Most people spend decades building wealth, yet a single extended stay in a nursing home can erase it within months. On Metcalf Money Moment, hosts Jeb, Ethan, and Eric sit down with long-term care insurance specialist Aaron Clark to discuss the real numbers behind nursing home costs, the power of a hybrid policy, and why retirement planning without an extended care strategy is incomplete. Aaron brings personal experience and industry data to show how protecting your financial plan now can mean the difference between leaving a legacy and leaving a burden.

What you will learn in this Episode:

Why your mid-50s is the optimal window to purchase long-term care insurance, how waiting until your 70s makes coverage nearly unattainable, and how rising premium payments can price out even motivated buyers who delay the decision.

How a hybrid policy solves the biggest objection to long-term care insurance by converting unused benefits into a death benefit for your heirs, ensuring that 100% of your policy value pays out to someone at some point.

Why you do not need to insure for the full nursing home cost, and how coordinating Social Security, pensions, and other assets to bridge the gap makes long-term care coverage far more affordable for those on a fixed income.

Tune into the Metcalf Money Moment podcast for expert insights on wealth management and retirement planning! Join Jeb, Ethan, and Eric for practical Estate Planning strategies that you can implement to unlock financial clarity and confidence. Listen now to inspire your financial journey!

TIMESTAMPS:

00:00 Long-term care insurance statistics show a 70% chance of needing extended care after turning 65

02:15 Nursing home costs average $9,000 monthly, and memory care can push costs even higher

05:40 The best age to buy long-term care insurance and why your 70s may be too late to qualify

08:25 How a hybrid policy eliminates use-it-or-lose-it fears through death benefit conversion for heirs

12:05 Finding policies that fit a client’s needs

15:58 Overfunded life insurance as a tax-free income tool when Roth IRA limits restrict high earners

KEY TAKEAWAYS:

Families do not need to insure for the full nursing home cost. By accounting for existing income sources and assets, a well-designed long-term care insurance plan can cover the gap at a far more manageable premium level.

A joint plan built on a hybrid policy chassis is the most cost-effective structure for couples, requiring only one death benefit while giving both spouses full access to extended care coverage throughout their lifetime.

Estate planning for high-net-worth individuals depends heavily on life insurance as the most reliable tool for preventing estate tax from consuming the legacy a family has spent decades working to protect and preserve.

ABOUT THE GUEST:

A graduate of Kansas State University, Aaron Clark knew that when things didn’t work out to become a rapper or a point guard for the Chicago Bulls or the LA Lakers, the financial services industry was where he needed to be. Having been an agent for over 20 years, Aaron enjoys and appreciates the opportunity to work with other agents because he can relate to them. He has field sales experience, which gives him a competitive advantage and shows that OCI is more than a typical IMO. Aaron has been married to his high school sweetheart, Abie, for over two decades. They have 3 children: Jameson, Meredith, and Garret, and spend each day teaching them that being a KU fan is just not ok.

https://www.linkedin.com/company/oci-insurance

https://www.facebook.com/ociservices

https://www.ociservices.com/

DISCLAIMER:

This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contact your insurance agent. This article is intended to assist in educating you about insurance generally and not to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company. If you need more information or would like personal advice you should consult an insurance professional. You may also visit your state’s insurance department for more information.

Aaron Clark, and OCI Insurance is not affiliated with or endorsed by LPL Financial and Metcalf Partners Wealth Management

RESOURCES MENTIONED:

Metcalf Partners - Website

Jeb Graham - LinkedIn

Ethan Hutchison - LinkedIn

Eric Wymore - LinkedIn

And the average cost of nursing home across the country is about [00:00:20] $9,000 a month, which is over $100,000 a year. So if you've got anyone with any kind of wealth [00:00:25] put together and they go into a home, you can see how that could really put a drain on their, on their [00:00:30] portfolio in a hurry. So if you haven't planned for it, it can really derail you.[00:00:35]

[00:01:00] Now your hosts.[00:01:05]

Uh, [00:01:30] you were with OCI Insurance, which is a ... What would you call it, Aaron? Is it an FMO? [00:01:35]

Aaron Clark: Yeah. I mean, the, the industry knows it as an FMO. Basically, we're an insurance brokerage company.

And then, you know, from, from our clients' [00:01:50] standpoint, I know we've had conversations about, uh, different insurances, specifically long-term [00:01:55] care insurance, which is a conversation that we have with a lot of clients. Uh, and it's a worry when we're building [00:02:00] financial plans. You know, a lot of times we're like, "Hey, there's one thing that can take this financial plan down, [00:02:05] and there's only one thing, and that's if you end up going to a nursing facility for a very long time."

