurance
00:13:46 Denial and long term care
00:22:04 Medicaid, long term care and facility quality
00:29:24 Financial planners and long term care knowledge
00:33:14 The cost of long term care insurance
00:39:40 The three “versions” or “flavors” of long term care insurance
00:43:13 When to buy long term care insurance
00:47:26 Who buys long term care insurance
00:51:38 Self-insuring vs. using insurance and quality of care
00:52:46 Probability of needing care starts at home
00:55:09 Neighborhood residential care homes
00:55:09 Caregivers how to talk to your parents about long term care
01:01:59 Paying for your parent’s long term care
01:03:10 The rapid aging of the population
01:03:10 How to start and who to talk to about long term care
01:09:46 Other types of insurance if I can’t qualify for long term care insurance
01:13:47 Veterans and long term care
01:17:07 Bryan’s phone number (yes, he gave it out!)
01:19:53 Show Close
00:00 / 01:20:10:
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Matt Feret (00:00:02):
Hello, everyone. This is Matt Feret, author of the Prepare for Medicare book series and welcome to another episode of The Matt Feret Show, where I interview insiders and experts to help light a path to a successful retirement.
Matt Feret (00:00:17):
If you're listening to this podcast, put a face with a voice. Don't forget, you can actually watch The Matt Feret Show on themattferetshow.com and on YouTube. There's a long-term care crisis looming in this country and it seems as if next to nobody is talking about it. Too young for a long-term care insurance? Think again. Do you know if your parents have any coverage? Do you know what could happen to their finances if they don't? How about what could happen to your finances? Have you thought about what that means to you and your family?
Matt Feret (00:00:52):
Maybe you're ready and willing to have mom move in down the hall and be her full-time caregiver. Maybe not. There are actually two long-term care crises going on at the exact same time. The first has to do with the long-term care facilities and staff themselves. Long-term care professionals continue to exit the profession in droves.
Matt Feret (00:01:16):
According to data from the Bureau of Labor nursing homes lost more than 380,000 employees because of the pandemic. A recent American Health Care Association and National Center for Assisted Living survey found that nearly every nursing home and assisted living community in this country is currently facing a workforce crisis.
Matt Feret (00:01:39):
What's that say about the long-term healthcare quality trends in long-term care facilities? How many will just close? I have zero clue how to solve that one, but I do have a few ideas how to solve the second long-term care crisis. And that's the financial implications of older adults, not having long-term care insurance in any form. Medicare doesn't cover it. Social security, certainly won't pay for it. Medicaid can cover it, but only if you spend down almost all of your assets. Yes, it's a complex topic. It's tough to talk about from an emotional standpoint. And it's frankly hard to find anybody. Who knows what they're talking about.
Matt Feret (00:02:21):
Bryan Herdt does know what he's talking about. He deals with this daily and he's my guest today. He's a long-term care insurance rockstar with decades of experience. Common estimates say fewer than one in 30 Americans own any type of long-term care insurance policy. And only about 7% of adults over the age of 50. The problem is over 50% of older adults will need some version of long-term care at some point in their lives.
Matt Feret (00:02:51):
Just hit that magical Medicare age of 65. Well, congratulations. But for 65-year-olds, there's now a 70% chance you'll need long-term care in the rest of your lifetime. Bryan is a treasure trove of knowledge. I can't emphasize enough how much this guy knows about long-term care insurance and all of the non-traditional options available today.
Matt Feret (00:03:13):
In fact, I barely made any edits to this episode because you're going to want to absorb all of it. This episode of The Matt Feret Show will give you a very comprehensive insider's view into long-term care insurance. What it is, how many flavors there are, when you should buy it. The differences in long-term care for people with long-term care insurance, what to buy, how to buy and why, whatever you do, you need to hit this problem head on. If not for you, then for your parents and loved ones. Enjoy.
Matt Feret (00:03:48):
Bryan, welcome to the show.
Bryan Herdt (00:03:50):
Hi, Matt. Thanks a lot for having me today. I'm really looking forward to our conversation today. Really focused on long-term care planning.
Matt Feret (00:03:58):
Exactly. And welcome. Thank you very much for being on the show. Let's do that. Let's talk about long-term care insurance and long-term care planning, but first tell everybody what you do and how long you've been doing it, and how you help people.
Bryan Herdt (00:04:14):
Very good. So, yes, I started in the long-term care market in the mid '90s. I was one of those many GE Capital agents. And we'll talk a little bit about that history. I've been doing long-term care here in this market for about 25 years.
Matt Feret (00:04:31):
And what states do you operate in? Is it nationwide kind of a section of states or only one?
Bryan Herdt (00:04:37):
Yeah. So thank you for asking. Directly right now, obviously, Arizona where I'm located, but we do have agents located in California, Nevada, New Mexico, Texas, and Florida. So we can help in most of the states along the southern border of the country.
Matt Feret (00:04:54):
And you can directly help, but this podcast and this YouTube show will actually help everybody in a lot of different ways in talking about long-term care insurance. So let me set this up just for a little bit. The setup is long-term care insurance used to be a thing, still is a thing, but was more of a thing in the '90s. Can you give everybody a little bit of a sense of where the long-term care insurance industry has been from your perspective since you started in what a lot of people consider as the heyday of long-term care insurance in the '90s?
Bryan Herdt (00:05:30):
Yes. I got in the heyday and very grateful for that, and was able to help a lot of people. So not really. Not everybody doesn't realize that long-term care insurance was actually invented in the '70s. Not a lot of people know that. But some agents got together up in the Seattle area, put together a product they thought would manage this huge risk that they saw our country heading for. It was kind of a slow start. It was really skilled nursing care to begin with, which nobody likes the sound of that, but it really started to evolve really into the '80. Late '80s, early '90s. And then as it started getting momentum, those few companies, which were like Penn Treaty Network America and Fireman's Fund. Pretty soon the John Hancock's and the Prudential's and the MetLife's and the mutual of Omaha's, and I could go on and on and on, they saw the momentum and the potential of this risk and it was a race. It was a fast and furious race.
Bryan Herdt (00:06:39):
I can remember days where GE capital, which was the Genworth product, they were posting sales of five and $6 million a week in long-term care insurance premium. And then Matt, we were looking at maybe a $2,000 year premium. So that was a lot of insurance. So you are so right. Then came 2007 and then come '08, and then came the market. And the interest rates started falling off. And understanding that many of these insurance policies that were sold were unlimited benefits and they had a guaranteed 5% growth inflationary rider built into them.
Bryan Herdt (00:07:29):
And these insurance carriers were in trouble. Well, not only that, but all these policies that were sold started going into claim. And so the insurance actuarials when they built these plans initially, they felt that the persistency rates might be 88%, 89%. And they got that wrong too, Matt, because persistency in long-term care policies were nearly 98%. So nobody was dropping them.
