Chris does it again in a long interview on the Mary Jane Poppoff Show. Mary and Chris talk about how Life Insurance can benefit you before you die.
Chris recently went on the Mary Jane Poppoff Show and had an interview filled with information about Life Care Funding. Mary Popp asked some great questions which covered everything from state legislation to funeral coverage. A topic in the interview was about funeral benefits. With a Long Term Care Benefit plan, money is set aside for future funeral expenses to help the family. The Poppoff interview had no advertisement breaks and questions were answered quickly and descriptively. Check out the interview below!
The Mary Jane Poppoff Show
And now it’s time to pop off with Mary Jane Pop
Mary: And welcome to the show, HI Mary Jane Pop and we’ve got a lot to talk about on the show today. Hang in there with me, yea I’m telling you right now we’ve got some things that you need to know about. Well you’re not going to leave yet because we’re going to talk about life insurance, do you need it? How much do you need? And can life insurance actually help you before you die? … What? I think I’ve got insurance that’s after I die, well according to Chris… former industry lobbyist, life insurance can actually help you with home care assisted living and other home expenses. Now Chris has created the conversion model that’s endorsed in a Texas law passed last month. He is CEO of life care funding. Nice to have you with us Chris!
Chris: Well it’s great to be here Mary Jane, thanks for having me on board
Mary: Ok, now tell me about this Texas law because I don’t trust a whole lot that happens in Texas
Chris: Well you know what it’s interesting because California has actually introduced the very same thing and it’s under consideration in your state.
Chris: Texas took a look at and a number of other states like California, a couple of other examples, Florida, New York, New Jersey, states all over the country have been looking at this same thing and that is this. People who own life insurance policies, particularly seniors, don’t realize that it is an asset that they control and that they can actually convert while they’re alive into a benefit that will help them pay for any form of long term care that they would like to choose. So unlike somebody who goes on to Medicaid and has to go to whatever community, nursing home, form of care that the state dictates to them, when somebody takes their life insurance which is their asset and converts it into a long term care benefit, they’re then known as what’s private pay. They can choose the form of care that they want whether it’s home care, assisted living, a nursing home, what have you. So Texas and all of these other states started looking at the fact that all of these seniors didn’t know that they were throwing away life insurance policies that they instead could have been using to help them pay for care and delay having to go on Medicaid. Texas said, you know what we’re going to pass a law that says our Medicaid department needs to inform everybody in the state that if they have a life insurance policy before they would either lapse or surrender it, they could look at converting it, use that then to stay private pay and delay having to go on to Medicaid. It’s a big win for the consumer because they’re choosing the form of care that they want and it’s a big win for the states because they’re saving taxpayer dollars by delaying people going on to Medicaid unnecessarily.
Mary: Ok so if they convert, they have to, it’s under a conversion to an FDIC protected senior care benefit plan, now explain to me what that means.
Chris: That’s right when they convert their policy in essence they’re trading it in. They’re taking the death benefit and they’re trading it in for a lesser amount today, the value of that policy today while they’re alive. That money is then going to be put into this irrevocable FDIC insured account which then on a monthly basis makes the payments directly to their care provider. So this way, you’re taking the policy and instead of throwing it away you’re getting the most value you can get for it, the money is then being protected, and then you know as a family that it’s only being used to pay for care to keep your loved one as long as possible getting the best home care assisted living or whatever it is that they’ve chosen to receive.
Mary: Ok, say a person, let’s just do a round figure, 100000 dollar life insurance. How much is that going to convert into that senior care benefit plan? How much do I lose?
Chris: Great question and that actually ironically is sort of the average sized of policies that we tend to see around the country. This really is something that helps the middle class. People with policies that have maybe have a 50000 100000, 200000 of death benefit. And the average range that a 100000 policy as your example would see is a low of maybe 20% of its value to a high of 60% or better. It really depends each case is different on the policy, what kind of premium payments are going to have to continue to be paid after they convert the policy because once the policy owner converts it, it’s no longer an asset in their name, they’re no longer responsible for the premiums, they’ve traded it in for the funded benefit account and it can be a pretty significant number particularly compared to letting a policy lapse to get nothing in return, or maybe taking a small amount of cash surrender value, you know 5000 dollars or something.
Mary: Now, if they do this transfer, this conversion, and say it’s even 60000 dollars which is like the high end, because you said it could be 20 to 60000 dollar when they convert it correct
Chris: Yes, correct
Mary: Let’s say its 60000 dollars, be honest with me, you know I had a mother that I had to you know have care for and I had her in a … care home and then obviously in a convalescent center. I mean those places cost 4-5000 dollars a month, that 600000’s not going to go very far.
