#16 - Long-Term Care w/ Roger Cantu

Roger Cantu, of OneAmerica, brings his 36 years of long-term care (LTC) industry experience to the show. We discuss:- What long-term care actually is- How likely you are to need it and for how long- How you can plan for LTC- What medicare covers (and what it doesn't)- The different types of LTC insurance policies- How the LTC insurance landscape has changed- Where and how to begin evaluating LTC insurance

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SPEAKER_03 0:00

Let's get started. Hey, everyone. This is Taylor. This episode is brought to you by Parthian, an AI-enhanced financial planning platform. Whether you're an advisor like myself or just a normal person trying to make the most of your money, Parthian can help. Parthian's goal is simple, to help you make better financial decisions quicker. And with Parthian's AI tools and planning methodology, this has never been easier. Parthian's advisor platform is the best financial planning software I've ever used, and their mobile app is the best personal finance app I've seen with the ability to track your net worth, spending, investments, and receive custom AI insights related to your spend Check it out today at Parthian.com. That's P-A-R-T-H-E-A-N.com. And if you're an advisor, tell them you heard about them on the Make the Most of Your Money podcast when you book your demo to get the best discount they offer. All right. Welcome back to the Make the Most of Your Money podcast. As always, you have Taylor and Colin. Colin, how are you? I'm good, Taylor. How are you? I'm good. Colin, you deal primarily with people planning for retirement, correct? Yeah, that's right. What is the biggest... unaddressed threat to most people's retirements that you see?

SPEAKER_00 1:33

Yeah, this one hits close to home, but it's, you know, thinking about a plan for long-term care. What if things don't go according to plan? And by long-term care, I don't just mean like, what if I end up in a nursing home, but like, you know, the whole spectrum of things that can happen in retirement that, you know, from a health perspective that, you know, you think you're going to live forever. You, you, want to live forever, and maybe there's something else in store for you. So long-term care, that's what you see

SPEAKER_03 2:05

as the biggest unaddressed. I would say the same, and this is all the way to segue to our guest today, the long-term care master himself, Mr. Roger Cantu. How are you, Roger? Thank you. That's a very kind introduction. I hope you'll live up to that. We just established before we pressed record that Roger's been doing this longer than I've been alive. So... true. I told you I was going to work that in here. So Roger, tell everybody a little bit about yourself, your background, your career. And as I always like to say, why the heck anybody should listen to you?

SPEAKER_01 2:38

Right. Well, first of all, appreciate the opportunity. Genuinely do. Anytime I have a chance to talk about long-term care and the importance of planning, it's vital because I started as, as Taylor had mentioned, in 1990, April of 1990. So coming up on 35 years. And despite 23 at the time I started the job, I had a great grandmother who needed care for 13 years due to Alzheimer's. And back then, they didn't even have a diagnosis. So I saw the financial and the familial impact of that event. And I just happened to start with a company that is innovating an approach to insurance for this, right? So I kind of looked at it as divine intervention, if you will. And I do look at my role now as much a job as it is a vocation. So grew up in Michigan, moved to Indianapolis for the company, worked there for six years, all with these long-term care solutions, then moved to Texas in 96. I'm in Plano, married. We have four grown children and now blessed with seven grandchildren and it's that expansion of the family right that that drives home the importance of this kind of planning even more because a lot of what we're going to talk about is financial but really it's the ripple effect on the family first with your spouse and then your kids and even into your grandkids of not having a plan and and how it can be disruptive to that family. So it is, I think I would echo your comments. The most overlooked part of retirement planning in the United States

SPEAKER_03 4:23

today. Yeah. Yeah.

SPEAKER_01 4:24

I

SPEAKER_03 4:25

definitely agree. I think all three of us have some personal connection to this topic. You mentioned your, you said grandmother, right? Great grandmother. Great grandmother. Yeah. So my, both of them, I watched both of my grandmothers in the last five years, one had long-term care, both needed care. One had some protection. The other didn't wildly different experiences. My, my, my great grandmother as well. So my dad's grandmother was in for 17 years with Parkinson's. Um, and so it's just, it's, it's like one of these, like I am acutely aware of it and I'll maybe take for granted that like, obviously we got to address this, but part of why we're talking about this today is because it's not widely addressed. I think, um, and maybe we should start there because I think long-term care, it's a very ambiguous term itself. It has a lot of crossover with healthcare. So I think a lot of people think, well, I've got health insurance or Medicare that'll cover long-term care, but What is long-term care and why is it not the same as medical or healthcare?

