I recently sat down with my wife and son, at their urging, to watch Disney’s animated movie, “Coco.” In a concise recap, the movie is about a young Mexican boy who is trying to understand why his family has alienated his deceased great-grandfather, especially on the Day of the Dead, a Mexican holiday that honors family members who passed on.
In typical Disney fashion, they put a nice spin on the story and, while their message of redemption plays well, I found myself thinking of a different message.
You see, in the movie we learn about the spirit world and how memory play a big part in a person’s legacy. When people in the spirit world are completely forgotten by their family in the living world, their spirit can no longer exist – it’s essentially your final passing. This reminded me of legacy planning.
Many advisors instruct their retired clients to allow their life insurance to lapse, except for a small amount for final expenses. They say, “Your children are grown, your home is paid for, you don’t need life insurance.” While I have always found this to be a bit cynical, watching “Coco” helped bring the concept into clarity.
Wouldn’t it be fantastic if, on your grandsons 25th birthday, you could provide him with a check for $20,000? And what if he received a check for the next 10 years, along with a handwritten note from you telling him how much he means to you? And, as he receives that check, wouldn’t it be wonderful if he could recall a favorite memory or two that you shared with him?
And, if he used that money to put a down payment on a home, or establish a college fund for his new baby, you would essentially be providing his family with a financial head start that maybe you didn’t have but wanted for him.
And, what if all of this could happen many years after you had passed away? Wait, what?! Yes, you can leave a legacy to your children, grandchildren, nieces and nephews or a favorite charity many years after you are gone. That is the power of life insurance.
Like the characters in “Coco,” your clients want to remembered long after they leave this world. To all my advisor friends out there, please don’t let this movie’s message go to waste. Help your clients, today, to create their legacy for years to come.
When my mother was young, she was a home health care aide for the local hospital. She enjoyed helping people – it was in her nature to care for those who could not properly care for themselves. But, she had no idea she would one day be sick herself, and unable to work as a caregiver.
After my sister way born, my mother’s health started to decline. Her asthma got worse. She started having severe depression and anxiety episodes. Her body was always in pain, no matter what she did. We used to joke about the “pharmacy” that she carried around with her, but in all actuality, it was sad. My mother was young, but she felt like someone twice her age.
Then, about 10 or so years ago, she was diagnosed with fibromyalgia. She finally had an explanation for her aches and pains. But, on top of that, her asthma had developed into COPD, even though she had never smoked a day in her life. She could barely get out of bed most days. Her depression was worse than ever. She would end up hospitalized every time she got sick, mainly with upper respiratory issues.
Amid all her medical issues, she was no longer able to work full-time. Whenever she would land a job, a few months into it, she would fall ill and need to be hospitalized … then she would lose her job again.
The cycle continued. Eventually, she learned her immune system was basically not functioning. But, without a job to provide proper health insurance, she had no coverage for the medication she needed.
She applied for Social Security Disability Income, but was rejected – three times. It didn’t matter that her physicians had all written letters. It didn’t matter that she had significant proof she was unable to work full-time. It didn’t matter that her illnesses were expected to last over a year.
I’m going to repeat that – she was unable to work full-time and her illnesses were expected to last over a year. That is the basic definition of qualifying for Social Security. But still, she was denied time after time.
Finally, she agreed to hire an attorney. After more than a year and a couple hearings, she has finally been approved to receive Social Security Disability Income. She’ll have some money coming in each month and will no longer have to worry about insurance. She can start focusing on getting better and enjoying her grandchildren.
I wanted to share my mom’s story for two reasons:
As I said, no one believes a disability will happen to them. You may not always see them, and you probably never expect them, but disabilities do happen.
Yes, long-term care insurance CAN be expensive. My first reaction when someone says this to me is to ask how long they waited to buy it (see previous post). Because, of course, too many people wait until they’re older and have more health considerations for underwriting. Which, of course, ups the price.
This isn’t car insurance or home owner’s insurance. Actually, don’t think of it as insurance at all – think of it as another asset, or income protection. Your client pays a company a set amount of money, and in return they get access to a larger pool of money should they need it. Oh, and that money (when used for long-term care) is income tax free. It’s going to be there for your clients when they need it.
In some cases, the financial return of long-term care insurance is pretty hard to beat. More importantly, the emotional return for your clients and their families is priceless.
Talk to your clients and ask:
Some people ask, “What if I never need it?” First of all, then you’re one of the lucky ones. Second, that money doesn’t go to waste – in many cases, it can pass on to your heirs. But, trust me, your children and grandchildren would rather you have a plan for care than a plan to give then an inheritance. The cost of NOT having a plan and having an event is much, much higher than what you would have spent on insurance.
This isn’t the end of our discussion. Let’s keep talking long-term care.
You put long-term care at the bottom of your client agenda – again. You avoided it. You decided, “It can wait.” But can it really? Or, more importantly, what are the costs of waiting?
There’s a lot of change in the long-term care market, but two facts will always be certain:
The best time to create a plan isn’t 60 or 70. It’s actually 40 or 50. In fact, the average buyer is in their mid-50s. These clients are seeing their parents deal with extended care and it’s front of mind. They don’t want to pass that burden to their own children.
Don’t wait. Here are some questions to ask at your next client meeting:
We’ve discussed nearly all of the most common client concerns when it comes to discussing long-term care
People have the tendency to look at retirement and long-term care as two separate issues. Why? Because they tend to look at long-term care as a place – a nursing home, assisted living, retirement community, etc. But it’s more of an event – an event that could wipe out your clients’ retirement savings.
I would argue that the largest risk to a retirement plan is a long-term care event. So you can’t call yourself a retirement planner if you’re not addressing this risk. You need to put the pieces together.
In a webinar I did with Tim Ash, we used our software to literally show the impact a care event will have on retirement plans. It’s astounding. The good news? This software can also help show the impact you can make by having a plan in place.
After you watch the webinar, consider asking your clients a few questions during your next retirement planning appointment:
Yes, you have plenty to talk about during your client meetings. And you might feel like you don’t have time to add one more item to the agenda. Stop looking at long-term care as a separate issue. If you do nothing to address it, it’s a big risk to your clients’ portfolio.
© 2018 Ash Brokerage LLC.