Long-term care insurance: the ultimate GAP protection

It’s estimated that 75 percent of all credit union members are age 50 or older, according to myCUsurvey. Living longer is wonderful, but it doesn’t come without some risks. Today, 70 percent of those who live past the age of 65 will need some kind of long-term care, which can be very expensive and – in too many cases – can exhaust assets saved over a lifetime, leaving many families destitute. Too many credit unions have looked past their largest demographic, and perhaps the greatest opportunity for fee income to the credit union: long-term care insurance. It has never been more important to help aging lifelong members bridge the gap between the day they retire and the 20 to 30 additional years they will live beyond that retirement date.

Why do credit unions offer members GAP insurance for their cars and trucks?

Having Guaranteed Asset Protection (GAP) coverage is like having a bridge when you need to get past a raging river or difficult terrain in a rugged mountain valley. Even the most skilled backpacker or mountain climber can have difficulty traversing these obstacles, and can make mistakes that can be costly and even fatal. But a bridge can take them safely to their destination. The many years I’ve spent backpacking and fording rivers and streams in the Pacific Northwest has helped me appreciate the bridges that others have built so that people like me can make it safely over rough waters.

Likewise, even the most cautious driver in the world can get into an accident that has the potential to cause financial hardship under certain circumstances. GAP coverage can be a bridge between the actual cash value of a vehicle and the balance still owed on the vehicle. Credit unions offer their members GAP insurance to protect them from Point A (the purchase of the vehicle) to Point B (the paying off the vehicle loan).

Why should credit unions offer members long-term care insurance for their golden years?

The same analogy applies to long-term care insurance, except the stakes are much higher. Today’s statistics show that three out of four who live past the age of 65 will need long-term care. How many of your members have built enough assets to take them to their 80th or even their 90th birthday? Would the day they come to a raging river – maybe a major health event, such as diabetes, a stroke or Alzheimer’s – have an effect on how long their savings will support them? How will they make the journey from the day their money runs out to their 90th birthday? These are all good questions, and frequently at the top of the list of those asked by your aging members. In fact, it tends to be their primary concern. A very close second is the fear that because their money will run out they will have to be cared for by their children, thus being a burden on them. Long-term care insurance is that bridge that protects their assets when they come to that river in life.

Does our government recognize the need for long-term care insurance to help bridge the gap?

Absolutely, it’s called the Partnership Program. Costly illness and medical issues trigger nearly half of all personal bankruptcies, despite the existence of health insurance in the majority of the scenarios, and 50 percent of all couples and 70 percent of single adults are impoverished within one year of entering a nursing home, therefore Medicaid is the largest source of long-term care financing according to a Harvard University study. 40% of those needing care find themselves on welfare, which has become a tremendous fiscal burden on many states budgets.

If you live in a state that participates in the Partnership Program, your members may be able to qualify for Medicaid in your state while retaining more assets than would otherwise be allowed under your members’ state Medicaid eligibility requirements. By purchasing long-term care insurance, for every dollar of benefit your member receives for covered care, an equal amount of their assets would be protected. This is what they call dollar-for-dollar asset protection. How would this benefit your members? Suppose your member purchases qualified long-term care insurance, and under the terms of the coverage, they receive $200,000 in benefits. Generally, they would be able to keep an additional $200,000 in savings or investments in addition to the assets their state already allows them to keep and still qualify for Medicaid. This is possibly the best-kept secret when it comes to protecting your members from the cost of care and, at the same time, preserving the assets that you have helped them build.

Now it’s up to you.

Your members will thank you for helping them bridge the gap through retirement. When they reach a turbulent river or the treacherous canyon in their golden years, they will be grateful their credit union built another bridge that protected them.

It makes sense to take care of the things you can control. Your members’ potential long-term care needs are among the things you can help them prepare for now. It can be an affordable solution for your aging member demographic who stand a very good chance of needing long-term care in their future, as well as a wonderful source of fee income for your credit union. It is extremely satisfying knowing that you have protected your members’ assets and financial independence. Let me, a trusted Long-Term Care Insurance Specialist, help you learn how to offer long term care insurance to your members.