Matt Feret (00:08:06):
Oh, okay. So persistency in the sense that everyone kept... Yeah, sorry, so persistency-
Bryan Herdt (00:08:11):
Large numbers of people going in decline and the interest rates were plummeting, and boy, did we start seeing a run for the gate. Many of the carriers at that point either got out of this market and refocused their monies in other faster or more safe, I guess, insurance strategies. But there were a few that stayed in, but what happened around 2013, as this started to recover, the industry started to recover. The actuarials had to be totally readjusted. So premiums went up substantially, underwriting got even more difficult to get cases through with people that had comorbidities. And it really brought the production down to really, almost a screeching halt for a couple of years.
Bryan Herdt (00:09:04):
So there we go. Now, we got this perfect storm, which I hate to call it that, but that's actually what happened. And then the whole industry now has really changed. So are people still buying long-term care insurance? Oh, yes. Are the products today and the strategies very different than they were back in the '90s? Yes, they are. And that's where it really kind of separated the long-term care pro from the more holistic financial planners. And then we started seeing a lot of other types of products. So yeah, that's kind of a backdrop to kind of where we are and where we came from.
Matt Feret (00:09:45):
Thank you. So let's talk about what long-term care insurance is and what it isn't. And I think for a lot of the folks listening and/or watching this, I think we may be getting lost in definitions. Are we talking about nursing home care? Are we talking about at-home care? Like, would you define for the listener what long-term care is and what it isn't?
Bryan Herdt (00:10:12):
Yes, thank you. So long-term care insurance is a reimbursement insurance product that will pay for the cost of care when somebody has lost their ability to live independently. So skilled nursing care, which is what these plans were originally and where the confusion with Medicare comes is because skilled nursing care is generally rehabilitative care. Matt, as you know, skilled nursing is rehabilitative care. It may be occupational therapy. It could be speech therapy. It's care that you're receiving to restore your independence.
Bryan Herdt (00:10:56):
But long-term care is really when those activities of daily living or ADLs, bathing, dressing, toileting, transferring, incontinence, eating, cognitive impairment, which is a big concern today. These are what we call custodial care needs and these are not covered by other insurance products. They're not covered by Medicare. They're not covered typically by your life insurance plan directly.
Bryan Herdt (00:11:26):
So long-term care became an insurance product to reimburse the $60,000 to $80,000 a year risk, average cost today. That could be two, three, four years or longer. So that was what this product was designed to do is reimburse the cost of custodial care needs.
Matt Feret (00:11:48):
In your experience, what is the percentage of people who might need a long-term care insurance solution who are living and listening, and watching right now?
Bryan Herdt (00:12:03):
Okay, great question. I'm going to give you really two segments, and this is really, really important. When people hear the word long-term care, they think, "Oh, man. Well, that's something I'm going to need when I'm in my 80s." Right? So here's the facts. If you're fortunate enough to live until age 65, which most are today, the probability of you losing your ability to live independently, you have a 70% chance of not living on your own before the end of your life comes. 70%.
Bryan Herdt (00:12:39):
Now, does that mean we're all going into nursing homes and we're all going into memory centers? No, that's not it at all. But what's important to understand is that through aging, frailty, accidents, chronic illness, things go bad when you're on the planet for a hundred years.
Matt Feret (00:13:00):
Bryan Herdt (00:13:03):
So these things, the probability of you having an event that you lose, your ability to live independently without care is highly probable. But the number, the statistic that people don't hear enough about is what about the risk for long-term care under the age of 65? "Oh, I'm just going to wait until I'm 80 and I'm going to get it then." Well, that's not working so well. I'll be honest with you. For sure, that's not working. That's really difficult to do. But the group of people under age 65, 40% of all the people that are in long-term care now are under the age of 65.
Bryan Herdt (00:13:46):
So this just does not happen to people when they are elderly. Car accidents, chronic disease, other types of accidents. There are a lot of events that happen in life that can cause somebody even younger to lose the ability to live independently. So that's the conversation that is important to have with people, Matt, because people are sitting here at 50 years of old going, "Yeah, I'm really in good health. I'm going to live forever. I don't really see myself being in this environment."
Bryan Herdt (00:14:25):
Everybody's healthy until they're not. That is the hardest part of long-term care planning because, Matt, as you know, it comes with a great amount of denial. This event is very difficult to talk about. People have a hard enough time talking about life insurance and the ratio for risk of that is pretty good, right?
Matt Feret (00:14:48):
Well, I was told one time by an insurance agent, it's the only insurance policy you're guaranteed to use.
Bryan Herdt (00:14:54):
Guaranteed to use. And you are so right. But the emotion that is brought out in people about losing their independence and losing the ability to self-manage is horrifying enough that people will just... They'll just dismiss it. They'll just say I just don't see it happening to me. And honestly, still, that's probably one of the biggest reasons why more don't do proactive planning for long-term care.
Bryan Herdt (00:15:25):
And I get it, "Listen, I get it." I mean, we're an optimistic society and optimism is a wonderful thing and it gets us a lot. But we also have to be realistic. And the probability of life expectancy, especially for women now that one in 10 are going to make it to 95. The reality view living that long on your own is just problematic.
Matt Feret (00:15:57):
Well, I mean, it's a great problem to have if you're living that long, but I get it from a care standpoint, it's problematic. Things don't get typically cheaper in medical care as you get older. They typically get more expensive. And you mentioned this earlier, there are gaps in the system, as you will. Medicare does not cover long-term care. I guess the state doesn't cover long-term care unless you go through your assets and you're on Medicaid, which is not typically a lot of people want to do.
Matt Feret (00:16:31):
They don't want to spend down your assets and go on Medicaid. I know we'll get to that but let me go back to one of the points you were mentioning too because there are gaps in health coverage if you count this and I do as health coverage in America. Do you think from where you stand, is this really more of a... There's just not enough people talking about it? Is it because what you were talking about earlier, is it painful for the individual to think about? And there's that kind of that third rail of, "Well, what if I pay for insurance? Never need it and die. Do I get any of my money back or do I pay these thousands of dollars and never use it?" I mean, is it a combo of all those three? I mean, I just threw a lot at you, but go ahead.
Bryan Herdt (00:17:14):
Yes. That's great. Let's unpack that. That's super good. So yeah, part of the reluctance is, "Well, I'm going to pay these premiums and these premiums are much higher than some of the other insurance premiums I'm paying. And because I'm optimistic, the probability that I'm going to live and pay all these premiums until death and I'm never going to use it. But the reality behind that is this.
Bryan Herdt (00:17:41):
Number one, you have a 70% chance of filing a claim on your plan. Number one. What insurance comes anywhere near that except for life insurance, right? Your homeowner's insurance doesn't come anywhere near that. Your auto insurance doesn't come anywhere near that and your health insurance. I mean, how many major medical events are you going to have in your life that cost hundreds of thousands of dollars? It's a one in 15 chance that you're going to have a major medical risk over 50 grand.
Bryan Herdt (00:18:15):
But it's so funny because people will shell out money for those and they don't ask questions. When they die, they go, "I'm glad I didn't need it." Well, why does that change when it comes to long-term care? For some reason, there's just a psychological block that we don't want to put long-term care planning into the same corral as proactive risk, manage it, as we do other insurances that we pay for 50 or 60, or 70 years, and we never ask a question about, "Well, if I don't use it, am I going to get all my money back?"
