EPISODE OVERVIEW:

Join Betty as she sits down with long-term care (LTC) insurance specialist Theresa Klewsaat to explore the critical realities of long-term care planning. From understanding rising costs to navigating insurance options, this conversation provides essential insights for anyone thinking about maintaining independence and dignity while aging. Theresa breaks down the complexities of LTC insurance, explaining policy features, underwriting processes, and timing considerations that can make all the difference in your family’s financial future.

TIME STAMPS:

[3:41] Evolution of LTC Insurance

• Traditional vs. hybrid policies
• Why hybrids are popular

[14:11] LTC Coverage

• How claims are triggered
• Implications of policies

[21:51] Planning for LTC Insurance 

• Best age to purchase insurance 
• Cost differences for policies

[36:00] Family Dynamics

• Impact of family dispersion 
• Planning for independence in aging

[38:12] Insurance Application Process

• The LTC insurance application
• The underwriting process

KEY TAKEAWAYS:

• Overview of long-term care (LTC) – Understand why long term care insurance is important as you age
• LTC Costs – Understand current LTC service costs and their trajectory, plus how these expenses can impact family wealth and dynamics
• Different insurance policies – Discover the details of traditional and hybrid insurance policies along with their features
• Wealth preservation for families – Learn how LTC policies protect family assets while reducing caregiver burden on loved ones.
• The underwriting process – Gain clarity on the application and approval process to improve your chances of securing coverage

GUEST INFO: 

Theresa Klewsaat, Long Term Care Insurance

• Website

RESOURCES:

• Join Betty in a free consultation call for your financial goals
• Subscribe to the Betty’s Smart Friends YouTube Channel
• Follow us on Instagram
• Visit my website for more info
• Follow us on LinkedIn

Betty Wang is an investment adviser representative of BW Financial LLC, a registered investment adviser registered in the State of Colorado. Registration does not imply a certain level of skill or training. The views and opinions expressed are as of the date of publication and are subject to change. The content is for informational or educational purposes only, and is not intended as individualized investment advice. This information should not be relied upon as the sole factor in an investment-making decision. You are encouraged to consult with a financial professional to address your specific needs and circumstances.

TRANSCRIPTION:

Betty Wang 00:00:06 Did you know that 70% of people who reach age 65 will need long term care services in Denver? The average in-home care costs about 42,000 a year for part time services, which is only four hours a day for five days. A private room and a nursing facility costs around $125,000 on average. So what does that mean for us? It means it’s highly likely that we will need long term care and that the care will be expensive. We all want to age with dignity and independence. So planning for long term care early is essential. Today we’re discussing what you need to know about long term care to make informed decisions for yourself. I’m Betty Wang, host of Betty Smart Friends. I’m a certified financial planner who helped women be more empowered and feel less alone in their financial lives. Joining us today is Teresa Cusack, a long term care insurance specialist. I reached out to Teresa after learning the importance of planning for long term care during my retirement income certified Professional studies. I found Teresa to be extremely knowledgeable and helpful.

Betty Wang 00:01:15 I’m so excited for her to share her expertise and insights with you. Please welcome Teresa to the podcast. Hi.

Theresa Klewsaat 00:01:22 Thank you Betty. Hi. Thank you for having me today and hello everyone. I hope you all enjoy this conversation and learn something at the end of the day.

Betty Wang 00:01:32 It’s such an important. Yeah, it’s such an important topic that after you and I talked, I wished, I thought, well, I wish everybody knew what was in your brain. And it’s just such good information. Maybe. Let’s start with you telling the listeners how you came to this, this profession and how you became so knowledgeable about this topic.

Theresa Klewsaat 00:01:56 So, my background, my education. I have a degree in finance, and I’ve always worked in some capacity in terms of insurance or through. I worked originally for Pershing Division of DLG on in Wall Street right after college. But as life progressed, my mother passed away and my father had dementia and the care fell on me. Finding a facility to help with him, I tried keeping him in my home and it wasn’t successful.

Theresa Klewsaat 00:02:25 He wasn’t safe. So luckily where I was living, I had a facility down the road for me and I first put him into assisted living. But the dementia started to spiral and he ended up in memory care. So going through that process, I found a gal that was great about long term care, and I just started working with her and asking questions. And then also my father was a veteran, so he was eligible for aid and attendance. A lot of people don’t realize that. Always look at your veteran benefits. So I started getting licensed and working in it, and now it is. I am licensed in life, but it is a major part of my everyday work. Is running LTC for clients all over. I’m licensed in all states, so I work with people all across the country.

Betty Wang 00:03:10 Yeah, that’s super helpful. Can you describe what the world of long term care is looking like now? It’s changed so much over time. And I think, you know, I know that when I came to you, I already had preconceived notions of what I thought long term care was.

Betty Wang 00:03:25 So I’d love it to to hear from you what you’ve seen and what you’ve experienced.

Theresa Klewsaat 00:03:32 So the original policies were always traditional based, meaning reimbursement. Use it or lose it. You had a monthly or a daily benefit, a benefit period and a Cola, and you paid your premium every year until you either went on claim, which is when the premium is waived, when you’re on claim or you passed away. So we often and I hate this word, but we often would say you would either use it or lose it, because if you passed away without using the policy, the pre all that premium you’ve paid in just becomes profit for the company. So LTC started to get a little bit of a bad name because of that. People said it’s not worth it. Not only that those types of plans can be eligible for rate increase. They’re not premium guaranteed. So if the insurer if the company goes to the insurance commissioner of the state you reside in and demonstrates to them why they need to raise rates and it’s approved and it can be multiple rate increases, not necessarily one.