SPEAKER_01 5:18

That is the fundamental question and a great place to start. And the best way to describe it is to talk about it in terms of what health insurance is for most retirees in the United States, and that is Medicare. There's Medicaid, there's Medicare. Medicare is designed for hospitalization, surgical, and medical expenses. That's it. And it expressly doesn't or very limited coverage for long-term care. So long-term care is any form of assistance due to a lost activity of daily living or really technically two lost activities of daily living that rob you of your independence, right? Be it a cognitive issue or a physical ailment. It even could be a fall. I heard Parkinson's, Alzheimer's is cognitive in nature. See, the challenge is with an event like a stroke, God forbid, where it leaves you incapacitated, if you're not getting better, the Medicare reimbursements stop for the hospital. So you're going to be discharged. It's that discharge and where it goes from there That that long term care is brought into the conversation. Right. So whatever repercussions from that event, right, then would have to be managed either in your home or a facility in a what I'll call chronic or status health facility. Yeah, I've heard

SPEAKER_03 6:58

you say that in the past where it's like, think about like medical care that where you're improving, rehabbing, getting better. That's kind of the domain of medical care, more traditional. But it's like, what if you plateaued and you still can't eat, bathe, dress, walk? Those are the six ADLs that I passed. If you can't do those things for a long-term period, for extended period, that's what's considered long-term care, like the care provided to help you in those areas. Those activities.

SPEAKER_01 7:28

That's it. And I mean, there's how many days that goes on for, you know, a lot of folks say if it's beyond 60 days, then it's really a long term situation. Anything prior to that is short term. Right. And Medicare, it's difficult to qualify for. It will cover roughly 20 days of that. But it's generally most states limited to just 20 days. There's a copayment of 80 days thereafter. Texas here is set up that way. And the bulk of the cost for it is going to be on you for those 80 days. So really, in most states, you're going to be less than a month of reimbursement through Medicare for that. And in some cases, you can't even qualify for that. Right. So what happens thereafter? because the costs for a long-term care event, I'm just quoting in Texas, but it's wide range tailored, but it's six to $9,000 a month. And it's a bill that as long as you're receiving care kind of never ends, right? So that's the financial bugaboo that a lot of retirees are going into, but it's, you know, how that affects the family, which is another can of worms, but I wanted to just further define what long-term care. No,

SPEAKER_03 8:49

that's really good. Colin, I would talk just like a planning perspective. Like, why do we think it's such a big, like, let's quantify it a little bit that the planning challenges of long-term care, why it is so important.

SPEAKER_00 9:00

Yeah. I mean, what, what makes planning for long-term care so difficult is, um, it's hard to get your head around the odds of needing it. It's one of those scenarios where there's a small or low, but not insignificant probability that you will need a significant amount of care. So it's one of those, it's a classic case for insurance where there's relatively low probability that you're gonna need a large amount of money. And we as humans just aren't good at getting our heads around those kinds of situations.

SPEAKER_03 9:45

Yeah, I think there's two parts to that. I think probably the statistics would show it's a very high probability of needing some level of care.

SPEAKER_00 9:51

True.

SPEAKER_03 9:53

And I would say just in general, I'm not super concerned about the one or two or three month long term care needs. especially the people we were listening to this probably can cover that maybe even a year, but it's that longer term one that could just blow up a plan that to me is so big because it also, it generally comes later in life when maybe you've depleted a chunk of assets and then your options get very, very limited. And so Roger, do you have any, I'm sure you do, but like stats on like tip average claim lengths and like, I know it varies for sure, depending on the type of care you're getting, but just what would you say?

SPEAKER_01 10:34

Colin's absolutely right. I mean, there's so many variables associated with this. Like for instance, I think one of the lowest costs in the US is in like Mississippi or Alabama. The highest cost is in Alaska. It's currently $153,000 a year to get care in Alaska. I mean, just, and you know, that's a huge range, right? So that's number one. And then within that, are you getting good care at home? Is it, you know, standby assistance or is it 24 hour care? I mean, that's a wide range as well. Let's talk through these stats and it's gonna get a little dry, but remember, This is all about trying to ward off risk and long-term care is a fairly substantial one. The odds, and this is historically after turning age 65 of needing long-term care in your lifetime are bumping up against 70%. It's like 68.8% of folks. So two out of three chance that you're going to need care, right? Of those that need care, roughly 20% of them need care longer than five years. So Colin's right. 80% of those that actually need care, it's less than five years. I would contend that five years at 7,000 a month is still a big bill that needs to be planned for, right? But truly the average is by gender, and these stats update quarterly, but For a male in the US, it's roughly 2.7 years. And for a female, 3.4 years. But a lot of those stats are built around facility care and don't factor in how long the family has cared for them at home. So the stays could be longer. The more egregious average is Alzheimer's. The average Alzheimer's stay is just shy of eight years. So you got an eight-year stay at, again, $7,000 a month right here in Texas. In other parts of the country, it could be closer to $10,000 a month. I'm sure on the coast, it's a lot more.

SPEAKER_00 12:52

It's that wide range that makes it so difficult to plan for. We're talking about... 30% chance that you, you don't need any 30% chance that you need, you know, some level of care that we can plan for, you know, whether it's a couple of years, you know, we could set, we could plan to set that aside. And then there's some, some small chance that you just need so much care that there's no way we could plan, you know, given just your assets to cover that or we'd be setting aside a whole lot to be able to cover that where it would impact your, you know, your living standard today.

SPEAKER_01 13:34

You make a great point there because, you know, it becomes economically challenging for a lot of folks to fully fund the cost of long-term care, right? Keeping up with inflation. Now, I work for a carrier that offers a lifetime benefit And very often folks are getting the lifetime benefit, but not accounting for the inflated cost or they're getting coverage that is best way I can describe it long and lean, meaning it's going to address a portion of that benefit for an unlimited period of time. Right. Whereas a shorter period, that keeps up with inflation. Sure, it'll cover a three or four year stay, but the bigger challenge is that closer to eight year due to Alzheimer's. So, and again, there's no easy answer. There's no perfect answer, but the key and I'll share reasons why is that something's better than nothing. It's the old saying.