Chris:You know the average cost of assisted living in the country today across the whole country is about 3500 dollars a month,
Chris: And that is a lot of money. Now, 60000 though could potentially last somebody, 2-3 years depending on how much of that they’re using every month. Some of the families that will use this kind of an option, options time what they’re faced with is a short fall in being able to cover the monthly expense. There might be 2000 out of 3000 they need every month, so they use a program like this to make up the gap with the additional 1000 or 15000 dollars, and in that way it could last them 4 or 5 years.
Mary: Ok, if they do they have to cash in the whole life insurance?
Chris: Yes they’re trading in the policy they’re making the trade of the death benefit in the future to get the full value that they can get today to pay for care.
Mary: Ok well say, give me, I’ll give you an example. Say I’ve got 200000 dollars and I say well can I convert 100000 and leave the other 100000 as the regular life insurance? Or no that’s not possible.
Chris: The way it works is you’re trading in the full policy…
Mary: It has to be the full policy
Chris: Yea, and quite frankly the families that we work with whether it’s a 50000 dollar policy or a 300000 policy and we’ve seen policies as high as 500000. As you said the cost of care can be expensive and people want the best. You know and so…
Mary: Well for 3500 dollars a month you’re not getting the best.
Chris: No, as I said that’s the national average. There are people that we work with that are looking for 5 6000 a month, there are people who are looking for a couple 1000 a month because they have some of the money and they want to make up the gap. Every situation’s different, but what we see consistently across the country is one way or another, families are struggling with how to pay for care. They’re struggling first with even understanding the differences between the types of care…
Mary: Oh Believe me…
Chris: And what Medicare covers
Chris: What Medicaid covers, that kind of stuff
Mary: Been there done that so I understand, I know what you’re talking about
Mary: So what if the person cashes it in and they’ve got this 60000 dollars and like you said they could last 2 or 3 years depending on where their care is, and all of a sudden they die in 2 months, so where does that money go?
Chris: Well it would be very rare that somebody would die so quickly after doing it, because there’s a very careful healthcare analysis that goes into determining what the healthcare needs are, but the entire amount that they are getting in the benefit in that account is going to go to them, so if they did it and were to die after a relatively short period of time, all the money that was in that benefit account is going to go straight to the family and on top of that, every account has a funeral benefit portion that’s preserved for every family. So if on the other hand they lived through and spent down the entire account, number one, they would then be able to go over on to Medicaid, seamlessly transition into Medicaid and that’s a big part of all that legislative activity in Texas and California is doing. Making sure that people know that they can do this and by doing it this way, it’s a Medicaid qualified spend down. And always making sure that there’s a funeral benefit preserved for every family so that there’s something there at the end to help the family with funeral expenses.
Mary: Are there any limits, any … to that that says no you can use it for this that and the other?
Chris: No, not really. In fact number one, every type of life insurance policy will qualify, so whether it’s term life, universal life, whole life, group life, any form of life insurance will qualify for conversion, and then there are no limitations, unlike say long term care insurance can be very restrictive as to exactly how much it will reimburse per day, what form of care it will or won’t cover. Or if you’re Medicaid it’s very restrictive as to where you can go, what level of care you receive. If you go into a nursing home you’re going to end up sharing a room with somebody you’ve never met before. But if you’re private pay, there’s no restrictions, so you can choose home care, assisted living, memory care, nursing care, you could get home care while being in an assisted living facility. There are no limitations to how you can use this form of a benefit to cover any form of care that the person chooses.
Mary: Ok, I like that, here’s the other thing too. And we’ve talked about reverse mortgages and what they can do for a person in their whole, but people have to be very careful. You have to ask a lot of questions, like what happens if I end up you know going to a nursing home for maybe a year and then I don’t need to use it all and I can go back and live in my own home and not have to have the care. Is that all going to stay in position for me so I can use it later on again?
Chris: Absolutely, in fact when people use this they can actually, from one month to the next, let’s say somebody was in homecare for 6 months and they were taking 2000 dollars a month towards homecare, and then they needed to make a move to assisted living because their care needs were getting more severe. And now it was going to go from 2000 to 4000 and they were going to move from a homecare company to an assisted living community, all they have to do is submit a benefit change and that very next month they can change the amount and where it’s going. If they decide that they don’t need it for a little while they can freeze the benefit for a short time and while they’re making a move to something else. So it’s very flexible and it’s portable as a benefit for anybody who uses it.
Mary: Well I’m glad, because the reason I ask that, and I know you understand this, on reverse mortgages, people don’t realize that if they leave their home and they go to convalescence care, under some, not all reverse mortgages do this, but there are some that say well if you’re in convalescent care or out of the home for a certain period of time, you can’t go back.