Bryan Herdt (00:18:53):
And I still think, indirectly, Matt, it's still tied to some level of denial. People just don't want to take the logical approach. So let's say I do buy long-term care insurance. I buy a plan and I buy a traditional long-term care plan. Is there a possibility that I could pay into this plan for many years, several years and not file a claim?
Bryan Herdt (00:19:20):
Yes. It is possible. And would you get those premiums back? So the risk we have to look at is this, okay, so let's say my plan is five grand a year for my wife and I and it has the potential to pay out hundreds and hundreds of thousands of dollars of long-term care benefits. We both live a long happy life and we both die. And my kids are going to miss a hundred thousand dollars of assets that they could have had if I would never have taken out the policy.
Bryan Herdt (00:19:55):
Well, let's say, I was wrong and we did have a claim. And the cost of that care at the time I need it could easily be in one year, the cost that I would've paid for my wife and I in premiums over our entire life of our policy. That's the leverage of money that people tend to kind of disconnect from. But it's managing the rest, right?
Bryan Herdt (00:20:30):
It's using a small portion of my assets to manage the rest of my estate. And I'll be honest with you. Most people do get that. They understand the logic of that. It's pretty simple, but I think where other issues come in, was that client at that time, were they offered the right plan with the right money, with the right benefits based on their right age and based on their current health. And also based on maybe the experience that they had with mom or dad or grandma and grandpa.
Bryan Herdt (00:21:05):
So a really good long-term care professional really does spend some time really looking at what is really your perception of this risk through your eyes and not necessarily about money? I'll tell you, Matt. One of the things that I see the most over my quarter of a century doing this is the focus is on the money. And this is not only a money problem. Matter of fact, it is sometimes far less of a money problem than the physical and the emotional impact on the people around you that care about you most.
Bryan Herdt (00:21:49):
And that's the part of the conversation that is really, really important that I think gets left out because it becomes a money conversation and a premium conversation. And that's only one aspect of the risk.
Matt Feret (00:22:04):
You're alluding to something there or maybe my brain went to something that you weren't alluding to, but I'm going to ask it anyway. Is there a difference in quality of care with someone who has a long-term care insurance policy or some other type of policy that helps pay for long-term care and folks that don't have insurance coverage? I mean, there are different types of nursing homes and long-term care facilities. I drive by them. Some of them look like garden homes and other ones don't. Is there a difference in the quality of care given the type of insurance you have?
Bryan Herdt (00:22:42):
Yes. Yes. You brought up Medicaid a little bit earlier. And yes, in some instances people feel like, "Hey, my mom went on state subsidy and she was in a really nice place and she got cared for. She didn't have anything." Her event was fine. Why is that not okay for me? Well, understanding, becoming eligible for Medicaid while you're in a long-term care event is very different than being eligible for Medicaid before you actually go into care.
Bryan Herdt (00:23:29):
So here's what I mean by that. This is going to tie into your question I think really, really well. When we survey and we talk to our clients about why did you make a decision to buy long-term care insurance? The response to that is very interesting. Number one response we get, nine out of 10 times, I do not want to become an imposition on my family. Number one.
Bryan Herdt (00:24:00):
Number two, you would think it would be, "I'd like to protect our assets." Nope. Number two is I want access to quality care. Number two, because they've seen some direct or indirect experience with family or friends who have had to make a choice based on the quality of the care based on how much they could afford. That doesn't always go well. And if it does go well, it may only go well for a segment of time.
Bryan Herdt (00:24:37):
So let's say I do have some level of wealth. I go into a long-term care event. I am self-insured. And at 60 or 80 grand a year, my three or $400,000 starts to whittle down. And now, I no longer have the assets to pay for the care that I chose being self-insured. Does that facility have to keep you? Not all facilities are Medicaid eligible. So some no. And I'm going through this with a client right now that has been in this facility. His family said, "Bryan, this was the greatest thing that ever happened, but we've only got about 12 months of benefits left. So now what?"
Bryan Herdt (00:25:26):
He can't stay there. He's going to have to transition into another facility. So when you go into a facility and you're already eligible for Medicaid, how many facilities are willing to take residents that are already eligible for Medicaid? Few and far between. Now, are all of those the best? Are all of them the worst? No. That's not the point. The point is you don't get to choose. You're going to go to a facility that is approved by the state, that is going to accept a new patient or a new resident, and they're going to be willing to accept the funds that the state will allocate for that care.
Bryan Herdt (00:26:12):
Assuming that your assets are spent down to the level to qualified, to begin with. And number two, one of the very important pieces of Medicaid, most people think that, "If I'm poor, I'll get in." That's not true. You have to be poor and unhealthy. So people say, "Well, my mom she's got dementia." Yes, she does. But does she need skilled nursing care at this point? Is she somewhat self-reliant? Cognitive impairment alone does not qualify you for Medicaid. So you may be poor, you may not yet be sick enough to qualify. We could do a whole segment on this.
Matt Feret (00:27:00):
No, this is fascinating. We could, because I always... Again, I've got some experience in being insurance licensed and I've been in Medicare for a long time, as you know, but I've always heard this Medicaid spend down strategy, which is essentially spend off all your assets, give them all away, qualify for Medicaid and you get long-term care insurance for free.
Matt Feret (00:27:22):
What you just said is not what I've heard before. I'm not going to get into the morality of it or the character of it. I mean, obviously to each is his own or her own, but that was what I've... If you Google Medicaid spend down strategy, that's what you're going to get. You're going to get, you can spend down all your assets and then qualify for long-term care insurance. And you're saying, there's a twist to that. That's not necessarily true what I just said, right?
Bryan Herdt (00:27:52):
You're exactly right. No, there is much, much more. And so you said something interesting. Maybe I don't agree with the philosophical strategy to go on state subsidy when I do have the money, if I can find an elder law attorney. And no disrespect, there are strategies where you can protect some, some of the money. But you know who gets the bad end of this? Is the surviving spouse. So now, we've got four, five, $600,000 of assets now. One spouse goes into long-term care, we've vaporized the majority of the estate and that spouse passes. And now it's all said and done. And now the healthy spouse, which in most cases, unfortunately, is the wife, the female, she's going to live the rest of her life on diminished assets.
Bryan Herdt (00:28:52):
Well, that doesn't seem fair. And I will tell you, there is no man on this planet that's priority isn't to take care of his wife. Whether I'm here or not, it's still my responsibility. That is the other side of long-term care planning that doesn't really get enough attention. It's, "I might have enough to pay for one, but what happens to the surviving spouse that now has to live on much, much less?" That doesn't seem fair.
Matt Feret (00:29:24):
That attention piece, and I know I'm kind of skipping around a bit, but let's go back to that attention piece. We know that the threat is real. That's not talked about enough in terms of the threat to... I mean, forget individuals just for a second, family, but how about the United States government having an under-resourced... I mean, this is a massive gap in elder care and care for older Americans that is only filled by self-pay or some sort of form of insurance.