Theresa Klewsaat 00:04:35 You’re looking at increased rates at a time when you’re on a fixed income, and you may not be able to afford the policy anymore. So sometimes people would drop the policy, which, you know, that’s a big loss as instead of, you know, modifying it, modifying the benefit. And then and then you’re getting you’re whittling down all the benefit you’ve paid in for all these years. So about what was five, seven years ago became the birth of the hybrid. And so hybrid policies are a long term care insurance policy, married to a small life insurance policy. And the way they work is if you go on claim you’re going to use your death benefit up. It’s usually about a two year benefit. Once that’s gone, you go into the LTC pool. So you’re either going to get the money that you paid for the policy. And by the way, these are premium guaranteed plans. So there’s no rate increase. Most of them are cash indemnity. So you’re not submitting invoices for reimbursement okay.

Theresa Klewsaat 00:05:46 So if you pass without using the policy a death benefit is paid to your beneficiaries. But if you go on claim, then you’re going to use that death benefit for your care. Plus, the LTC pool that’s been growing due to compounding. So either way, you get your investment back either in death benefit or in claim. And in the case of a nationwide policy and and and a few other, there is one other policy that does this. If you use everything up in the policy, there is a guaranteed minimum death benefit. Nationwide has a 20% return of the death benefit as a residual death benefit. And New York Life does it 10%. So the hybrid market has really changed the dynamics of LTC. It’s in my opinion, it’s strengthened it because people when you talk to someone and and someone who’s savvy about investments, they say, well, what is what is my return of premium? I’m paying all this money in and I’m not I may not get anything back. and under the old plans. That’s correct.

Theresa Klewsaat 00:06:54 And I still sell those old plans because they are less expensive than the hybrid. So it’s a tradeoff cost versus security. And I feel peace of mind is worth something. So if you can afford the hybrid, I try to tell people, look, this is the better plan of care for you.

Betty Wang 00:07:14 Let’s talk about a few of those pieces of really good information. Right. The hybrid. Because, you know, one of the fears from the general public is that, okay, what you said I’m going to pay all this money. They’re going to keep increasing my premiums. Right? Correct. And you’re saying that with a hybrid that’s not the case. Is that still the case with a traditional long term care policies?

Theresa Klewsaat 00:07:36 Yes. And they are going to increase. The pricing is going to reset. And as inflation creeps up we are going to see the cost of traditional plans. Those rate increases are going to occur more frequently and for a higher rate. I when I quote a traditional plan to someone you know as a sales person.

Theresa Klewsaat 00:08:00 Some people may say, oh, this is a great option. I come right out and tell people, look, you’re going to get a rate increase and it may be more than one. But that’s the trade off of the lower premium. And and just to give you an idea in terms of let’s talk a little bit about cost of care. So in the Denver area from and Genworth has a great cost of care calculator out there. So homemaker services from 2022 to 2024. They went up 5%. Assisted living went up 9%. Now private room for a nursing is like what you said $125,000. So when I looked at the cost of, let’s say, the cost of waiting or the cost of care 20 years from now, so 20 years from now, we’re going to look at homemaker services, going from 91,000 today to 165,000, two, 95 and 20 years. Assisted living is going to go from 60,000 a year to 108,000. And a private room is going to go from 125,000 to 226,000. Now you can imagine what 30 years is going to look like.

Theresa Klewsaat 00:09:18 So for someone I’m working with now who’s 50, most people go unclaimed between around if you’re in good health. 85. Okay. So if I’m selling a policy now at 50 and they’re, you know, you want 30 years of compounding in 30 years, you’re looking at a homemaker cost of being around 222,000 a year. Assisted living is 145,000. And I’m going to come back to that. That’s interesting. A private nursing home room is 303,000 a year. That’s 25,000 a month. So someone may come to me and go, well, why is assisted living so much cheaper than private home care? And I said, well, I’ve never come across anyone that says, I can’t wait to get into assisted living or a nursing home. Everybody wants to stay in their home. And I understand that I would be the same way. So it’s supply and demand. If you have more people wanting to be in their home, well, the cost of home care is going to rise. And I want to mention something.

Theresa Klewsaat 00:10:26 By 2030, all boomers I’m included on the tail end will be over, will be over the 65 mark. Okay, we are estimating around 27 million people by 2050 that are going to need some form of LTC 27 million people. And on the tail end of that, I was born in 1964. That is a lot of people needing care across our country. And remember, that’s just an estimate. I read another estimate where they thought they might be looking at 40 million people needing some form of care, whether home all the way up to facility. Now, I was reading an algorithm that said what we’re seeing is four months of home care, 22 months of assisted living, and maybe one year of skilled nursing. So I ran a simulated cost. Okay, so if that’s the case today four months home, 22 assisted live one year skilled nursing, you’re looking at $266,463 to pay for care. In 20 years. That’s going to jump to 392,588. And in 30 years, it’s going to be 4925.

Theresa Klewsaat 00:11:46 I think those are conservative estimates. I really do. I think you’re going to be looking at cost of care, getting closer to 8 to $900,000. If someone ends up with dementia, you could be looking at 12 years of care, which would put you well into the millions. So it’s really important in LTC. And you and I had this discussion about this, that a policy is designed to hedge against your loss, a hedge against your savings. It’s not designed to cover an entire LTC event. So we are looking to buy time. An LTC plan is to buy time to get to work with you and to get a plan in place. What happens next? You know, am I going to run out of savings? How much longer will this last? What type of care am I going to need? So the idea is to create a plan and to hedge. That’s the whole point of these policies, not to cover your entire LTC expense.