Chris: Well that’s right and those kind of restrictions aren’t the case with using a life insurance policy, because one this is not a loan. Nobody has to pay anything back, there’s no interest, there’s no fees, this is purely converting an asset that somebody owns, putting it into a protected account and directing that account to pay for your care. Now they money can’t be used for anything but care. You couldn’t take that money as say well I’m going to get my care on a world cruise for 6 months while I go around the world that’s not…
Mary: I can get a prescription for that, no I’m just kidding
Chris: Unfortunately this benefit wouldn’t be able to pay for that, but this, again protects the money and makes sure it’s being used in a way that care is being provided for and you’re not endangering somebody from being disqualified for Medicaid disability in the future.
Mary: Now, what, question, you say I can get 20 to 60, that’s 20 to 60% of the value, the face value of the insurance. Why not just sell the policy and maybe you can get up to 70%. Why a restricted benefit plan.
Chris: Well for a couple of reasons. One, they’re, certainly if somebody decided they wanted to just seek to sell a life insurance policy on what’s known as the secondary market, they can do that. But it’s a different type of transaction than what we’re doing, what we’re talking about here. The average amount that somebody would get in that kind of a transaction tends to be smaller than what they would get in this conversion transaction. And if you took a lump sum like that, there’s no guarantee that that money’s going to be protected. It could, it goes to a family and then it’s up to that family to be responsible stewards o that money for their loved one, and they risk for future Medicaid eligibility is real because if that money is not used correctly while they’re inside that mandatory look back period for Medicaid eligibility, it could end up coming back to haunt them as a disqualifying factor. When the money is converted and put into the account, it’s protected, it’s a getting a maximum value, the highest possible value out there in the market that anybody could get for life insurance policies in this process. The money’s protected and there’s no worries about Medicaid eligibility in the future.
Mary: Now, what’s, compare this for me. What about a person that says look, I’m just going to put the money in a long term account and get some good percentage on it, and some long term accounts you can get up to 6% even today. Which I know is a shock. But it’s possible. So why not do that?
Chris: Well, the people that are using this program are using it because they have an immediate need for care. The families that our company Life Care Funding works with every day are calling us because a nursing home, an assisted living community, a home healthcare company has referred them to us, or maybe they heard about us online, or read about us somewhere. And typically they have an immediate need for care. Many of the families are already in an assisted living community or getting home care but they’re running out of money. Or they’re coming up short and if it weren’t for the fact that they were coming up short they’d be getting care today. Somebody who would call our company or look to do this kind of a program that’s thinking I’m going to need long term care in 5 or 10 years. This wouldn’t be the right option for them.
Mary: Ok, so, why is it, well I think I know the answer to this, but I’ll ask you because you’re the expert. So why didn’t the life insurance companies let us know this? I mean they’ve kept that a secret for a long time!
Chris: Well there you go, there’s the trillion dollar question…
Mary: No I think I know the answer…
Chris: Yea yea, and the answer is…
Mary: I don’t want them to opt out…
Chris: Insurance companies have been profit for years from the fact that seniors don’t know about this, so seniors have been dumping policies after paying premiums for years, even decades. We talk to families who have been paying premiums for 20 or 30 years on a life insurance policy and they get into the last years of their life looking at long term care and they’re dumping the policies. They’re just saying you know what, we’re just going to stop paying the premiums or there’s a few 1000 dollars of cash value, we’ll just take that because it just doesn’t make sense to carry this policy anymore, it could end up counting against us for Medicaid eligibility. It’s part of our assets, so let’s just dump this thing. Then they find out wait a minute. No one told us, but we’re now starting to learn, that we all along had the right to convert this into something to pay for long term care. When that happens, that does eat into the insurance companies profits, they don’t like that. But they know it is the legal property ownership right of every policy owner in America to do this and they can’t stop them from doing it. It’s simply a matter of people just don’t know.
Mary: Why even have life insurance to begin with if you can put it in an account and let it accrue there?
Chris: Well you know this actually for I think some of the life insurance industry, and let me be clear life insurance agents, agents and advisors are very much in favor of this. They see the good that this does for families and the use of the assets that they bought years ago. But when you buy a life insurance policy at a young age, younger age, you’re getting the benefit of that death benefit protection for a young family. And life insurance is one of the most efficient and important financial vehicles available in this country. The fact that you can pay a relatively small amount of monthly premium for a guaranteed death benefit if something were to happen to you is an incredible financial tool for families. But as they age and get older and then the kids that they bought that policy to protect are now grown up and on and doing their own thing and you’re sitting here with a life insurance policy you bought 20-25 years ago. There’s a new value to it that people just didn’t know about. It’s that hidden value of converting it to pay for long term care. So you buy a policy when you’re younger for a relatively smaller amount of money, your family’s protected in case something happens to you and then as you get older, you’re protecting your family again because now you’re converting it into something that will help pay for long term care and take the financial pressure off of your children your siblings your love one. And so that life insurance policy even at the end of life converted continues to still provide that value of protecting your family with financial protection.
