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Old 06-09-2008, 12:57 PM
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How do I explain the need for Long Term Care to my clients?

Dear Taxguru,

I need your help to "explain the need for Long Term Care to my clients", can you please provide some guidance in this area, specifically, how do I go about helping my clients understand the need for Long Term Care?

For your information my clients net worth is somewhere between $250,000 and $1.6million.

Thanks a lot!



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Old 06-10-2008, 07:26 AM
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Well, you should start by discussing the widely known facts about Long Term Care needs in the US. The facts are that "after Age 65, Americans have more than a 65% chance of needing some form of Long Term care".

Well, what does this all mean? The implication of the above statement is that the cost of long term care is extremely high, and typically averaging over between $195-235 per day in a nursing facility, depending on which state you reisde in. This translates into is an annual expenditure that could cost anywhere from $70,000 to over $85,000 per year!

Who needs long term care?
Your clients net worth ranging from $250k to $1.6m represents a group of the population that could potentially benefit from purchasing long term care insurance. The reason is that most people who assets fall below $100,000 would get free assistance from Government after exhausting their assets, and those with assets in excess of $2m would be able to fund their own long term care at a nursing facility.

Whereas, the clients whose net worth mirrors your clients net worth have a lot of assets that would be potentially at risk and just from a pure risk protection it is worth purchasing this insurance looking at the cost-benefit ratio. It makes sense from a pure insurance point of view to protecting these assets of your clients.

What is the best strategy to pursue
Clearly, the best policy is to advise your clients to get at least 3 quotes from highly rated insurance companies. Also, if you provide this policy, please provide a policy that best customises the needs for your clients.

What are the basic types of long term care
There are several types of coverage options to choose that you can discuss with your clients and these are as follows:
  1. long term care at home.
  2. long term care at assisted living.
  3. long term carenursing facilities.

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