SPEAKER_03 14:35

Yeah. Yeah, let's talk about some of the planning options now because we had a previous guest who said everybody needs to do long-term care planning. Everybody has a long-term care plan. Whether insurance is a part of it or not is kind of the part two. So with anything, you can always self-fund against long-term care. And that's like – I would say – some amount of money needs to be earmarked set aside accounted for to be available for long-term care because those numbers are just too significant i mean 70 of some level of care that could be the three-month thing or but like still 20 of those people who need it for five years like that's not a small amount like that and so like there needs to be some level of money set aside i'm talking more like to call on as the planner here that like $100,000, $200,000 or something earmarked, okay, this is going to become long-term care. So you can always do that, but then you're left with a little bit of the unknown of, okay, if the market's really bad or if I live too long, there's going to be a level of unknown. So what people do with the unknown, that's where insurance comes in, right? And we say the words long-term care insurance, a lot of people, if they've if they're 50, 60 years old, probably heard some pretty bad horror stories. Maybe they've got a parent who had a pretty bad experience. I've heard you talk a little bit about this before. But the good news is there's another option, which is where you kind of live, and it's these hybrid policies. So focusing on the insurance piece, first, what would you like to say about the traditional long-term care space?

SPEAKER_01 16:06

If I can, let's go with where the majority have their plan. Okay. And the majority have their plan in self-funding, self-paying for long-term care. And I'll caution anyone listening to not use the word self-insuring because the very definition of insurance is shifting risk from yourself elsewhere. So it's kind of an oxymoron to say self-insurance, but you're going to self-pay and that's either by choice or default where most people are, right? Because if you haven't set an asset aside for care, You've set all of your assets aside for care. There's one way to look at it. That's well said. So in the bigger problem, and I know I keep bringing this back up, but self-funding really throws your family into a tumultuous

SPEAKER_02 16:56

situation.

SPEAKER_01 16:58

I mean, I have four children. I can already see them getting slotted in a different socioeconomic strata in life, right? And without a plan that, of course, I and my wife have, the decision-making for one end of that spectrum would be, we got to make mom and dad's money stretch the best we can. And at the other end, they're like, whoa, whoa, whoa, wait a minute. That's my inheritance we're talking about here, right? Do they really need to go to that nice place and cost that? And then resentment happens. And that's just an outcropping of self-funding that a lot of folks don't really think about. But here's, if I could drill it down to the dollars and cents of it, You might be preparing for retirement and being asked from your advisor what kind of lifestyle you want and what you feel comfortable in having for retirement. And let's just say it's $120,000 a year that they can guarantee and everything's groovy. You're going to retirement and that can happen. The problem, in the blink of an eye... you go from needing $120,000 a year to needing $200,000 every year, every year, because another $80,000 now is needed to offset long-term care expenses that you hadn't planned for. How long would that work before the wife starts... I say wife, the healthy spouse starts changing their lifestyle to accommodate that, right? And when I say change, I don't mean increase. I mean, they start reducing their lifestyle and then... All of a sudden, you're dealing with two horror stories now, a loved one that you maybe spent a lifetime with, infirmed, and then your own lifestyle being chipped away at financially, and then that's when the kids generally get swooped in to try to help, and then the apple cart gets tipped over. Financially, here's what long-term care insurance is. It's creating the resources needed to pay someone else to do the things you don't want your wife and children to have to do is one way it was described to me, right? And these are skilled people to provide that care, right? So your quality of life is maintained. But outside of the financial and the familial, it's just... you don't realize it until you have it, but it's the peace of mind, right? Leading up to retirement that you've got all your boxes checked that you can't put a price tag on.

SPEAKER_00 19:33

Yeah. I mean, it's so important to talk about just long-term care within the context of the overall financial plan. Um, because like you said, um, When that unknown is out there, if you say you've decided to self-fund, which is a viable strategy for some folks, but there's always going to be that unknown that you have to set aside for. You may not feel like you can spend what your financial advisor is telling you you can spend, or you may not feel... I don't know what I'm trying to say, but, but, you know, there, there's that, that fear of the unknown can both lead to people either underspending what they otherwise could, or it can lead them to be, you know, really exposed to, to this, you know, a long, long-term.

SPEAKER_03 20:37

Knowing you have, like, if you, if you have like a good long-term care plan and whether it involves insurance, it's almost like a permission slip to go ahead and spend, because without it, you're, waiting kind of always, should we, what if, what if without knowing that that, is that what you're trying to say?