Betty Wang 00:12:52 Well, I think that’s a common misconception as well.

Betty Wang 00:12:56 Right? Or something that was previously thought that, okay, long term care is going to cover everything. I want to go back to a couple of terms that you use that maybe the layperson isn’t familiar with. I know that I wasn’t aware of. Could you talk a little bit more about homemaker services? Because that is when people hear long term care insurance, they think, you’re putting me in a home that’s a home. But right like that is that is where I go to die, right? but that’s not really the case of what long term care covers anymore. Now it’s much more popular to have these homemaker services. And what does that entail?

Theresa Klewsaat 00:13:36 So the quote I was giving you was really, 44 hours of someone coming in and providing care 44 hours a week. Basically, homemaker services can be. So let me back up for a second. Let’s talk about what triggers a claim. The activities of daily living people are going to hear the acronym ADL. Okay. ADL is eating, bathing, dressing, toileting, transferring, continence, walking, if to be a little bit more explicit.

Theresa Klewsaat 00:14:10 And then I have I read recently taking medication med management okay. So and I if someone has a plan or they’re looking at a plan, you really need to read the outline of coverage which describes what would trigger a claim. Usually it’s two out of those six ADLs or a cognitive impairment such as dementia or Alzheimer’s. Those will trigger a claim. What usually happens next is when you you go to your doctor, the doctor says yes. You can’t complete these ADLs. A letter is generated. You file a claim with your carrier. They either bring out a care coordinator. Sometimes it’s a social worker to evaluate you, to see what the plan of care is. Now, if you have a low level plan of care and even even moderate level of plan of care, a home health aide, depending on what they’re licensed to do, can come into your home and help you if you just need help bathing and getting dressed, that’s fine. Home health aide like a CNA could come in and assist you. If then you start to get into a higher level of care.

Theresa Klewsaat 00:15:20 Well, I can’t feed myself or I have a feeding tube. Then you’re going to need someone maybe with a little bit more level licensing and it would cost more. Obviously, the higher the level of professional care, the more it’s going to cost. I recently had a gentleman who had to have this vest, It’s, best put on him. He had developed severe mucus in his lungs, and he had twice a day. He has to have someone come in and put this vest on. It vibrates his chest to clear it out so he can breathe. So obviously, he has a specialist come in two times a day, but he’s still in his home. He’s still in his home getting his care. And as long as he can stay there, that works. It saves money. Nobody. Like I said, nobody’s rushing to go to a facility. Everybody wants to have their last days at home. So I hope that answers your question about home care.

Betty Wang 00:16:14 Yeah. Because again, I think this is for people like me who were just starting to see this happening with our parents or our friends parents.

Betty Wang 00:16:22 So we really don’t know about all these new things that have been coming out. Could you explain to the listeners the difference between cash indemnity and reimbursement?

Theresa Klewsaat 00:16:31 Yes, that’s a big thing. And I always make sure people understand that. So reimbursement means you pay the bill First you get an invoice for your care, and then you submit it to your insurance company, and they pay you back the funds that you’ve paid out for your care. Now you’re going to get paid back up to the limit of your policy. So if you got a bill for $8,000, but your policy only pays 5000, you’re only going to get a check for the 5000. I always try to make people understand you’re not going to get, you know, whatever bill you submit, you’re going to get up to your policy’s limit. A cash indemnity means once your claim is approved, they are going to turn on the payment and the money will flow into your account. And it’s up to you to decide how you want to pay for your care.

Theresa Klewsaat 00:17:20 There are no invoices, so there’s no reimbursement. No one is over your shoulder looking at, oh well, you know, you had this person come for this many hours. That’s not what it’s about. You manage your own care, or if you have a loved one or, you know, a confidant or partner. They help manage your care. So it is a very hands off approach to your LTC care.

Betty Wang 00:17:45 My understanding is that this is the preference for. Let’s say you wanted to pay a family member or a trusted friend to give you care. Is that correct? Correct.

Theresa Klewsaat 00:17:54 That is correct. Correct. As long as the level of care is not so high that you would need a licensed person to provide that. But yes, you can pay for your care any way you see fit, so no one wants to be dictated to. When they’re older. I have an 86 year old mother in law and she tells me how things are going to go. I she had a situation. I brought in caregivers.

Theresa Klewsaat 00:18:18 She fired everyone that came through the door. And I finally said, you know what? You’re on your own.

Theresa Klewsaat 00:18:24 On this one.

Theresa Klewsaat 00:18:25 I’m here. If you need me, pick. Call me. You know? But yes, nobody wants to be dictated. Who’s going to help me? They they get comfortable with somebody. That’s the person that they want to come in and have them take care of them.

Betty Wang 00:18:36 And I think that’s the freedom of this cash indemnity piece of it. Right? You get to choose. You get to I think that’s what it’s what I’d want. As I age. Right. I want to choose who I get to work with.

Theresa Klewsaat 00:18:49 It’s the flexibility. The flexibility being, yes, of not being dictated how your care is going to be given to you.

Betty Wang 00:18:56 How does that translate in terms of cost? Is that obviously then more expensive because you have more flexibility?

Theresa Klewsaat 00:19:01 Okay, yes. So hybrids are more expensive than traditional plans. And depending on what age you’re buying, this the plan matrix 5%, whatever benefit you’re looking for, they can be as high as 30 to 40% more than a traditional plan.