Matt Feret (00:29:53):
But the other gap seems to me to be somewhere in the advisor and the insurance agent and the financial planning and somewhere in there. Is it an avoided subject? Are there not as many experts as there should be? Because we hear stocks bonds, crypto on repeat. Medicare advertising everywhere on TV. And even life insurance on sports radio, no one ever gets something about, "Have you thought about your long-term care?" So beyond the emotional challenge and the psychological challenge of thinking that you might be incapacitated somehow and charging a lot of money later in life. Is there some sort of gap in the advisor role, the insurance agent role that isn't pushing this forward to people trying to plan for the future?
Bryan Herdt (00:30:45):
Matt there is. I've been staring this thing in the face for 20 years trying to understand this. But what is apparent and is the fiduciary responsibility of a financial planner. Okay? Part of it is their exposure under regulation that a lot of them, they run an income portfolio analysis on their software and they will plug in the long-term care risk. They do, and that's great. They make the client aware that, "Hey, here's the probability. Here's the potential cost and here's the debt it's going to make in your finances." And the client says, "Well, I just don't think that's in the cards for me." And the plan. And the planner says, "Yeah, I don't think it is either." Next, they check the box and on they go.
Bryan Herdt (00:31:46):
So I understand it. The financial planner says, "I don't want to get into that ground because I don't understand that world." Just like you with your complex Medicare world, the long-term care world is as bad. There are so many different solutions and products. What happens if the company goes under? What happens if there's 80% rate increases? The financial planner is going, "I don't want that pinned on me." I get that to a degree. But what about the fiduciary responsibility to the family? If you didn't proactively encourage them, show them they had the money to allocate towards this.
Bryan Herdt (00:32:26):
And in a sense, "Matt, if people are willing to use some of their money to protect themselves against a long-term care risk, if they do it dollar for dollar, they're self-insuring." But what if I can reallocate a portion, a small portion of my estate to a long-term care plan and mitigate the majority of the risk and protect everything else I have? Well, why is that story not told with more passion? Because that really is the thing. You're still self-insuring it. We're just not leaving all of your money at risk. But that message is not delivered with enough passion, in my opinion.
Matt Feret (00:33:14):
We talk money. I mean, that's what a lot of people want to talk about is, "How much is this going to cost?" And we talked earlier in the show about how sometimes you're going to pay the premium and never use it, which is kind of a use it or lose it situation, which people go, "Well, that's a lot of money to lose and never use." I mean, not that you want to use long-term care insurance, but still that's there. How much money do you have to have, to have some sort of long-term care coverage? Are we talking like I have to have a million bucks net worth here or five, or 50 grand, 60? What type of people should be thinking about covering at least a portion of their long-term care insurance risk?
Bryan Herdt (00:34:03):
Okay. So man, you're giving me some great questions and it's going to take me a minute because I'm unpacking these and these are long answers. [inaudible 00:34:11]
Matt Feret (00:34:10):
Well, I know they're long questions. I'm sorry to do it to you.
Bryan Herdt (00:34:13):
But boy, you're getting into some great stuff. So the use it or lose I, that was sold in the past. It's still being sold today, not nearly at the volume. But what happened when the reimbursement segment of long-term care had its collapse, the asset based long-care products started rising to the top. So this is where all the momentum has been coming back to the long-term care industry. So what if I could leverage long-term care protection, but rather than doing on a use it or lose it on a traditional reimbursement long-term care policy like was sold in the past predominantly, what if I could put that inside of a life insurance policy?
Bryan Herdt (00:34:59):
So initially, I have a death... I buy a life insurance policy. It has a death benefit of a certain amount of value which is generally more than I put into it. So if I die and I don't use it, my family, my estate gets a death benefit. Wow. That sounds pretty good. But what if I don't die? What if I live? What if I do go into a long-term care event? If the death benefit, we call this extent... This is a prepaid out death benefit where an insurance company may be willing to multiply the death benefit in multiples of two or three or four, and create a much, much larger benefit pool that will reimburse the cost of the care.
Bryan Herdt (00:35:49):
So if I live, I get money. I get money from the life insurance plan. If I die, there's a death benefit. "What happens if I pay into this thing and maybe it's a single premium product, and I put the money in there and I change my mind in 12 or 14 years? I win the lottery and I steal a bunch of stock and I'm now a multi, multimillionaire, and I really don't need the long-term care insurance anymore, can I get my premium investment back?" Yes.
Bryan Herdt (00:36:22):
So these are the products now, financial planners are feeling much more comfortable about these products. Now, not everybody has the ability to take $100,000 reallocation and move that money into an account, but does it always take that much? Well, no, because now what the industry's done is they've taken these asset based long-term care products on a life or an annuity chassis, and they allow you now to pay these over time.
Bryan Herdt (00:36:55):
So listen, I don't want to dump a hundred grand. Have you seen the stock market? Well, don't look today. Don't look in the last couple of weeks. Right?
Matt Feret (00:37:02):
No, I don't want to look.
Bryan Herdt (00:37:03):
I don't want to take my money out of the market. Okay. Well, why don't we chip it off maybe $10,000 a year for 10 years, maybe up to retirement, and then it's fully paid when I retire. There are so many strategies, Matt, on how to mitigate the risk of long-term care that it really doesn't leave anybody an excuse, not to do some level of planning.
Bryan Herdt (00:37:31):
Now to answer your question, if I'm living on social security and I've got 50, 60, 80, a hundred grand in assets, this is probably not a wise move, right? It's certainly not a wise move and reality in short term, the state would be there. There would be some other state benefits that may make more sense at that. But I've had multimillionaires tell me, "Bryan..." And I'm just trying to say, "What are we doing? You've got millions and dollars. Why do you think you want long-term care insurance?" You know what's really interesting, Matt, that they say to me? I'm going to tell you this too. And I went through training, no disrespect to Genworth. They told me, "Hey, if your client has more than 1.2 million, forget it." That's what I was trained.
Matt Feret (00:38:23):
Bryan Herdt (00:38:24):
I had phenomenal training there. It gave me the ability to do what we're doing today. But I found that out by education from clients that, that was bad, bad advice because multimillionaires go, "Bryan, do you think I accumulated my assets by leaving it at risk?" And I'm like, "Good point. Listen, I buy the best airplane. I wear the best shoes. I want the best long-term care plan you can offer me. Is that everybody?" No, but there are so many solutions in between a mitigated marginal plan to give your family some breathing room for planning and having a fully comprehensive product that's going to do all things you could ever imagine.
Bryan Herdt (00:39:15):
There are so many ways to mitigate this risk, Matt. Everybody should at least be educated about their options based on their age, their health, their assets, their family unit. Everyone should visit what it looks like and what's affordable and what's attainable, and what's practical because for most people, there is a solution that would fit.
Matt Feret (00:39:40):
So broadly, it seems like there are two solutions and I'm wrong all the time. So please correct me if I am. One seems to, there is this long-term care insurance that's been around since the, well, '70s you said, get really popular in the '90s. '08-'09 recession, kind of obliterated a lot of the companies who were offering benefits that they could no longer afford. And that list of insurance carriers offering those kind dropped in the early 2010s and has stayed down. You can still buy them. They're expensive. They're not as comprehensive. And the number of companies selling them are fewer. That seems to me to be option one. Is that right?