SPEAKER_00 20:51

Yeah, I think, I think that's right. And then there's also like the, the family side of things. Um, when, when, And speaking about this more personally, having grandparents who are in a long-term care nursing home facility and a mother who's experiencing cognitive decline and looking at that being potentially on the horizon, there is a burden on the family to try to figure out, okay, when do we start get bringing in help. Um, or we know that this is coming on the, on the horizon. Um, and it's going to be a big, a big bill. And so there's pressure on the family to, to step in and provide those services that they may not be the best person to, to provide. Um, especially when it's a spouse and you're now being, you know, the spouse and the nurse and the, right. The maid and the cook and the, you know, you, you're now doing all of these other roles. Um, How about

SPEAKER_01 21:55

the environment you're in when you have to make those tough calls and decisions? I mean, long-term care is a very emotional ordeal. That's some of the worst time to make financial plans is when you're emotionally torn, right? Over not just the care, but the rest of the other spouse's lifestyle and their retirement. It is... challenging to say, not just financially, but familially, because the ripple effect of this can be mitigated, not eliminated, because emotions are always gonna be there, but mitigated to the family. Like just as an example, if you had the resources to pay for care, you're less apt to call your kids in from out of state to help out, right? What are you doing then? You're giving them the second to last gift you're ever going to give your kids. And that is the freedom to keep living their lives. Otherwise, that's in jeopardy. By the way, the last gift is, you know, death benefit for life insurance.

SPEAKER_03 23:04

That was probably the biggest difference between talking to my two grandparents, grandmothers. For one, my dad went to see her and spend time with his mom. My mom took care of her mom. And when she was done with that, she went home to rest to go back. So it was just like very different because one, the care was taken care of the other one, they were part of it. And then she went into a facility and it, you know, depleted things and it is what it is. But yeah, that, that is like the, the, the, there was a, I think it was a nationwide piece, like who cares for the caregiver type of thing. Like it's just such an under overlooked thing. And actually I, I, I deal with, A lot with like 30 to 50 year olds. So we're it's not so much my clients that are dealing with this, but their parents are starting to. And for some of my clients who have the means, we've started looking at purchasing long term care on the parents just out of their own self-interest going. Yeah, I can't take that much time off. My parents live in North Carolina and I just can't go out there to do this. And so that's an interesting opportunity. And I want to. maybe talk, not firm numbers, but this is one, Colin and I, neither of us sell insurance directly. So this is as objective as we can be. I fully believe in some of these hybrid long-term care policies. And even in the math, I just think is great on it. So I would like to dig into these a little bit more. First, just establish traditional long-term care. The challenges of that what the industry has done in response and then let's get into the the hybrid policy so um do you want to i'm sure you've had that conversation a time or

SPEAKER_01 24:40

two oh sure so really mid to late 70s the first long-term care insurance or nursing home 1970s okay yeah okay yeah and very limited right but but but they are and continue to be for many years and indemnification against a risk. They are like homeowners insurance or car insurance where you pay a premium that if a traffic mishap or whatever happens, it will pay a benefit, a stated benefit. And that was the case with long-term care insurance. Challenge was they didn't really base the pricing on anything more than health insurance and life insurance. It's all really, they had maybe disability insurance. And as such, the numbers were, if you will, kind of thrown at the wall, right? They didn't really have a lot to go on. Now, those indemnity policies are guaranteed renewables. So this is a premium you paid, you pay, you pay, you pay. If the experience on that isn't strong enough, just like with a homeowner's insurance policy, what happens? Your premiums go up. And that was the case with traditional long-term care. It didn't happen for many years, but as those blocks of business, and the interest rates continue to decline throughout the 80s and 90s, you ended up having, quote unquote, bad blocks of business. Right. So as a result, traditional has whittled down to a select group of them. And that's a plan that people should look at if it's an affordability issue, meaning you can't afford to go any greater than that style of contract. So that's a traditional. Plan. That's like

SPEAKER_03 26:21

term life, like it's use it or lose it. You just pay, you pay a premium, but this time and what has happened and why there's kind of a bad rap is like your premium day one can be literally like four times or more higher over the course of the contract. Is that right? Sadly, that has happened. Well, I've seen it firsthand, people coming in with policies. And that's where a lot of the bad rap is. And then people can no longer afford it. And then they drop their care right about the age they're about to need it. And so that's traditional. There's some challenges there.

SPEAKER_01 26:52

So we have self-funding. We have traditional, which is truly an insurance solution, but with some... know variables there increasing premiums and you know the perception of use it or lose it if you use it it's great but if you don't then the premiums you paid into it are lost another option that i've seen as of late are chronic illness writers that are on life insurance so if you're buying life insurance you're buying a a writer on top of that and it's often called a not long-term care but chronic illness rider reason for that is i don't want to get too tax cody here but those are 101g policies and they cannot be marketed this is the naic and the department of insurance dictating that they cannot be marketed as long-term care insurance because the long piece kind of goes out the window most of those policies only pay for four years right they're only on individuals so they have to be buying separate policies And I'm sure you guys have heard the expression, you cannot serve two masters, right? Kind of Eastern philosophy. Well, if you're buying life insurance and the long-term care is kind of the kicker, but you bought the life insurance to make sure your grandkids get through medical school, yet you use up your death benefit in a long-term care event, It doesn't do both. They're mutually exclusive, right? And the odds are that a long-term care event will gobble up that death benefit, leading to what we call the hybrid, and you've referred to it, Taylor, as a hybrid long-term care plan. It's also called a combo plan or a linked-based. We call it asset-based long-term care. And essentially, it is a life policy and or an annuity that is liquid for long term care, much like that chronic illness rider. The difference is because it has extended benefits beyond the death benefit up to lifetime coverage, it can be marketed and it's sold as a long term care solution and it can even be done for a couple

SPEAKER_03 29:01

together.