Theresa Klewsaat 00:19:19 It just depends where I’m looking to at the age of the person and the health of the person. Okay. If you can get your plan, the sweet spot is in your 50s to early 60s because people there at that age, I can come in at a low benefit with a 5% Cola, and I can grow that policy for 3035 years when I have someone coming in in their 60s. We have to sit down and say, okay, this is what the cost of the hybrid is versus a traditional plan, and let them sort of work with an advisor and see if this would be which I still people in their 60s buy them because they of all the reasons we just discussed, it’s just it may be a little bit more expensive than a traditional plan. Now, if someone comes into me and they’re in their later 60s, I do target a traditional plan and I will do to keep costs down. I will do a 20 year compounding Cola instead of a lifetime compounding cola. That helps bring in the cost a little bit.

Theresa Klewsaat 00:20:25 And that person knows going in, okay, I am going to get rate increases and I realize what’s going to happen, but I need to secure care for myself, so the earlier the better. Carve out funds for that, the earlier the better. We get a much more robust plan for a client than someone who’s waited in their 60s or maybe 70s to get a plan.

Betty Wang 00:20:50 When’s your recommendation to start looking for plans? I think AARP was mid 50s. What’s your recommendation? I mean, I think when you and I it was earlier the better right?

Theresa Klewsaat 00:21:03 Earlier I do still hold that earlier the better I can. Right. In your 40s but I, I did a little analysis on that and and cost wise the LTC rider is very high in your 40s. So your IT levels out at 50. So if you can start in their 50s, like I said, if you start in your 50s and I ran a simulated plan, you want to make sure you get enough benefit pool for the dollar. The first quotes I always run are never the ones that someone goes with because there’s so many variables to the algorithm I can manipulate to get what you want.

Theresa Klewsaat 00:21:38 But if someone’s 50 single female and I run a $3,000 initial monthly benefit, yes, that is low, but I do a 5% compounding cola and I did a four year benefit period. Some people, some carriers will go, agents will recommend a six year. But I like to sort of test the waters and see what what works for people. By the time they’re 80 that that 3000 will have grown to almost 13,000 a month, and they’ll have a $626,000 benefit pool. So that kind of puts them in the middle of where we said to hedge, you know, you’re not paying for an entire LTC event. You’ve covered a lot of your savings with your plan. Now, that plan costs $5,000 a year. That’s relatively inexpensive, that same plan. So I tried to create something stable. That same plan at 55 years of age is now a little bit more expensive. It’s a little over $5,000, but at age 80, your benefit pool drops to 491,000. That same plan at age 60 is now going to cost $5,200 a year, but the benefit pool drops by 38%.

Theresa Klewsaat 00:22:47 You’re only with you, and you have $384,000 and the same plan at 65. It’s now $6,000 a year and you have half the benefit pool size. You only have a $300,000 benefit pool. So you can see earlier is better than later. So if at age 60, I would never quote someone $300,000 monthly benefit unless they absolutely came to me and said this is all I can afford, I would bump it up to five $6,000 a month just to give them a bit more of a cushion. But that’s where you play with the algorithm, and I work with clients to find that sweet spot for them. And I love to work with advisors and say, okay, this is what we have. Is this a is this feasible for them? Because in the end, everybody wants the Cadillac of plans, but we all can’t afford it. So we have to find some middle ground on that.

Betty Wang 00:23:44 Absolutely. Hi there. Hope you’re enjoying this episode of Betty Smart Friends. I wanted to share a quick money tip with you.

Betty Wang 00:23:55 The tip give each dollar a job. Give every dollar you earn a job. Some dollars will have the job of paying your taxes. Some dollars will have the job of paying your mortgage, others saving for retirement. But don’t forget that fun self-care or buying your precious time bag are valid and important jobs for your money. The key here isn’t to judge the job or how much goes there. It’s to be mindful of where your hard earned money is going, and to make adjustments if you discover it doesn’t align with your values and your goals. Hope you enjoy the rest of the episode and remember, you’re not alone. Now back to the show. I just want to take a minute to first of all clarify that, you know, I’m sure some listeners will be like, well, of course Teresa is sharing all these scary data because she’s trying to sell. She’s trying to sell us something. But to be clear, Teresa is does not work on commission. She’s a salaried. This is all just information for you to be better for the listeners and for me to be better educated.

Betty Wang 00:25:10 So this is not some, you know, pushing product. This is just for education.

Theresa Klewsaat 00:25:16 Absolutely. And and I get that a lot people don’t want to think about this.

Betty Wang 00:25:21 Because I want to think about it. And they’re worried they’re going to get ripped off.

Theresa Klewsaat 00:25:24 Exactly. And that’s why as a as a broker I’m not. Let’s talk about a captive agent for a moment. A captive agent is a person that’s licensed to sell one company’s product. I would not do something like that. I am a broker. I go out and I have an arsenal of carriers that I. I pre-screened very well so that I can get my clients into the right product for them. In the end, it’s up to them to decide whether they feel like this is something they want or they don’t need it. It is scary if you read the data out there. Our future in terms of LTC, we are going to need care. And I, I don’t know if you want to touch on this or not, but I read a lot about these about what are contributing factors to these ADLs.

Theresa Klewsaat 00:26:15 Well, we have an obesity epidemic in this country, which means people are having knees replaced, hips replaced. You know, if you if your weight is such that you can’t move your body around to do things, you’re more likely to go on claim, and it’s going to make it harder to get a policy. And you’re going to get a I don’t want to say a bad class, but a lower class than what you need. Because remember, select is average, but there is a class one and a class two. And those benefits are limited to people. So I’m not trying to scare people. I’m trying to make people aware, hey, this is the situation. The train is coming. Yeah. You know, the lights are on. You either educate yourself about this and prepare. But I do have a lot of people that go, I don’t want to think about it, okay? It’s like life insurance. A lot of people don’t want to think about their mortality. Okay. That’s fine.