Aaron Clark: Sure. Yeah. So OCI, so we are an insurance brokerage firm, and basically, we can [00:02:20] handle any kind of insurance other than property and casualty. So I actually learned recently, I think we even do, like, trip [00:02:25] insurance.

You know, LIMRA did a study a, a handful of years ago that said people turning [00:02:45] 65 right now, there's a 70% chance they will need some form of extended care [00:02:50] in their lifetime. So that means you take 10 people and put them in a room, there's a chance, there's a great chance that seven [00:02:55] per- seven of those folks are gonna need some form of extended care in their lifetime.

And, you know, to me, when th- when [00:03:20] those things are happening, that's a sacrifice. When you're away from your family, you're making a sacrifice so that you can be at work and provide for your [00:03:25] family. Well, I'm pretty sure that if you ask people that are retired if they worked 90,000 [00:03:30] hours and made all those sacrifices during their career so they could give that money to a nursing home, I'm pretty sure they would [00:03:35] say no.

And the average cost of a nursing f- nursing home [00:03:55] across the country is about $9,000 a month, which is over $100,000 a year. So if you've got [00:04:00] anyone with any kind of wealth put together and they go into a home, you can see how that could really put a drain [00:04:05] on their, on their portfolio in a hurry. For sure.

And

Aaron Clark: It, it can. I actually was visiting [00:04:20] with someone in Washington State recently, and they were asking me for a quote for long-term care insurance, and they [00:04:25] wanted me to price it at $11,000 a month just because of, you know, cost of living in a certain area.

Jeb Graham: So, so I'll tell you, [00:04:40] Aaron, like for us as financial advisors, you know, when we're working with clients, and I'm gonna be [00:04:45] just totally honest and, and I'm sure Ethan and Aaron would agree with this, is that it's, it's always the least [00:04:50] fun thing to talk about, right?

As they're getting ready to retire. And then as [00:05:05] they retire and kind of move on, I feel like that's really when people start to think about, [00:05:10] well, I want to, I want my kids to inherit X amount of money or, or [00:05:15] whatever it is. And then you kind of... And, and not that we don't bring up long-term care in the beginning, we do, [00:05:20] but it's typically not the, the very first thing that people start thinking about when they think about their retirement.[00:05:25]

Aaron Clark: That's a great question. Um, so I've been having [00:05:45] conversations le- recently with folks, and if you were to ask me when's the optimal time to buy it, I would [00:05:50] say 50s, mid-50s.

She said, "Oh, I understand the question now." And she was married. It was her [00:06:10] first marriage, but it was her husband's second marriage, and there currently, his 90-year-old dad was [00:06:15] living with them. And so her reason for wanting to look at long-term care insurance was she said, "I don't want to be in that position [00:06:20] when I'm that age."

And so always [00:06:35] protecting your insurability is key, but do we wanna buy long-term care insurance when we're 30 years old for [00:06:40] something we know we're not gonna use until potentially 70 or 80 or later? If you ever use it, right. With life insurance, no one has a lease on [00:06:45] life. Yep. So, so we don't know when we're gonna die, right?

It's, it's... The insurance companies are [00:07:05] like, "You've worn out your welcome. We don't want you anymore. You're, you're too close to needing to have that." And quite honestly, it just [00:07:10] gets, it gets very, very cost-prohibitive for anybody- Yep ... in, when you're in your 70s. Yep. Well,

And, and, [00:07:20] and, you know, understanding that, hey, you're, you're gonna spend quite a bit of money on this policy, and, [00:07:25] you know, hopefully, maybe you don't use it. You know, is there any kinda conversations that [00:07:30] you have with individuals that, you know, have to continue to pay a long-term [00:07:35] care insurance but maybe not use it?

Aaron Clark: Yeah, so the peace of mind, you know, when I got into long-term care insurance, I started in the [00:07:50] industry in about 2001, and, and I'll never forget my agency manager, we had a long-term care policy.

Well, LIMRA's [00:08:10] telling us that there's a 70% you're going to use it, right? But what about the 30% that don't? You know, [00:08:15] long-term care insurance, if you're spending 5 or $10,000 a year or more on a premium for [00:08:20] something you may never use, that's kinda hard to stomach that, right? Mm-hmm. Well, the good news is the industry, I [00:08:25] don't know how long they've been out, at least 15 or 20 years, so that's how long I've been talking about them, but the industry [00:08:30] came out with ca- what's called a hybrid policy.