Bryan Herdt (00:40:22):
Matt Feret (00:40:22):
Okay. Option two is life insurance slash annuity, which allows insurance companies to construct kind of combo deals. I mean, not like at McDonald's, but combo deals like, "Well, you can have an annuity with a long-term care writer if you use it." Great, if not wonderful, you still have an annuity that you can use. Same with life insurance. If you need it, it's there. But if you don't use a long-term care, you still have a life insurance policy. Have I got that right?
Bryan Herdt (00:40:52):
You've got it right, but there's actually a third one. There's a third one and it's called short term care. And what a short term care product is, is really designed for people that really understand when you look at statistics on long-term care, which I've got two screens uploaded for you ready, but the risk is... Really the risk is maybe about three years. Yes, are there people that outlive a three year plan? Oh yes. Especially dementia and Alzheimer's. Average length of claim is maybe six to eight years.
Bryan Herdt (00:41:30):
So that's a really troublesome one. But men and women that are not cognitively related, the average claim is about maybe 2.7 years for men and maybe a little over three years for women. They live a little bit longer and they tend to do... They're just tougher than us. Let's just admit it. So that's just a reality of nature. So what happens is, is some people say, "Look, I don't want a five foot plank over a 10-foot ditch. And I don't want a 20 foot one either. Can you build me something that's adequate that will give me a couple of years of benefits that will give me integrated care, integrated care, home care, assisted living, community care, skilled care. So no matter what level of care I need that money will pay out."
Bryan Herdt (00:42:26):
But maybe the premium is more practical, and maybe the underwriting is a little bit more liberal because I do have a few speed bumps in my health. And I may not be able to qualify for a traditional long-term care plan. Yes, and the sales of short-term products have skyrocketed over the last 10 years. So that's why I say, if you're dealing with somebody that only has awareness or access to just a couple of different strategies, there are long-term care agents in this country, and I know a lot of them and they are dynamic. There are a lot of ways that we can help people if they just find somebody to connect with and ask the right questions.
Matt Feret (00:43:13):
When do I start this? Well, what age? Because you mentioned that this isn't necessarily what we call the insurance biz.
Bryan Herdt (00:43:22):
Matt Feret (00:43:24):
It sounds so wonderful.
Bryan Herdt (00:43:25):
You are right.
Matt Feret (00:43:26):
Guaranteed issue, which means you get it regardless of health. There are very few guarantee issue products out there. I'm assuming long-term care insurance and one of the three or all three, you're going to have some pretty stiff qualification criteria that only gets tougher, the older you get and the more healthy. So talk to me about when I should start thinking about long-term care insurance.
Bryan Herdt (00:43:59):
When you look at the numbers and you look at the data and you look at "Okay, when am I at the right age to get the most leverage the biggest bang for my buck." Right? That's what everybody is looking for. The biggest bang for your buck. Well, between 50 and 60, you look at these products and it doesn't matter which segment we're talking about, whether it's short term or traditional or it's asset based.
Bryan Herdt (00:44:26):
It really depends on where you're going to fund it from. But as far as leveraging the benefits between 50 and 60 is really ideal based on actuarial numbers because what happens is every year that you're a year older, then you're obviously a year older closer to the event, hypothetically, right? So insurance says, "How long are you going to give us money?" And the longer you give us money, the bigger the pool of money we'll give you. It's actuarial 101.
Bryan Herdt (00:45:03):
But what's interesting that people don't understand is if I was to buy a policy at age 55. And we knew somehow, Matt, that we were going into a long-term care event at 85, and we were going to pay those premiums out for 30 years. And somebody looked at the same plan and they bought it at age 60. They were going to need care at 85. The 60-year-old paying five years less would pay 30% more in premium by the time of claim.
Bryan Herdt (00:45:37):
That's intentional by the insurance industry. They understand the numbers. Those pocket calculator, guys, they're super smart. They understand all this, right? So really it's we get in our own mind is saying, "Well, I'm too young. If I buy it now, I'm going to pay these premiums forever." Yes, but realistically, you're going to pay over a longer period of time, but you're going to pay less.
Bryan Herdt (00:46:03):
And remember, when you do go into claim, you stop paying. So most plans have a waiver of premium. Once you go into claim, you're no longer paying premiums for the plan. So there is a size for lots of people. People generally rule themselves out. I mean, most of our long-term care planning in the last four or five years, Matt, have come from our Medicare clients.
Bryan Herdt (00:46:33):
They're aging into Medicare and we're saying fundamental part A of Medicare skilled nursing care, this isn't custodial care. "What? Oh, we thought Medicare. Oh, no. What?" This is a good time for us to have the next discussion. That is where the majority of our long-term care planning comes from. You know why? Because today, people at age 65, they're healthier and they're wealthier than ever.
Matt Feret (00:47:01):
And they're living longer.
Bryan Herdt (00:47:02):
And they're living longer. So that is a great time. So when's the right time? Here's the perfect time to buy long-term care insurance. When you're as young and as healthy as you're ever going to be, and somebody brings it to your attention. That's a winner right there. That's the time. It might be when you're 52 and it might be when you're 72. But it's never too late.
Matt Feret (00:47:26):
Tell me who buys this stuff? Is it the male or the female? Are they couples or is it the solo female that already lost her husband or partner? How does all that work? I mean, who should be paying attention right now, listening? Because their other spouse or their partner, they're not going to do anything and they need to bring it to their attention.
Bryan Herdt (00:47:51):
Yeah. So let's give you the quick practical answer and that the insurance industry right now says that 68% of all the claims that are paid industry wide are paid out for women. So women, you basically crush all the statistics. Okay? You live longer, you live healthier, you outlive your spouse. And sometimes you outlive your kids. I mean, that's reality. But now, let's bring DNA into this.
Bryan Herdt (00:48:29):
All right. Let's talk about men for a minute. Men don't like this conversation, and it's okay. I get it. I don't know if you're familiar with Harley Gordon. You may know who Harley Gordon is. Harley Gordon is a really well known elder law attorney who basically created a certification for long-term care planners many, many years ago. Harley's incredible. He's got a book out that's fantastic that I give to every single agent we bring on board about long-term care. But what he talks about-
Matt Feret (00:49:11):
What's the book name. I'll put it up on the website.
Bryan Herdt (00:49:13):
It's called The Conversation.
Matt Feret (00:49:14):
Bryan Herdt (00:49:15):
The Conversation. We buy him in gross because his concept is the conversation about long-term care planning. Listen, this is an elder law attorney, and he is incredibly pro long-term care insurance. His book also does cover social security. It covers Medicare. It covers Medicaid. It covers all these different types of insurance. It's a very, really good resource for anybody that's in our industry.
Bryan Herdt (00:49:48):
The crux of the conversation is, "What are the consequences for the people that I've been taking care of that are now in a position to take care of me.And they've had to put their life on hold to do it?" Listen, men respond to that. Men go, "Oh, no. Bryan, that's a whole horse of another color. Now we're talking about my responsibility as a man to protect my family. I don't want to put those consequences on my family or my wife."