Theresa Klewsaat 00:27:12 What’s your plan for your family?

Betty Wang 00:27:14 Yeah. Estate planning is a conversation I have with clients. And you’re right, it’s just not pleasant. This conversation about long term care. Yeah. No one really wants to talk about it, but it’s so important.

Theresa Klewsaat 00:27:30 It is.

Theresa Klewsaat 00:27:31 I had this conversation with my parents, oh, maybe 15 years ago. And I said, okay, what do I sell first? What goes? Because my parents had a large piece of property in southern new Jersey. And I said, how much land do you want me to sell off? Do you want one of us to take one of you in? And you live with us, and we sell the house to pay for care. And the more I said it, the bigger their eyes got. And and my, you know. And they I said, you just need to think about it. Let me know. And then they said we really then they a few days later they called me and said we need to meet with an estate planner.

Theresa Klewsaat 00:28:02 I said, I think that’s a good idea.

Betty Wang 00:28:05 You know, another misconception that I want to make sure that listeners know is that that Medicare will help you with long term care. Not true. 100% not true.

Theresa Klewsaat 00:28:18 No.

Theresa Klewsaat 00:28:19 No. And so Medicare does not run in conjunction with an LTC plan. LTC kicks in after. So let’s say you’ve been in the hospital. Medicare covers up to 100 days. Once you’re done, then your LTC plan should really kick in is how it’s designed to work. So Medicare and it says disclaimers all over these policies. This is not a Medicare plan. This is a private personal policy for long term care insurance. So I reiterate that too with people. Now, if you’re a veteran and you’ve been in the hospital for a while, yeah, you could get moved to a veteran facility and that that’s perfectly fine. I actually have that going on with a client. They decided to go into a veteran facility as opposed to going into a private facility at this point. I think they’re trying to save the policy for the other spouse is what it is.

Theresa Klewsaat 00:29:19 But yes, Medicare. These are not Medicare plans. plants. Absolutely not.

Betty Wang 00:29:23 Can you explain for the listeners? Okay. You use the for your benefit plan. The benefit pool and the Cola just kind of in layman’s terms. Like what? What is the benefit period. What does that mean? You know that.

Theresa Klewsaat 00:29:37 It’s.

Theresa Klewsaat 00:29:38 So a benefit period when we run the software. You would choose a two year, three year, four year, six year, seven year benefit period. The initial benefit pool is the monthly benefit you select multiplied by how many months do you want your plan to last? Okay. That’s your initial benefit pool. And then the cola. Some carriers it’s different with some. But you can either do simple interest. You can do a 3% compounding 5% compounding Cola. In between they’re a couple carriers have rates. You could do three and a quarter 4%. So your compounding cola will dictate how fast your benefit grows. So if you’re young, like I said, I do a small monthly benefit, but I do a 5% cola because I want that to compounding 30 years of compounding to occur.

Theresa Klewsaat 00:30:32 What was the other part you asked me? Cola is your cost of living adjustment for everyone out there? Yeah, you can do a simple cola or a compounding cola and that’s why I say the algorithm. There’s so many variables in the algorithm I can manipulate to fit a budget. I can also if someone comes to me and says, and this happens quite often, I just inherited $100,000. I want to buy a policy. I run it backwards so I can see, well, that 100,000 is going to give you this much benefit. Is that enough for you?

Betty Wang 00:31:02 And just so people understand, the Cola is so that your benefit will increase. So the money that you get to spend on your care increases.

Theresa Klewsaat 00:31:11 Correct. Correct.

Theresa Klewsaat 00:31:12 Like I said in my example before, at age 80, the person went from $3,000 a month to $13,000 a month, and that benefit pool went from 145,000 to 626,000. That’s the power of your compounding cola.

Betty Wang 00:31:29 So what if people are saying, you know, I have enough money? I mean, this is a lot of folks are saying I have enough money.

Betty Wang 00:31:36 I’m just going to self-insured. What are the benefits and risks of of self insuring your long term care?

Theresa Klewsaat 00:31:44 Well, the benefit is congratulations. You’re a very wealthy person. You have a lot of. You probably sleep well at night and you have a lot of security under your belt. The downside is the market and your investments don’t know when you get sick. So you could be pooling a large portion of your savings out to pay for your care at a time when the market is experiencing a downturn. So you’re losing on both ends. Think of a bucket of water. You know you’re pulling out for your care and you’re losing money on your investments. So you’re looking at probably a significant loss of available funds to pay for your continued care. I would always tell someone you need, everybody should have some sort of policy to hedge against that, because the the policy is designed to buy time to figure out what are my next steps. How am I going to pay for my continued care? The other part about that is let’s say.

Theresa Klewsaat 00:32:47 You’re you’re.

Theresa Klewsaat 00:32:47 Worth several million dollars. Okay, fine. And you get dementia. And when my father was in a nursing home, we had a lady there that was in there for 12 years.

Theresa Klewsaat 00:32:59 Wow.

Theresa Klewsaat 00:32:59 With dementia. So 12 years. So if you’re spending $300,000 a year for 12 years, all the money is just about gone. It’s just about depleted. So you need to be prepared not only for a short term use of your policy, But a long term use of your policy. So, do I have funds? If I get this condition that’s going to take me in a facility for 12 years. That’s that can be a scary situation. So people need to be prepared for the good and the bad.

Betty Wang 00:33:35 Yeah. And I mean, I talk to my wealthier clients about this as well. It’s it’s a wealth preservation tool in a way. Right. It’s making sure that you’re not using your investments to pay for your care, or at least you’re sheltering those investments.