UNKNOWN 29:02

Yeah.

SPEAKER_03 29:03

There's a lot that you just said right there. Like in theory could have a lifetime benefit for two people on the same policy. Correct.

SPEAKER_01 29:13

And then on top of it, if care is never needed, most folks who are listening, they're not thinking they're going to need care. Nobody ever does. Even though seven out of 10 will, right? They don't think it's going to happen to them. Well, but if that's the case on this hybrid-based chassis, You're basically addressing the extremes. One extreme is that you need care for 13 years, like my great-grandmother, and it'll get paid. The other extreme is you don't, and you get promoted to glory, as I like to think. And there's a death benefit going to your heirs. Now, does it match your premium? That depends on your age. Sometimes it's in excess of the premium.

SPEAKER_03 29:55

Yeah. Yeah. So I would say to like simplify it, there's the, the, I think what the term would you all say is like the live, die, quit. You're going to get your money back at some money back out of the policy. If you, if you live, meaning need long-term care, if you die, there's a death benefit. And if you quit, there's a surrender value there. And the, you know, there's different. So it addresses a couple of concerns. The issue with self-funding is the great unknown of like, Oh my gosh, what if, what if, what if, okay, now we know there's a policy.

UNKNOWN 30:22

Yeah.

SPEAKER_03 30:23

Traditional long-term care at least has a lower initial premium typically, but there's, I don't really want to pay for this. And what if I spend all this money and I die? Hybrid long-term care addresses that. Additionally, the hybrid premiums, are they not guaranteed generally? Yeah. They currently

SPEAKER_01 30:42

are guaranteed. The other appeal of it is you're there. So again, for listeners, I apologize. There's guaranteed renewable contracts and there's non-cancelable contracts. Guaranteed renewable gives the insurance company the ability to raise rates. I know that's weird. Guaranteed renewable sounds positive. Non-cancelable sounds negative. That's the good one. That means they can't raise your rates. And that's the case with the hybrid solution.

SPEAKER_03 31:08

Okay. So, so this is where I was saying, I've just become a big fan because like, again, like, The optimal plan you can only know in hindsight, whether you should have self-funded or not. And that's just, we can never know those things. But what I love about the hybrid policies is the optionality it provides. You have to set aside some, a good financial plan, set some money aside one way or another for long-term care. This is all that's doing. It's setting aside some money and it's creating a bigger pool of money that's available. If you need long-term care, it's an even bigger pool. If you die, there's that pool of money. And if you change your mind, you're going to get some level of that money back. And I just think from a planning perspective, that just changes all those boxes of, okay, we've got protection. We didn't waste the money, which I know there's a, there's a trap that, that thinking can be abused sometimes. But you, yeah. And if you, yeah, you're, so you've got plant, you've got protection. You can change your mind if you really, really need to. And you didn't, you're going to get your money back one way or another. So I just, I'm a big fan.

SPEAKER_01 32:09

Well, the other piece of it, the other piece of it too, is, you know, And I'm a little snarky when I say this, but it's a way to make a point. There are a lot of policies that get sold, including ours, where it's only covering a portion of the benefit. As I said, the more popular is the unlimited benefit, but without any inflation. So by the time you need it, it may only address half of the cost.

SPEAKER_02 32:34

I

SPEAKER_01 32:35

have yet to, and this is my snarky comment, I have yet to hear from our Claims Department, 35 years. No one has ever sent a check back to the company because it wasn't enough. You know what I mean? If it's covering half the bill, guess what? It's covering half the bill. You don't have to pay $12,000 because you have six offsetting it. And the money is always – we always find a way to use those dollars.

SPEAKER_03 33:00

I think that's one of the biggest mistakes people make is they go, okay, long-term care costs today are $7,000. It's projected to be $12,000. That means we need a $12,000 benefit and it's going to cost you – $90,000 a year in premium. No, you don't need that. This is where a good plan can look at and go, okay, what is the amount that we can't afford? We can protect against that. For some people, they can insure against 100% of the risk, but you don't always need to. And I think you've used the line, underinsured is better than uninsured, right? Yeah,

SPEAKER_01 33:28

that's it. I like that. If I burned down, would you rather be underinsured or uninsured? I'm taking underinsured all day.

SPEAKER_03 33:35

No.

SPEAKER_01 33:36

So that's the

SPEAKER_00 33:37

case.

SPEAKER_03 33:38

Go ahead. No, no, no. I just love how it can soften the blow. Colin, are you going to

SPEAKER_00 33:42

– Yeah, I was just going to go back to like – whenever thinking about insurance, I go back to the fundamental like – that you're making when you buy insurance. The best use case for insurance is to pay for the things that you otherwise cannot afford to pay for. And so that's the reason why like buying the insurance policy on the television at Best Buy, probably not a great Use of money. Could I afford to pay for a TV if it breaks? Sure. I won't be happy about it, but yeah, I can afford that. I don't need, I don't need insurance for that. You can't really use insurance. Insurance is not very good at paying for things that everybody needs or it's just very expensive. And for that, for that example, I mean, I think of like, What's a good example of that? I mean, you can't insure against... Yeah,

SPEAKER_03 34:43

if it's a high probability thing, the premium is going to be so expensive, it generally offsets the benefit. So this is...