Bryan Herdt (00:50:26):
Another little tidbit here, statistically, this one nobody likes, the life expectancy of a caregiver is shorter than that of a care-needer. Caring for somebody that needs care kills people. Fact. So the greatest gift you could give your family is the tools to help make that event a little bit easier for them so that when you are no longer to perform your duty, you're not leaving this incredible burden on the people that you care about the most.
Bryan Herdt (00:51:04):
In The Conversation, Harley talks about that in absolute clarity. And I'll be honest with you, when I met him years and years ago, and I read this book for the first time, it changed the entire way that I had a conversation with people about long-term care. It's not scare tactics. You're not going to bully anybody into doing it. You're not going to scare them into doing it, but you have to get to the heart of the issue. And the heart of the issue is, "It's probably going to happen and your family is going to be stuck with caring for you."
Bryan Herdt (00:51:38):
Now, I've got a multimillionaire that goes, "Bryan, I could give my kids $12 million a week to pay for me, and I'll never run out of money." Are we really doing them a great favor? Have we really solved the problem? So I've got $12,000 a week in money, but who's coming? When do they come? How often do they come? Do they steal from my dad while he's taking a nap? These are not fun questions.
Bryan Herdt (00:52:08):
A long-term care insurance plan is going to allow the kids to have tools, to get the best care, to vet out the care, to partner with an insurance company, to make sure that I've got every resource possible to make this go as easy as... And it's never going to be easy. It's always hard. But not giving your family the tools they need to help mitigate part of this risk and to help bring in the service to help make their life easier, it's a tragedy. And I'll tell you that conversation changes everything.
Matt Feret (00:52:46):
That's an interesting point too, that I know we've been in this for a bit, but it's long-term care. I mean, I've been framing this in my mind mistakenly. So I've been framing this in my mind as care needed away from the home. But there's a heck of a lot of people that don't want to leave the house and whose family don't want them to leave the house and they're home bound yet they still need 24-hour care. Maybe even only 12-hour care. How does long-term care insurance and the various forms it can take play into at-home care?
Bryan Herdt (00:53:22):
Absolutely, Matt. Nobody buys long-term care because they're going, "Yep, I'm going to be in that skilled nursing home and I want to make sure it's covered." Nobody thinks like that. But the probability of you needing care starts at home.
Bryan Herdt (00:53:37):
Statistically, you look at claims throughout the industry. 70% of long-term care insurance claims start at home. Why? Because that's where everybody wants to start. Everybody, you ask anybody. If you're going to need care, where do you want care? I want care at home. Why? Because that is also part of our DNA, which is called aging in place. People will tell me, "Oh yeah, my dad, you're never going to get him out of that mobile home. You're never going to get him out of there." "Why? You're going to put him in this beautiful facility. He's got thousands of dollars a month in long-term care benefits coming to him, and he can move down to Garden City. He's right in between all you kids." And they go, "He's not going." "Why?" "Because he doesn't want to leave the environment that he's in."
Bryan Herdt (00:54:30):
So one of the most important things that long-term care insurance does is it will support your care in your home as long as you're safe. Safe is the key. So then we can transition. "Well, maybe I don't want to be in a home, but I want to be in my home, but I want to be in a home. I want to be in a home in my neighborhood that has a wonderful family that provides care, but I don't want to go to one of those warehouses." I hear them called that every day.
Bryan Herdt (00:55:09):
Okay. So residential care. Sure. You could go into a residential home in a nice neighborhood. Matt, every neighborhood has one. Most people don't know that there are residential care homes in just about every neighborhood in the country. People just don't know they're there. They take care of five to 10 people and they live and they got a caregiver there 24 hours that lives there. Do people get 100% quality care there? No. Can they get bad care? They might. So you move them.
Bryan Herdt (00:55:41):
But many of them do give very good care. And you know why I would do that? Because I would move that. I want to be in the neighborhood where my daughter lives. I don't want to move into a house. I don't want to move into her home, but I want to move near her home so she can keep an eye on me.And then there's a assisted living. You're right. Some of these facilities are breathtaking. I mean, we have one here in Scottsdale that's... I mean, like really, it's crazy.
Matt Feret (00:56:14):
I'll move in today. Is that nice, huh?
Bryan Herdt (00:56:17):
It's $14,000 a month. And that probably doesn't even include your meals. So sure. Is that available? Yeah. Can we do that? Maybe, and probably not, but it's available with long-term care because long-term care insurance doesn't... It's not HMO. It doesn't say, "Oh, you live in St. Petersburg, Florida. We have three facilities in your city that you can go to." That doesn't happen on any long-term care insurance plan. You can go anywhere that's licensed that the insurance will cover.
Bryan Herdt (00:56:51):
So it does give you a lot of flexibility because we know sometimes people in later stages of their life, they do want to move closer to the kids. They do want to change geographic location. "Florida was awesome. Texas was awesome. California was awesome. But my kids live in Missouri and I want to be close to my kids. And yet it snows there. Yes, it does. But my kids live there and I just think it's safer for me to move near my kids. So will my policy pay there?" Yes, it will.
Matt Feret (00:57:23):
You mentioned caregivers earlier, but I'm going to back into before you're a caregiver, because when you're already a caregiver and long-term care insurance, there are really no options for long-term care insurance. Right? Because you already need it. So let's call it caregiver, but let's just say it's son, daughter, relative. Let's say, mom, dad, they're getting older. What's my role in this. Should I be talking to them about their long-term care insurance, their long term planning? Because to your point earlier, and I think it's pretty much logical common sense, at some point, somebody's going to be helping mom or dad in this situation.
Matt Feret (00:58:13):
Either make decisions or moving them into a home or that moving them into your own house and your own home? What's my role and responsibility as a son to talk to my mom about this or as a daughter to talk to my dad about this. How have you had these conversations and in your experience how does that go? When's the right time to talk about it and how do I?
Bryan Herdt (00:58:38):
Yeah, it's hard. It's hard, Matt. It's a hard conversation for kids to bring up. I know that personally, because I mean, obviously, I've been in this industry for a long time. My dad has some troubles right now and my mom is worried. I mean, I'm living this out really right now with my own parents. I'm 900 miles away from them. So I think the conversation, it needs to be intentful. It needs to be understanding with dignity that having a conversation with mom and dad about becoming frail is difficult.
Bryan Herdt (00:59:20):
But you think it's difficult now while they're independent? You try having that conversation with your siblings when mom and dad are not independent and then everybody is scrambling to figure out what the plan is going to be. So it is an uncomfortable situation. Years ago, and I probably still have it somewhere. Genworth did put out a really cool little pamphlet that basically was called the conversation starter. And it was just a really neat piece that really gave empowered kids.
Bryan Herdt (01:00:01):
I'm talking about kids 50, 55, 60 year old kids having conversations with mom and dad about, "Hey, we don't hope this will happen, but what is the plan here? What's the plan of attack? What would serve you best and how can we as your kids, how can we plan what our role may or may not be? There are kids that are healthcare providers and they jump in with both feet and they go, "Hey, I want to do it. I live near. I'll be the one. I'll be the one that steps in."