Mary: Now just to review though again, when you say life insurance, you said that term insurance is in there, universal life insurance, all those are all covered in this?
Chris: Every form of life insurance qualifies to be converted into a long term care benefit like this.
Mary: Oh ok, that’s good to know, because otherwise you feel like well I’m not quite sure what it is, and to be honest with you, you know we’re not experts in this field, we’re out there floundering, trying to figure out what’s going to work and what doesn’t work.
Chris: Oh absolutely, you know there’s 2 places where we find people to be really struggling for good information. 1 is about life insurance and things like this that they have these rights and that these options are available to them. The other one is planning for long term care. People have a hard time telling the difference between assisted living and a nursing home and Medicare and Medicaid, and long term care insurance, and all these different things. People just don’t know even what they don’t know. And they’re unprepared for the future, and they don’t realize how expensive as we were talking about this can be. The more you can plan and use financial vehicles like this to help you and your family handle those burdens as they come, the better off you’re going to be, and the better off everybody in this country is going to be.
Mary: Out of curiosity, because obviously with long term care insurance, you can age out. And, what is it, over 74 it’s like very very difficult to get any long term care insurance, that’s what I’ve heard
Chris: That’s right, you’re very right about that
Mary: Ok, is there any age out here? I mean you can still opt out and convert your life insurance at any age?
Chris: Any age, any age, whether you’re in your 40s or in your 90s. We’ve worked with families and policy owners that are between that age range, it all depends on their need for care. It’s not about age, it’s about what kind of long term care do you need. What kind of life insurance policy do you own that you can convert to help pay for it.
Mary: Ok, now how, what’s the process of going through this? Who do you contact? I mean can we do that in California? You’re in Texas you can do it already!
Chris: Well actually you know what we’re not based in Texas, we’re based in New England, but we’re a national company, we work in every state. We work with assisted living communities Home health care companies, nursing home companies; all across the United States, insurance agents, and elder law attorneys come to us with clients to help them with this process. You can do this in California, you can do this in Texas, and you can do this in all 50 states. Again the reason that those laws are starting to be introduced it’s not about people being able to do this, it’s about informing people that they already can do this, and they just don’t know it. Now our company, we’ve been in business since 2007, we’re a pretty well known national company particularly in the long term care and financial planning areas. LifeCareFunding.com is an easy website to get to. We put a lot of good information on there, we have a very highly trafficked blog a lot of people go to to read information about senior care issues, financial issues. But I always tell people too, do your homework, make sure you’re well informed, go online do some googling. Look up things like convert life insurance to pay for long term care, assisted living. Read the information that’s out there. Look at us, look at other companies, and make a good decision about this is an option to help you with your needs to pay for long term care, but the number one thing we encourage everybody. Don’t just dump a life insurance policy before you look into its hidden value to pay for long term care.
Mary: Ok, two things brings up in my mind, number one, what do we need a law to get the information… if it’s available to us now, you know by doing the kind of thing that we’re doing right now is getting the information out.
Chris: Well you know why, and why these states have been introducing this, it’s a couple of reasons. They said you know what we have a huge burden on our taxpayers, and I mean California has a huge burden when it comes to the taxpayers paying for Medicaid and long term care services in your state. And the lawmakers, policy makers said all of these people potentially that have life insurance could use it to help pay for care. They could make their own decision on where they want to get their care as a private pay patient and instead they’re throwing these policies in the trash because nobody knows. The states have taken it up as their fiduciary responsibility to their citizens to inform them that this is something that can help them because if they don’t, as we talked about, the life insurance companies aren’t going to do it. And then that leaves it up to, I mean compared to the life insurance industry, we’re just a tiny little company out there trying to tell this story.
Mary: Ok only 30 seconds left here, but how long do I have to have that life insurance policy before I can do this?
Chris: You want to have it, have owned it for at least 2 years to be beyond the contestability period. An insurance company wouldn’t challenge you wanting to change the ownership.
Mary: Ok, that sounds good. Now you said they can get more information at…
Mary: LifeCareFunding.com. Ok, listen, we’re always open to any possibilities because man it’s getting more expensive to just survive. Not live, but just survive out there.
Chris: Absolutely, anything we can do to help when it comes to long term care, that’s what we’re here to do.
Mary: Well Chris thank you so much for taking the time to be with us today
Chris: It was great to be on, thank you very much
Mary: You bet
Chris: Alright, bye bye
Mary: That’s Chris Orestis, O R E S T I S, former industry lobbyist, now he’s the CEO of Life Care Funding, and you can go to lifecarefunding.com for more information. They also have a blog there so you can get a lot of good information. Options on Pop Off, that’s what we try and do. And as always on Pop Off we try and give you the best and the brightest. In the meantime, live Simply, Laugh Often, Love Deeply. And above all else, you dare to dream. Talk with you next time, right here on Pop Off.