SPEAKER_00 34:49

Yeah, exactly. If you're trying to insure against something that is very likely to happen, that insurance is going to be more expensive. So for example, think of like a whole life insurance policy. A whole life insurance policy is guaranteed to pay off when you die. And guess what? Your likelihood of dying is 100%. And so in order for an insurance company to be able to write that contract, they have got to make sure that your premiums on average are going to you know, plus the earnings on them add up to that death benefit, you know, that you are going, that the insurance company is going to have to pay out at some point. And so I think, you know, maybe I'm going off on a tangent here, but like philosophically, the issue I've had with long-term care insurance in which I think maybe the hybrid policies kind of address is that Long-term care is expensive and there's a high likelihood that you will need some amount of it. So that makes it expensive to provide insurance for. On the other hand, and I could plan for being the average person that needs the average amount of care. I can set that funding aside. What I can't plan for is that tail risk, that 10 years in memory care. And so what I want insurance to cover is that tail risk. As a planner, that's what I'm concerned about. You know, what's that tail risk?

SPEAKER_03 36:40

Right. Yeah. That's the risk. Go ahead.

SPEAKER_01 36:43

Well, I just, one of the things that, I often talk about our, and I started there, we went to the financial, I want to come back around to something that is often forgotten. And yes, I brought up the family, but let's look at the future. And within seven months, beginning of 2026, the baby boomers, 68 million people in the United States, started out with 74 after attrition, 68. So third largest segment of the population. That year, the oldest baby boomer is going to start to turn age 80. This is often referred to as the silver tsunami. And they're going to turn age 80 in roughly about 9,000 units a day. I hate to say units, but what does that mean? That means that people are aging into the point where they need care. Why? Because the average age for a male to need care in the U.S. is 80. So now we have this huge swath of individuals who have not planned needing care. And then the females age 81, 82 are going to be quickly behind. So we have a huge demand will in the future, short order, huge demand for long-term care, you know, services,

SPEAKER_02 37:57

right?

SPEAKER_01 37:58

The added benefit of having this contract beyond the financial, beyond the familial is it could buy you good quality long-term care in the future. What I mean by that is Colin, you're, you, you, in your area, you offer the best home healthcare services in the area and everyone knows it. And as demand goes up, you're going to have a waiting list, which is great for a business standpoint, right? But you also are a business owner and you have discretion on who you're going to allow as a customer. Now, guy in the front of the line says, I know you're expensive, but we're good for it. I got the money. And the 17th guy in the waiting list says, I got a policy that'll pay a lifetime benefit and you can get your payments directly from the insurance company for both me and my wife. Who are you going to take? I mean, you're going to number 17. I mean, if you're a smart businessman. So my point with bringing this up is the intangible benefit of having such a plan is the fact that as demand increases, it could be your golden ticket into getting quality long-term care versus whatever's left over.

SPEAKER_03 39:07

Yeah. Especially if the supply of care doesn't keep up with the pace of demand. Because I know in a lot of areas, that's a major problem right now is there's just not enough facilities for this, which is how you get $153,000 cost in Alaska and then Yeah. So that's an interesting perspective that just wouldn't show up on the spreadsheet, you know?

SPEAKER_01 39:26

Right. And in five to 10 years, that's what we're going to be talking

SPEAKER_03 39:30

about. Yeah. Yeah.

SPEAKER_01 39:31

I can't get good care. Well, if you had a policy, you might be able to.

SPEAKER_03 39:34

Yeah. Yeah. I think I thought when you were trying to say earlier, I think is like. Yeah, it's the long, long-term stay that could truly blow you up. And the way, if you're going to, I have done this, if you're going to spreadsheet, you know, try to buy insurance or self-fund, it comes down to, of course, you know, what does the self-funding strategy do from a return perspective, but when you need it and how long you need it for. And guess what? You can't know either of those things. And, you know, an average claim or an average case, it's going to be around a wash. That's generally kind of how they're priced, but it's the, what's your... protecting against is the long-term one. So back to why I like these policies so much is that if you have the long, long-term care case, you're protected. If you have the wash case, it's a wash. And if you have the other case, you're getting some money back one way or the other. Can we talk about a little bit more on the design of these different policies? Roger, you're at One America. I don't even know if we've mentioned your company's name here. There's a couple of other companies that offer these types of policies. For the listeners, what are the levers that the insurers can pull in designing policies, some things to look out for or to consider, whether it's elimination period, claims experience, indemnity versus reimbursement. Can you just walk through, if you were trying to say like, yeah, what should people be looking at and for?