Bryan Herdt (01:00:34):
And that's a really noble role and it's certainly difficult. But the insurance products, here's another kind of a plug for the insurance, many of these products have what we call informal care writers. So if a child wants to be involved with mom and dad, they want to be involved in the care at some level, for some period of time during the week, policies have a trigger that could provide informal benefits or basically pay cash benefits out to a child. That's passing up a promotion. That's taking extra time off work. That's having to relocate.
Bryan Herdt (01:01:14):
This is what I mean by the conversation sometimes doesn't go deep enough to help understand how these policies can really support the role of the children, not necessarily just throw money out to make sure you get your care paid for. It's a really deep conversation that we have with our clients. Matt, thank you. You're just asking a ton of really good questions that we're not going to be able to cover in one episode of this show. But I'm so glad you're asking some really great questions.
Matt Feret (01:01:49):
Well, it's a fascinating topic and I do want to be respectful of your time, but let me just ask a couple more. I know you're a busy guy.
Bryan Herdt (01:01:58):
Go ahead, yeah.
Matt Feret (01:01:59):
So back to the kid thing, what if mom and dad don't have any money? Is it unreasonable for me to think, or maybe the siblings band together and buy a policy for mom and dad? Do you see that? I mean, because again, the burden is going to fall on the kids, and it could be for a long time, so we don't get to the point where dad is gone, but mom is in long term. Mom needs to move in with someone and disrupt their lives even though we would be gracious and empathetic. I mean, mom could be there nine years. And while it might be great, it might be even better to plan earlier and pay for that policy for mom and or dad. Do you see that?
Bryan Herdt (01:02:43):
Yes. Not nearly as often as I would like, but that is certainly a strategy. Obviously, as an insurance guy, we can set the insurance up, the insured, and then we could change the payers and the policy owner. And we could do some really unique things with that. And yes, give the kids all the ability to share in that just to make that a little bit easier.
Bryan Herdt (01:03:10):
So by all means, yes. But I can't say we see that every day. We don't see that as often, but I do think that... I think we're going to start seeing more and more of that as time goes. I mean, this industry has been talking about what's coming right now. I mean, you talk about the thousand... Listen, baby boomers, Medicare. We were like 2009. It's Yahoo time. 11,000 people a day turning 65. Well, that was in 2009. What's happening now? 11,000 people a day turning 80.
Matt Feret (01:03:51):
Bryan Herdt (01:03:52):
Oops. And how many of them are going to need care? A lot. A lot. So I think you're onto something that needs to be marketed out there as a strategy to say, "Hey, kids, come together." And maybe you got one wealthy kid that's done really well. Could he be willing to fund a policy for mom? Sure. I think they would. I think if they knew that was an option, I think they would do it.
Matt Feret (01:04:18):
So who do I start talking to about this? I mean, if I'm 50 to 60 to 65, should I be going to my financial planner? Should I go find a financial planner if I don't have it? Should I be talking to my Medicare agent? Should I be talking to my life... Where do I start? Do I start going down various rabbit holes around the internet? How do I start? Because there seemed to be a zillion different options out there and policy writers. Where do I start? I obviously need a professional. I mean, that's my personal bias. I'm going to go to a pro to help me out. How do I identify one? How do I know who's a pro and who's not.
Bryan Herdt (01:05:01):
Yes. And that's difficult. There are some agencies, the American Association for Long-Term Care. Jesse Slome has a site that is pretty good and it has a locator on it. Of course, but not every agent is part of Jesse Slome's program, but he's done a really good job of trying to get that message out over the last... Man, Jesse's had that out for maybe 15 years. But start with your financial planner. And I can say that because we probably have, "Oh, maybe 20, 25 financial planning groups, just basically in our sphere, in the Arizona market."
Bryan Herdt (01:05:39):
When their clients bring up long-term care planning, they just call Bryan. So that may not be directly with me. I'm affiliated with an organization called LTCPG, Long-Term Care Producers Group. And Long-Term Care Producers Group is an association of, literally, and I mean this Matt, some of the top minds in long-term care from all over the country.
Bryan Herdt (01:06:06):
So ltcpg.com. Anybody can go there. You can go onto that site. These are long-term care brokers. These are the best of the best of the best. And many of these agents, I either... Some I recruited, some I field trained. Some I worked alongside. Some I just flat admired because they are just phenomenal at what they do. And many of them only do long-term care planning. So I would be happy if somebody is not in one of the states that I help. I would be happy to connect somebody to a broker that I know would give them the answers that they... And answer their questions respectfully and make sure they were going down the right path.
Matt Feret (01:06:54):
What kind of homework do I have to do before reaching out? Do I have to fill anything out? Should I at least familiarize myself by tooling around the internet and going down those rabbit holes or do I really just start with my financial planner? And if I don't have one start with a long-term care insurance professional and say, "I don't want to leave my estate at risk and just start from zero." Which way? Should I...
Bryan Herdt (01:07:31):
Yeah. I think that's the place to start. Another thing is that many credit unions have implemented insurance, senior insurance departments inside their credit unions. We work with a number of them. So go to your trusted resources. Go to your financial planner, go to your credit union. Maybe be, enough courage to ask around to your friends. "Hey, do you have long-term care insurance? Have you done this? Do you have somebody you worked with that you felt good about?" But going on the internet and finding somebody, oh man, I just don't know.
Bryan Herdt (01:08:11):
I mean, that's a roulette wheel. But you got to start somewhere. I would say, start with your trusted relationships, your banker, your credit union, your financial planner. Maybe even your P&C agent, if you've got a good relationship with your P&C agent. We do that too. We partner our P&C groups. They send over clients to say, "Yeah, long-term care car insurance? Yes. Long-term care insurance? No." But you should go do this. And so we're very grateful for those relationships.
Bryan Herdt (01:08:44):
We know that's very difficult for people and I don't really have an easy answer for you, Matt. I wish I did. I wish I could just tell you, "Yeah. I just have everybody go here." And like magic, they'll find somebody.
Matt Feret (01:08:57):
Well, it's the same with a lot of the different... I mean, it's all...
Bryan Herdt (01:09:00):
Matt Feret (01:09:02):
There's no single place to go to find the experts in a lot of fields, which is why shows like this, I'm very personally rewarded to have a show like this, where I can interview someone like you that's been doing this forever. And not only then the states in which then... How do I say that right? Who's been doing this forever, not just in the states you operate in, but also you have this incredible network of people literally throughout the country and scattered over all the counties in America of how to find long-term care insurance and all the options that are available to them. What questions or topics did I not ask or get into that I should have?
Bryan Herdt (01:09:46):
Yeah. I mean, there's always going to be a small question about VA. There's also questions about, "What happens if I've got some money, I could reallocate some money, but I've already got a chronic progressive condition? So I've got the money to do it, I just don't have the health." And then there's people that have health and they've got very little money. Right? [inaudible 01:10:11]
Matt Feret (01:10:11):
So go with that one, Bryan. Go with that, first one.