Theresa Klewsaat 00:33:51 Exactly. And in that situation, I just said, if you’re a couple, one person could deplete a large amount of your savings.

Theresa Klewsaat 00:33:57 So you’re right. Wealth preservation. That’s exactly what it’s about.

Betty Wang 00:34:01 And, you know, the other added benefits are, you know, studies show that people are so they hate taking money out of this bucket that they’ve worked all of their life for. So their retirement savings, they don’t want to spend it on care. And that, you know, I think the nice thing about having a long term care policy is that that’s what the money’s there for.

Theresa Klewsaat 00:34:27 You’re not you’re not taking for it.

Betty Wang 00:34:29 You’re not taking this money from your children’s pockets. and it also takes a lot of stress off of the off of the, you know, your children, right? Who?

Theresa Klewsaat 00:34:40 Your adult children. Yeah.

Theresa Klewsaat 00:34:42 Yes, it really does, because that’s something maybe we just want to touch on a little bit. And that is whether you have children or not. Families are scattered all across the country. Okay. My kids, I’m in Colorado, but my kids are all over the place. I have three children.

Theresa Klewsaat 00:34:58 If something were to happen and this is what happened with me, I was in Colorado. My father was in new Jersey. It’s a lot of back and forth. We don’t, as a family unit, live together in the same place anymore. So it’s don’t anticipate your children coming to take care of you. They’re going to move you closest to them. So if you want to stay where you are in your home, then you need to have a policy that’s going to pay for your care. Otherwise, you can’t depend on your children to take care of you. I know it may sound a little cruel, but they have their own lives, they have their own families, and some aren’t going to just say, I can’t do it. This isn’t for me, I can’t help, I can’t take care of this person. So in the end, you need to put yourself first. And I say that to women everywhere because we’re always trying to take care of everybody else. It’s okay to put yourself first and your needs first.

Theresa Klewsaat 00:35:56 You want to visit with your kids. You don’t want to have your kids take care of.

Theresa Klewsaat 00:35:59 You.

Betty Wang 00:36:00 Well, and you want the choice, right?

Theresa Klewsaat 00:36:01 You want. Absolutely.

Betty Wang 00:36:03 I mean, I think it’s a choice of how of your care. Who.

Theresa Klewsaat 00:36:07 Absolutely.

Betty Wang 00:36:07 When? Yeah. No, that’s a that’s a really good point. So let’s say someone’s like okay I think I’m ready, I want to get long term care insurance. Can you talk about what that process looks like? You know, we’ve worked together for my personal long term care insurance. I am a believer now. and it’s it was there are some surprising things about it because I’ve never done it before. So could you walk some people through what that might look like if they decide to go that route?

Theresa Klewsaat 00:36:38 So I ask a lot of intrusive questions and I, I try.

Betty Wang 00:36:43 Yeah, it’s true, it’s true.

Betty Wang 00:36:45 I try to be very gentle about it.

Theresa Klewsaat 00:36:48 But, you know, for starters, what state do you live in? Because certain states have different rules in terms of what I quote.

Theresa Klewsaat 00:36:56 That’s rule number one. I’m going to ask about your build. I’m going to ask about your tobacco marijuana history. I’m going to ask if you ever been on claim before. Do you have an existing policy. Then I’m going to start to dig into diagnosis. Do you have any arthritis? Do you have any cognitive issues? Diabetes. Have you had any joints replaced? Hips. Knees. Shoulders. Do you have any depression or anxiety? History. Cancers. Heart disease of any kind. Do you have any sleep apnea COPD, liver disease? Have you? Surprisingly, I’ve had people with mini strokes already. They’ve had either a full blown stroke or they’re called Tias systemic attacks. So you know and then you look at people, maybe they’ve got multiple sclerosis Parkinson’s diagnosis. They’re not that far along emphysema diagnosis. So and any medications I’m going to ask about your medication history. What are you taking and why. A lot of people blood pressure meds, statins. It’s fine. You know that’s not going to ding you in your quote.

Theresa Klewsaat 00:38:04 It’s perfectly fine. Have you been to the ER recently? You know, things of that nature. If you’re someone who’s older and you’re just getting checkups, EKG baselines, that’s fine. There are all preventive care. As long as everything’s normal, that’s fine. We’re not having any issues with that. Physical therapy. Let’s talk a little bit about physical.

Betty Wang 00:38:26 That was a surprising one for me.

Betty Wang 00:38:28 I know so.

Theresa Klewsaat 00:38:30 And any time you were receiving any active care, it’s a postponement. It’s not a decline, it’s a postponement. So if you’re currently getting physical therapy for an ailment, it depends on where in the body you’re getting physical therapy. You must be stable to get through underwriting. So if someone says I’ve got, you know, a couple more weeks of PT, I’ve had some sciatica or I’m having trouble with my elbow or something like that, we have to wait until you’re done and you’re stable. You’ve been released from care because when you signed the application. I have 100 days to get you through underwriting.

Theresa Klewsaat 00:39:15 It can take up to 45 days just to get medical records. So if there’s any delay in underwriting, it can cause a problem. I have to get people to resign their applications, things like that. So we like people to be stable. Nothing’s going on. No change in medications. Chiropractic care is okay as long as it’s within two times a month. Maintenance. Chiropractic care is fine, so we can’t underwrite. If you have a surgery pending, a test pending, a procedure pending, or you’re getting active physical therapy. We have to wait until all that is done and then we can proceed with an application. The other part is family history. I’m going to ask if you had anyone mother, father, brothers, sisters with dementia. Now, some carriers won’t limit the monthly benefit. Mutual of Omaha with one parent with dementia will limit your initial monthly benefit to $5,000 a month. If you have two parents with dementia, it’s an automatic decline. We just can’t underwrite for that situation. So we do ask a little bit about family history.