SPEAKER_01 41:00

Well, first of all, what they're looking at, it needs to be a tax qualified long-term care insurance policy. The chronic illness riders, you know, I mean, they get close, but you're also sacrificing a potential death benefit for a needed purpose when you die. So there's a challenge there, but within the realm of either traditional or for that matter, The link-based or hybrid-based solutions, it's all that you've mentioned. Waiting period is basically your deductible. The time you frame, you have to wait before you receive benefits. Our company for home care is zero elimination periods. You're covered day one if you get care in your home. A facility, it's 90 days. And a lot of them are set up with either a zero, 60, or 90-day elimination period. Claims paying is a big deal nowadays because a lot of carriers... Not all of them. And we're not alone in how we go about it. There's other carriers who take all the claims in-house. But many do farm it out to a third party. Who am I calling if I go on claim? Well, you're calling XYZ company. Do they know what your coverage is? Are you able to talk to the same person every time? You're probably going into a phone bank and they're reading off maybe a manual. I don't want to discredit them, but by Taking the claims in-house, which we do, you're talking to someone who understands your policy and they're assigned that claim. We call it a claims concierge service. So the only person you're talking to is that assigned person. So there's no restarting the conversation. You can

SPEAKER_02 42:39

just

SPEAKER_01 42:40

pick it up where you left off and they really can advocate for you. That's the other benefit is how long have they been offering the plan? That's the other that you didn't mention is know it's 36 years lincoln for instance who also takes claims in-house like lincoln national they they have a 36-year history with it but there's a couple of johnny come lately's and ironically they do farm the claims out

SPEAKER_02 43:04

right

SPEAKER_01 43:05

so and then the third is funding you know how much variety do you have in funding the plan can you fund it on an annual premium monthly can you do a single premium and reposition that emergency money and then within that how How flexible are you? Can you use existing annuities? Can you use retirement accounts? If you have challenged health, can you pivot to a solution that's more simplified underwriting? I've described to you in that last run there how the One America plans operate. It's a portfolio of solutions that try to touch all the parts of the market. be it young who need an annual premium or older who need more simplified underwriting, there's going to be solutions for them. I didn't mean it to be a commercial about One America, but that is something to pretty much consider.

SPEAKER_03 43:56

Yeah, look, I mean, I'll put the commercial on. My grandmother had the One America policy and had that concierge special, whatever you just said, concierge claims. One person we talked to who understood, knew her name, knew the facility. It was incredible. But And yeah, when I was in the insurance space, we did quite a bit of One America. We helped a lot of people get policies there. And the funding flexibility is incredible. What you want to pay a lump sum, you can do that. You want to do a 10 pay, 20 pay. I don't know if like to 95. There's so many ways to chop it up. You can do a little bit of both. But I think the piece that probably most people aren't aware of, you mentioned using retirement dollars like IRAs. There is a way to do that. Can you say

SPEAKER_01 44:38

something about that? Well, the plan has actually been around since 1993, right? The plan came to market in 88, but the use of qualified funds developed about five years later. And admittedly, there wasn't much of a market for it because, I mean, at the time, the baby boomers, you know, they weren't even old enough to do such a thing. So it was geared toward the World War II generation, the great generation. Well, they had the pension and the gold watch. They didn't have an IRA or 401k. Baby boomers do. In fact, that's where many of them are going into retirement with the bulk of their wealth is IRA money. So the ability to use that money, have the taxation on that to fund the care spread out over 10 years and even have bonuses in place to be able to help offset some of those taxes. You can still attain coverage for a husband, a wife, even though it's one of the spouse's IRA, like the wife's IRA could be used to cover a plan for she and her husband get that lifetime benefit. Is it without taxation? Of course not. I mean, anyone knows we're dealing with the government. They're going to end up getting taxes out of it, period. But this is a way to address long-term care, spread the taxation out over 10 years, even have it count toward required minimum distribution, which we're all facing in the mid-70s. And then, of course, if care's not needed, have that death benefit. So I want to make sure that we close, and not that we're wrapping up, but that's just one way of going about it.

SPEAKER_02 46:18

The

SPEAKER_01 46:19

key with everyone listening is start now. And the reason I say that is the biggest issue I face is folks calling to want to get coverage that can't. They've reached a point where, you know, It's like, oh, we should probably address this. It's after a diagnosis that prevents them from getting it. And pickleball is not helping, guys. I'll do that when I'm old. Yeah,

SPEAKER_03 46:47

yeah. Go ahead. No, it's different. People are so used to thinking like, life insurance and what's going to like, what you could pick up all the, like increases your chances of needing long-term care. Cause you can bust a knee and not be able to walk anymore. So, um, but even like the, the time is now, that's not just a sales trick, right? I mean, it's like, it's just, it just gets more and more expensive. And, um, Colin and I were texting about this last night. My wife is 35 and wants to buy a long-term care policy today. I think that's the extreme end. But what is a nice age to start thinking about long-term care? I think 50. I know that seems crazy, but the pricing is pretty decent there. What would you say? First

SPEAKER_01 47:30

of all, I don't think people really will give it much credence. five years or more than five years before they retire. So they plan to retire at age 60. To have them look at it at 52, it might be a stretch, right? So I do think that they need, and advisors who are listening, need to talk to their clients five years prior to retirement and deep five years into their retirement. Continue to bring the conversation up because things change. But you should start exploring long-term care coverage at 50. right at 50 and that gives you enough runway to make some kind of decision on it and fit it into your plan as you approach retirement and that way you're ensuring the good quality health you need and by the way listeners you don't have to be you know jack lelang you know who i'm talking about they you don't have to be in incredible health but you have to be in such health that you're not a mortality or a morbidity risk. And that means your life expectancy is shorter or your need for care is sooner. It's one of those two. So the sooner you do that, the better. And as Taylor just mentioned, the younger you are, the less the premium. So it's affordable. As you age, you get in the trap of health and wealth kind of not being there for you.

