A topic that is almost universally overlooked by most advisors is that of asset protection. In fact, most don’t really understand the term when it is first used.
What is asset protection?
A simple definition of asset protection is protecting your wealth from anyone or anything that can take your money. The following is a partial list of creditors who can take your money and need to be protected against:
- Negligence lawsuits (plaintiffs)
- Taxes (income, capital gains, estate)
- Downturns in the stock market (see the last two crashes of -46 percent and -59 percent)
- Long-term care (LTC) costs
For this brief blog, the focus is on long-term care. I know a lot of advisors don’t deal with LTC insurance
, but this blog might get you thinking about doing so for the next few weeks.
Did you know that 69 percent of people turning 65 years of age will need long-term care at some time before they die? Did you know that the average monthly cost for nursing home care is $6,665?
The costs of LTC can devastate a family’s wealth and it should be protected against.
Planning with a deadline
Most advisors do not know that Guardian and Met Life pulled out of the LTC business recently. No one is sure if this is a short-term or long-term pull-out. That doesn’t leave many companies still selling traditional LTC insurance policies.
There is one company that is still in the market that is going to raise their rates for applications turned in after August 24th.
When I say raise rates, I am talking about the fact that the company is changing the way it deals with credits, discounts and underwriting
, items that are routinely used to drive down premium costs. Think of it as a backhanded way to raise rates.
24 applications in two weeks
I have an advisor I work with who has taken in 24 LTC applications in the last few weeks. Once he found out about the rate increase, it was his excuse to contact old clients and just about anyone else he knew that is a candidate to buy LTC insurance. He also contacted anyone who could refer him people who are candidates for LTC insurance. That’s pretty powerful.
What should you do with this information?
If you work with an LTC broker, you should contact the broker to verify this information and to get help marketing yourself over the next few weeks.