Theresa Klewsaat 00:40:21 And then that’s why I’m saying as an insurance broker, I’ll steer to someone else who’s not going to limit your benefit. But my pre screener is so thorough that I have a very good success rate of getting clients in the right product and approved at the rate I quoted, it’s unless something comes up that I wasn’t aware about. So once we submit an application, it actually goes pretty quick. The interview is conducted, they’ll give you a call, go over your medical history, and then they’ll do a mini cognitive exam. And then once that’s done, they’ll pull med records. Now also, before I can submit an application, you must have had a full physical exam with a lipid panel in the last two years. That is a requirement. It is one of the first questions on every application. When did you have your last physical exam and lipid panel? Was it within the last 24 months? And we say yes and we get the date. Now’s where things slow down because we have to go to a doctor to pull med records on.

Theresa Klewsaat 00:41:26 And it depends. Sometimes we do pull med records. I have people that have nothing going on. Like in your case, you had nothing going on. You were able to get your rate through. So we. That can be the the slow down the 45 days. Going back, getting special authorizations. That’s the part where it just stops and we wait to get this in. But then once we get the records in, it goes into underwriting review, which can take another ten, 15 business days. And then we get approvals on cases or we get a decision, I should say. So then a lot of carriers are doing electronic applications and e delivery. Everything is done. No paper. Everything is done electronically. So ideally, I like to get people in and out the door. I mean, I try not to hit that 100 day mark. I try to get cases in and out within 2 to 3 months as fast as we can. So that’s that’s pretty much it all. A lot of the work is in the front end.

Betty Wang 00:42:27 Yeah. I mean, I think, you know, I’m not in my 50s yet, but all these, you know, situations where you could get declined immediately. I mean, that’s that’s one of the reasons why I wanted to start earlier rather than later is because we don’t know if when I get diagnosed with something that precludes me, that is an automatic decline for me or correct. One or both of my parents were to be diagnosed with Alzheimer’s. You know, same thing. What about clients or folks who say, well, I’m not healthy? Should I even bother? Are there things that you know? What should they do? I mean, I think that would people know that they’re not living healthy lifestyles. I mean, you’ve said a couple of situations where it’s an automatic decline. What about if you’re in that in between healthy and automatic decline.

Theresa Klewsaat 00:43:22 And that’s that’s a great point of view. For example, state life one America, state life one America is a great company. If someone’s health is a little bit on, you know, there’s some issues going on.

Theresa Klewsaat 00:43:35 There are products available for them. And also there are annuities with LTC benefits. So we can always pivot and look at something else. We are not just going to get on the phone and go, well we can’t help you. We will find a product available for someone. And you know, you know, I’m a four year cancer free survivor. I had breast cancer at 56. So, you know, I’m looking at other options right now because I can’t get a type of plan that I got for my husband, so to speak. So I’m looking at other alternatives where my situation would still be insurable. It’s just a matter of finding a carrier that’s willing to underwrite, and then working with them to get the best plan possible.

Betty Wang 00:44:20 So it would be better for folks, you know, let’s say they’ve had a cancer diagnosis. Not uncommon.

Theresa Klewsaat 00:44:26 No, not uncommon at all.

Betty Wang 00:44:27 Is it fair to say that it’s probably better for them to go to a broker, a not captive broker?

Betty Wang 00:44:33 Correct. Okay, correct.

Betty Wang 00:44:34 Because I could shop around a little and see.

Betty Wang 00:44:37 Sure.

Theresa Klewsaat 00:44:38 Sure. And that degree, you know, we have plenty of men who’ve had prostate cancer. They’re still getting the best rates, you know, available. No doubt about it. No doubt about it. We’ve had people with, you know, skin cancer of a different kind. They’re still getting the best rates possible. So, you know, cancer is not, you know, an uninsurable condition. We all move on from it. We all live full lives, long lives. So it’s not an uninsurable condition. The best thing to do is to pre-screened. Okay. This is the situation. Looks good. Numbers still look good. Oh, you’ve been cancer free for this long. Or, you know, those are things that we can work with with clients. And like I said, there’s some great annuities with LTC benefits out there for people that may not get a a policy with one of our standard carriers. And, you know, we work with we work with various companies state life one America nationwide, Minnesota life which is security and Lincoln money guard mutual of Omaha national guardian life we do for care annuities state care.

Theresa Klewsaat 00:45:46 State life also offers asset care and annuity care. So there’s a wide variety of products out there that we can match to a client’s needs.

Betty Wang 00:45:56 Well, that’s good to know right. Because there’s yeah we’re all on the spectrum of health, right?

Betty Wang 00:46:00 Absolutely. Absolutely.

Betty Wang 00:46:03 I could ask a lot more questions, but we’re kind of.

Betty Wang 00:46:05 I understand.

Betty Wang 00:46:06 I don’t want to keep you for the people who are hesitant to, to reach out and learn more about long term care. What what advice do you have for them, particularly women? Right. We you know, we have special considerations. We live longer. Statistics show that we are in long term care longer than men. Right. Our average is almost four years, while men and the need for long term care is to. Right.

Theresa Klewsaat 00:46:30 I’m waiting for that to change. Apparently, we don’t have stress in our lives. So that’s.

Betty Wang 00:46:34 Why. I, I always love that.

Theresa Klewsaat 00:46:38 I always laugh when someone tells me, well, women don’t have the stress.

Theresa Klewsaat 00:46:41 I’m like, oh, really?

Betty Wang 00:46:43 Okay, okay.