UNKNOWN 48:59

Yeah.

SPEAKER_00 49:00

Yeah, and this has been so helpful for me just as an advisor to understand what these options are and to... Yeah, I mean, start the conversation younger. Maybe it's not time for me to start shopping for a policy, but just understand and know that these are considerations that I need to address. One way or another, we're going to address them. And it's a complicated space. I mean, given all the levers we were just talking about, and you really do, even as like a financial advisor yourself, I can't read a long-term care contract and be qualified to talk about all the ins and outs of it. I mean, I understand them conceptually. And an educated listener can, too, understand exactly how they're supposed to work. But when it comes to figuring out the... you know, the ins and outs and the right kind of policy for your situation. Even I, as an advisor, have to look to someone like you to help me navigate what, what is a complex contract.

SPEAKER_01 50:12

Well, it's interesting that you bring that up and I know we're in wrap up mode, Colin, but I've seen more and more advisors who are very successful also have set aside long-term care as a, as a, agenda item with their clients, but they have an event in their family, right? A parent or a loved one, and it's like, oh, this thing's real, but I can't fit it in with how I work, right? And I don't want to be an expert in that area. So I've seen more and more advisors, and this is fee-only investment advisors, You know, even those with an insurance license that want razor focus and the right thing for their client offload that responsibility to what I'll call a long term care specialist. And there are folks out there have insurance license and that all they do is long term care. And they the advisor feels comfortable in connecting their clients with them because they're going to be agnostic. They're going to present one American, all the other solutions that are out there. and get the right solution for them. And it avoids a lot of guesswork and learning curve for the advisor.

SPEAKER_03 51:21

What can somebody, do you have anybody in mind that you would think of or where people could find that

SPEAKER_01 51:26

specialist? They're all over the country. I just happen to work in a field and have been at it long enough where I have, you know, about a half a dozen folks that I know that this is their sole purpose, right? That this is what they do. So I, I could be a vehicle for connecting you to them. Remember I'm for the listener. I don't sell insurance. I have an insurance license, got a securities license, but my job is, is a wholesaler is to educate advisors on, on this kind of planning and specifically one America. So I would connect them to someone who works in that area exclusively.

SPEAKER_03 52:05

Okay.

SPEAKER_01 52:05

That's good.

SPEAKER_03 52:07

Yeah. Yeah. This is, we keep touching on wrapping up. I think just to summarize my thoughts, like, like, just long-term care is a very real threat like we said from the very top and whether you insure or not you need to have some level of plan for it to me the planning can get very simple with some of these hybrid policies a way to carve out some money and have that live die quit optionality um i would say like companies like one america you almost have no excuses like outside of a true health risk, like for funding, there's flexibility. You don't need perfect coverage, you know, a hundred percent coverage, but there's options to start chipping away of it. That's not lighting money on fire that you're never going to see again. Yeah. Obviously I'm a fan of One America, but there are others. Roger, you do a lot of education, your webinars. Are those available to the public? Are those just advisors that can listen to your webinars? Because

SPEAKER_01 52:56

of my role, it's just advisors, but I do them for advisors, meaning for their clients and any family members or friends of those clients. I've been part and I do it on a regular basis where I'm presenting the importance of long term care planning to the public. But again, with the advisor in tow and they're the ones who would do the follow up and so forth. But the web work that I do is really educating advisors on how these plans operate. And I do that. every other week.

SPEAKER_03 53:30

Okay. Yeah. Any other, do you, do you do much public facing stuff? Any like people want to find you just what's the best way to reach out? Like if somebody is listening to this, like I want to, I have a question for that guy. How could they find

SPEAKER_01 53:39

you? Well, probably the best way is just LinkedIn. I got a pretty uncommon name, C-A-N-T-U. It's Roger Cantu. And you're going to see it's either Plano, Texas under my or DFW. There's probably a couple others, but I'll look like I'm a professional. So look for me on LinkedIn. Send me a message or send me a connection request. But put a note in there. Say, hey, I have a question. I listen to the podcast. Yeah. I'll absolutely reach out and help the general public or advisors.

SPEAKER_03 54:10

Yeah, that's what I love about you and why we had you on. Colin, any last thoughts from you?

SPEAKER_00 54:15

No, just thank you so much for the time and sharing your expertise. This has been a really helpful conversation.

SPEAKER_03 54:23

Appreciate it, Roger. All right, Colin, see you next time. See you next time. Thank you for listening. If you would like to learn more about Colin, Taylor, or the show in general, head to makethemostofyourmoneypodcast.com. All opinions and entertainment purposes only. Nothing on the Make the Most of Your Money podcast should be considered advice. Always consult with your team of professionals before making any decisions regarding your finances.