Long Term Care Insurance – Indexed Universal Life

Are you prepared for your future? In this interview, Brian interviews Grace Harrington about long term care insurance, which, you guessed it, helps aging people pay for long term care when the time comes that it is needed. Grace also introduces listeners to Indexed Universal Life Insurance, a fairly new insurance product that can be used in a variety of ways. Listen below to learn more!

Brian: Hi. I’m Brian Spitz, president of Big State Home Buyers. We’re Houston’s top rated company for buying houses quickly. We help homeowners sell their properties in 30 days or less. We pay cash. Standard closing costs. Help solve title problems and related issues.

What we also like to do is help our clients by introducing them to related professionals, like Grace Harrington, who can help them with related topics. And so one of the things we’re covering today is long term care insurance, but specifically, something that’s new out there, a product that’s getting a lot of attention, called IUL. Indexed Universal Life Insurance.

And so that’s kind of a hybrid of some different options for policies, so I wanted to have you talk to us a little bit about that.

Grace: Okay. I’d be happy to. Thanks for having me.

Brian: Sure.

Definition of Indexed Universal Life (0:01:20.3)

Grace: Indexed Universal Life. A fairly new product but they’re doing some really amazing things with it. So you can use an Indexed Universal Life product and you can pay premiums on it like you do an IRA. And use it as an accumulation vehicle.

Brian: Okay.

Grace: Which is pretty amazing. You know about how annuities work and the stock market. It’s all the growth but none of the risk of a mutual fund. Very, very interesting.

And also, you can have IULs that have what’s called Living Benefits.

Brian: Okay.

Grace: And if you have a Living Benefit-type policy, you can have it provide long term care. You can have it do critical illness. You can have it pay for disability income over time.

Brian: And you set all that up front.

Grace: Yeah, you set all that up front. So it just depends. I’m a big proponent of having layered approaches to protection. You know, long term care is my specialty. So what I look for with people is, okay, do you have accumulation covered. If you need growth on your retirement, let’s look at a better way to do that. It’s tax free. It’s not tax deferred. You pay your tax up front and when you get your benefits, they are tax free.

Brian: Okay.

Grace: So it’s a great way to help people kind of become their own bank and use their own cash. So the people who want to be independent and don’t want the government messing in their money, IUL is a great product to look at.

Plus, there’s living benefits. So that’s the problem a lot of people have. Or not the problem but the concern they have is if they buy a long term care plan, that they don’t need long term care. And nobody wants long term care. Where does that money go? It gets lost.

Brian: It’s lost. Right.

Grace: Just like if you have homeowners insurance and your house never burns down. You know, you don’t want your house to burn down. You don’t want long term care. So it’s a hybrid. It’s a new thing. It’s getting a lot of attention these days.

Who Has Long-Term Care Insurance (0:03:15.9)

Brian: What percentage of people out there do you think have long term care insurance?

Grace: Not nearly enough. Probably, I think the latest was 8 to 10%.

Brian: Wow. And you said something, I don’t know if it was a solid figure, but 70% of people are likely to need it?

Grace: 70% of people over the age of 65 are going to need some type of long term care. Not you. Not her. Not me. But those people. Everyone else.

Brian: Right. Everyone else.

Grace: (laughter) In my family, I’ve seen a lot of people needing long term care. And it’s just been devastating. So having a plan, you know, options.

What Happens Without Long Term Care Insurance? (0:03:52.5)

Brian: And so long term care, in general, without the insurance is devastating, like you said previously, emotionally. But tell us what happens financially when somebody doesn’t have long term care insurance and they’re at the point where they can’t care for themselves in the home anymore, because Big State steps in and sees a lot of families like that. They call us and they sell the home or the asset or whatever they need to do to help facilitate that long term care, but that only goes so far because it’s extraordinarily expensive. So what happens if you don’t have it?

Grace: So if you don’t have it, you’d better be hopeful that your kids like you. Because there’s a good chance you’re going to have to burden your family if you don’t have insurance.

You’re going to have to drain all of your income. It can be very expensive. The average assisted living in Houston is around $4,000 a month.

Brian: Wow.

Grace: A nursing home is even more expensive. Now, keep in mind, 80% of the people that get long term get it at home or in an assisted living. Nursing homes are kind of the way of the past.

Brian: Okay.

Grace: If you end up going on Medicaid, that’s your path. So.

Brian: So it’s not the best path.

Grace: Well, you know, no one wants, I don’t really know many people who want to burden the government or want to burden their families. But if that’s what happens, there is a safety net for you. You may or may not be close to your family. You know don’t.

When Should You Buy Long Term Care Insurance? (0:05:12.3)

Brian: Right. When is it too late to buy long term care insurance?

Grace: Once you’re unhealthy. So people come to me all the time and say my health is really good. Okay. What’s your blood pressure? Oh, it’s sky-rocketed. Oh. Diabetes? Yeah, I had a leg amputated. Oh. But they’re otherwise in perfect health. I say, well, you’re uninsurable.

I’ve had three heart attacks but I feel great. Hmm. Yeah.

Brian: Good day to buy insurance.

Grace: So, yeah. If you missed the window on buying long term care insurance, you can still protect yourself. There’s even an annuity out there that you don’t have to health-qualify for at all and it has a long term care benefit. But you’ve got to have money. So.

Brian: Okay.

Options for People Without Money (0:05:48.5)

Alison: What are the options for people who maybe don’t have that much money and they have surpassed that window? What are their options, if any, for long term care?

Grace: For the health window?

Alison: Yeah, like for someone who hasn’t saved a lot and their income isn’t a lot and they have some health problems. Do they have any option for financing?

Grace: There are options out there to help them get home care. I promote an organization who helps people. You buy an annual membership and you get quite a few hours of care. So it can be, like discount services.

Brian: So  you have a huge array of solutions for people.

Grace: Yeah.

Brian: And the best way to reach you is at, what is your website again?

Grace: LTC4Texas.com. You can also spell “four.”

Brian: LTC4Texas.com. Which is long term care for Texas .com. All right. Excellent. Well, thank you very much for the information. It was great to have you hear today.

Grace: You’re welcome. Thank you.

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