Betty Wang 00:46:44 Do you know any women?

Betty Wang 00:46:45 Yeah, that’s a good one. Yeah. So yeah, you’re right.

Theresa Klewsaat 00:46:50 No, you’re dead on with that. You know, women 4 to 6, men 2 to 3.

Betty Wang 00:46:55 Okay. All right.

Theresa Klewsaat 00:46:56 But call me I. I’m easy to talk to. Two. Everything is confidential. It’s kept in secure. I don’t keep any paper. Everything is in electronic file. It’s secure. If a client. When I’m done and they say they decide they don’t want to proceed, could you please delete my file? Absolutely. I will just hit that delete button. But I talk with people all day long. I pre-screened, get a feeling for them what they’re looking for. You know, I’m here to help. I’m not here to judge. I am not here to. To sell a policy to you. I am here to give you some peace of mind to. To help work with you and make a plan.

Theresa Klewsaat 00:47:37 Let’s make a plan so that you feel a lot more comfortable about the future.

Betty Wang 00:47:43 And what is the best way to contact you?

Theresa Klewsaat 00:47:46 My email address and you have my contact information.

Betty Wang 00:47:50 And then I can also reach sure.

Theresa Klewsaat 00:47:52 And 800 number (800) 796-0909. Option four. I’m Teresa Clausen. This has been such a pleasure. I’ve really enjoyed this. Invite me. Call me. Ask me any questions. I’m available.

Betty Wang 00:48:08 And what if someone wanted to meet in person and they weren’t? How do they find a Teresa in their neighborhood or in their area?

Theresa Klewsaat 00:48:17 Well, you know, I work a lot through advisors, but I also have people that, through word of mouth have called me and said, hey, you wrote a you wrote a plan for a family member or a friend. And I’m like, sure. I work with anyone that reaches out to me. So I am a member of FPA through Arthur J. Gallagher, my parent company. But, you know, just look me up. I’m around.

Theresa Klewsaat 00:48:42 I’m available to you.

Betty Wang 00:48:44 Great. And then I asked this if these questions of all guests, as a busy woman with absolutely no stress. Oh, yeah. Yeah. How do you maintain the balance and peace? I mean, you’ve obviously very educated and busy with what you do. How do you maintain your own peace?

Theresa Klewsaat 00:49:05 So I, I’m an avid skier. I love to get out and hike and ski and bike. Just being in the outdoors in Colorado. It’s a beautiful sunny day today. I’m looking outside my window right now. We had that tremendous snowstorm yesterday Friday.

Betty Wang 00:49:21 Right.

Theresa Klewsaat 00:49:21 And you know, spiritually, I, I pray I pray for everyone that I encounter, protect them, help find peace in people’s lives, get out, enjoy the wonderful area. Do what makes you happy. So I for me it’s being outdoors, hiking, skiing. I love to ski on top of that mountain. Looking out. A couple weeks ago I was. I was skiing and I could see all the way to Vail.

Theresa Klewsaat 00:49:49 It was such a beautiful, clear crystal day. So those are the things that I live for. And, you know, whatever it is, your path in life, find out what makes you happy. And you will. You will never have a down day, I can tell you that.

Betty Wang 00:50:03 Well, that, you know, takes over my next question, which is again, studies show that people who have these interests, these hobbies that they take into their retirement life, are much happier and much more fulfilled. And it sounds like you’ve already determined those as being skiing. Hiking.

Theresa Klewsaat 00:50:25 Yeah. The worst thing you can do when you retire is do nothing. It’s your second career opportunity. Doesn’t have to make money. It just has to be something that you love to do.

Betty Wang 00:50:36 So what will your retirement career be? Skiing.

Theresa Klewsaat 00:50:41 Skiing as long as I can. Traveling. I love to read about finance. I mean, what I’m doing right now. I plan on doing well through my 60s. Thank God I do, I.

Betty Wang 00:50:52 Really.

Theresa Klewsaat 00:50:53 Do, I, I work. I really do. I plan on doing this for as long as I can, and even my doctor told me. My oncologist told me. She says, well, your outlook on life is what’s pulled you through. You just can’t turtle. Someone said, you can’t turtle.

Betty Wang 00:51:09 You really have to do that. Yeah, I’ve not heard that before.

Theresa Klewsaat 00:51:12 You have to fight. You have to fight for every good day in your life. You really do. So, yeah, I love that. And I love to cook. I’m Italian. My daughter loves to cook with me. So we love to cook together. You know, just enjoy what life has to offer.

Betty Wang 00:51:30 Well, on that note, I think. No, I love that. Just don’t. Turtle, I think we need that as a bumper sticker. I really, really appreciate this. And of course, I again learned learned a lot more than than than what I knew in the beginning of this hour.

Betty Wang 00:51:48 So thank you so much for being here.

Theresa Klewsaat 00:51:50 No problem.

Betty Wang 00:51:51 I look forward to more conversation.

Theresa Klewsaat 00:51:54 I’m available. Call me anytime. Thank you so much for having me. This has been a blast. Okay.

Betty Wang 00:52:01 Thank you for tuning in to another episode of Betty Smart Friends. I hope you enjoyed today’s conversation and that you learn something new. You can connect with us on social media to stay updated on future episodes. Share your thoughts and join our community of smart friends. You can find us on Instagram at Betty Financial. And don’t forget to subscribe to the podcast so you never miss an episode! If you are feeling ready to be more empowered and less alone in your financial life, please schedule a complimentary 15 minutes with me. The link is in the show notes. Please see the show notes for important disclosures regarding BW financial planning and this episode. Until next time, remember you are not alone. We got you.