Bryan Herdt (01:10:14):
Matt Feret (01:10:14):
"I got a little money. I know I need long-term care insurance, but I can't qualify for any of it. What do I do?"
Bryan Herdt (01:10:19):
Yeah. So there are some income products out there that really have very unique writers. They're going to be fixed annuity products in most cases. Not all. Some of them, they can be tied to the S&P and they've got some investment strategies in them. But they're really an income product that allows an enhanced writer for long-term care planning. So what they do is they say, "Okay, when you get to the point where you start drawing distributions out of it," you can take your 10% right away. And they'll allow you to take 20% after year two. But what happens is if you become ADL dependent, what they will do is they'll increase your distribution that you would normally get by 25%, for five years.
Bryan Herdt (01:11:18):
So what'll happen is, "Yeah, I'm still self-insured. Is this going to look as good as MoneyGuard or Brighthouse or CareMatters with Mutual?" No, but it's going to give you a leverage of money that's available that will enhance the payout. It'll put your money to work and enhance the money that's available to you when you're in a long-term care event. And all that money comes to you tax free. So these are strategies we're educating our financial planner partners about this going, "Hey, there are a couple of other tools in the toolbox out there that you probably need to be aware of."
Bryan Herdt (01:11:59):
So these plans are coming up. They're coming out more and more. There's a big company that spun off of Genworth that is called... They're income annuities and they're being sold literally in assisted living facilities. They're going into assisted living facilities. You're like, "Well, wait a minute, Bryan. What? These people are already in care." Yes, they are. And they're self-insuring that, but are they in jeopardy of running out of their direct assets under management if they're there too long?
Bryan Herdt (01:12:35):
So this product is available for people that have the assets to self-insure for a while, but it allows them to stretch that money out so that money will pay out a longer duration in order for them to stay in the care and not have to go on Medicaid.
Matt Feret (01:12:51):
So the message is, even if you're sick or have a chronic condition that you think may exclude you from some sort of long-term care coverage, think again?
Bryan Herdt (01:13:00):
That is exactly the message that should be out there. Now, can we help every single one of those? No. But there might be a solution for people that don't think there's a solution for them. More than likely there's going to be something out there. Now, is it going to be the most dynamic product in the world? Well, it's not, but it's better than just paying dollar for dollar for your care hoping for the best. And if I'm wrong, ending up on the state system? That's just not acceptable. Not in my mind. And we need to make sure people really have the understanding of what tools are available to them regardless of their health, regardless of their age. You should ask. You should ask.
Matt Feret (01:13:47):
Second to last question. You mentioned it, veterans and VA. Specifically a nice, about 15% of the overall retired population. How does long-term care insurance planning play in for veterans?
Bryan Herdt (01:14:01):
Yes. So they need to look into aid and attendance. There are benefits available for veterans that they may not have to show service related disability, because that's the big thing. Are you a veteran? Are you retired military? Were you disabled in war? Was it wartime injury? What percentage of disability do you have? That is a whole nother department of long-term care. Not quite as I think a lot of veterans think there might be more there than there really is, but they certainly should ask.
Bryan Herdt (01:14:42):
A lot of them just don't know how to ask the right questions. So I have a partner with that. We don't do that directly. We have a tremendous partnership here and they're all over the country where we can connect somebody with a VA connected service that will say, "Okay, who are you? When did you serve? What's your health like? What are you eligible for? Here's what we can provide." But aid and attendance is basically a veteran's benefit that's available that will provide intermittent home care for veterans. And many of them don't even know that it's available.
Bryan Herdt (01:15:16):
So it's really sad. They all should have a hundred times more benefits than they have. That's my opinion. And I think it's the opinion the most. But unfortunately, it's kind of a convoluted message, but they don't really know where to go to ask and they should ask because there are the benefits out there for them, many of them aren't aware of.
Matt Feret (01:15:40):
There are benefits out there, but it sounds like there are still gaps and benefits, or-
Bryan Herdt (01:15:43):
Matt Feret (01:15:43):
... if not gaps in knowledge, gaps in benefits. So it's still worthwhile for a veteran with any level of benefit to talk to somebody about long-term care. True?
Bryan Herdt (01:15:54):
Absolutely. Absolutely. Yep, absolutely. They just need to know where to go, get the right answers. And sometimes when they get the answers, they go, "I've got the money. I'm in good health. I don't want to take away money that's available for another veteran that might need it." I mean, you're talking about the most noble people on the planet and they'll go, "Nope, let's build my own. I probably could get access to the VA, Bryan, but I don't want to impede on what benefits might be available to somebody else. So I'll just go ahead and self-insure. I'll just go ahead and take responsibility for myself."
Bryan Herdt (01:16:27):
Those people, they need hugs, man. That's a phenomenal human being. But that's who we're dealing with. So they just need to be able to find the answers, and that's what we found. That's a whole nother segment of products that we just feel it's better to have a professional doing that rather than us.
Matt Feret (01:16:48):
You've been very generous with your time. And to your point, I think multiple times we could spend hours, plural on this. We might just have to do it again. Until that time, tell everybody where can we find you on the internet? Where can we find you? How can we find out more? How do we get in touch with you?
Bryan Herdt (01:17:07):
Thank you, Matt. Very easy. www.innovativebrokerpartners.com is our website. You can go on there. You'll see our phone number. I'll give you the number here, 602-710-2211. That does ring directly to my desk. Feel free to call that number. Okay? But the website-
Matt Feret (01:17:27):
Really? Are you sure you want me to publish that?
Bryan Herdt (01:17:28):
Yeah, that's okay. And you can see on the website, you'll be able to see where the long-term care planning is proactive and reactive planning for long-term care. Two different things. And we hit on both of those today. And then what do I do with my life insurance and how do I transition from 90 days prior to retirement? What questions should I be asking about my insurances? Are they all portable? Do I need to get rid of them? Do I just drop them? I mean, what do I need to salvage? And what do I do?
Bryan Herdt (01:17:59):
So all that is on our site. And then my email is on there. Feel free to reach out. You'll come right to us and we'll be happy to respond and take care of you.
Matt Feret (01:18:10):
Bryan, thank you so much for your time today. This was great.
Bryan Herdt (01:18:13):
Yeah, this has been fun, Matt.
Matt Feret (01:18:16):
I can't thank Bryan Herdt enough. Great stuff. You can contact Bryan at innovativebrokerpartners.com. Check out the show notes and websites discussed during the show at themattferetshow.com. And of course, please subscribe to the podcast on your podcast platform of choice. I'd also really appreciate it if you'd subscribe to The Matt Feret Show YouTube channel, which you can get to through themattferetshow.com or by searching for it on YouTube. Until next time to your wealth, wisdom and wellness, I'm Matt Feret and thanks for tuning in
Matt Feret (01:18:53):
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Matt Feret (01:19:23):
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Matt Feret (01:19:53):
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Matt Feret is the host of The Matt Feret Show, which focuses on the health, wealth and wellness of retirees, people over fifty-five and caregivers helping loved ones. He’s also the author of the book series, Prepare for Medicare – The Insider’s Guide to Buying Medicare Insurance.
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