So the peace of mind is, look, I know I'm spending a lot of [00:09:00] money on this thing, but at least someone's going to benefit from it at some point. Mm-hmm. In addition to that, a lot of these [00:09:05] hybrids have what's called a... It's not necessarily return of premium, but it does have a residual [00:09:10] cash value in them at some point.

But if you know there's a cash value or an [00:09:30] exit strategy if you have to bail out, it might make it less painful to leave in the event you decide to do [00:09:35] that. But again, when people buy policies, they generally buy them to keep them. They don't buy them to cancel them. But they [00:09:40] like to know that, hey, what if?

What, what are my options if this happens?

Aaron Clark: The... That's a great [00:09:55] question. They're both, they're both hybrids. I would suggest that the, the true hybrids are the [00:10:00] ones that are more long-term care focused.

Gotcha. Cool. [00:10:25]

Aaron Clark: Uh, it depends. It depends on what the purpose is, what they're trying to accomplish. I would say the most [00:10:35] cost-effective way to buy, uh, a long-term care policy for, for a couple is a [00:10:40] hybrid, a, a joint plan that's a hybrid.

Those premiums will go up, so one [00:11:00] of the biggest reasons people buy hybrid is to levelize the premiums, to make sure they're never going up. No surprises. Mm-hmm. But when [00:11:05] you put it on a joint plan, you're only buying one death benefit, so it reduces... It's most cost-effective to do it [00:11:10] that way. Um, and then the death benefit, of course, it pays out upon the second death, so it's like a [00:11:15] second-to-die life insurance policy.

Jeb Graham: I, I will say too, I think a lot [00:11:30] of clients just in general think that it's an all or none.

They've probably sold their house, their ba- you know, whatever it is. They're, they're in the long-term care facility. That's what they're paying for. They [00:11:55] still have a Social Security benefit coming in. They m- they may have other stuff. So, so I think that's [00:12:00] another thought process with a lot of clients is you don't necessarily have to get a policy that's gonna cover 100% of [00:12:05] your long-term care costs.

Aaron Clark: It, it really does. I'm really glad you brought that up, Jeb, [00:12:20] because a lot of ti- you know, when people get a quote for a $9,000 a month long-term care plan for four years, for [00:12:25] example, and they put that inflation or cost of living adjustment on there, which by the way is the most expensive part of [00:12:30] owning the policy, all of a sudden those premiums can start going up like crazy.

Maybe that's Social [00:12:55] Security. I had a lady that worked, uh, she was a schoolteacher in North Kan- like, Platte [00:13:00] City or something. This was years ago. I was helping her agent design a plan for her, and she was talking [00:13:05] about a 9,000... or excuse me- Yeah, $9,000 a month plan back then, but she had a [00:13:10] guaranteed pension of $6,000 a month for life.

And, and you know as well as I do that when people are on [00:13:35] retire- or retired, most of the time to some capacity they're on a fixed income, right? Mm-hmm. And [00:13:40] so trying to squeeze in a long-term care premium with everything else going on a lot of times can, can really [00:13:45] create an issue. So yeah, they don't necessarily have to insure for that whole 9,000.

So there are different ways they can address [00:14:10] that. They can do a, a ... They can do a life pay, they can do a five pay, a 10 pay, a 20 pay, and they can even [00:14:15] do a single pay. If they just wanna write a check and be done with it, and they just know that their long-term care piece is taken [00:14:20] care of, uh, they can do that as well.

A lot of ways to go about it. Nice. Mm-hmm.

Aaron Clark: Life insurance is huge. I've, I've always been a big believer in [00:14:55] it, uh, for a lot of reasons. Um, I'm probably over-insured. Um, for your younger [00:15:00] folks that are, that are just starting out , term insurance is normally the, the route that they wanna go. You know, they're [00:15:05] raising a family, they need insurance, they've got a big need, uh, but they maybe don't have the income that they need right now to [00:15:10] support a big premium payment.

So, um, you know, when I first [00:15:30] started in the business I always wanted to help people get some of that permanent insurance enforced so that they would definitely have, [00:15:35] you know, final expenses taken care of and things like that. My old man always used to say, he, he was in the business with [00:15:40] me as well and, and a partner over the years, and he would say, "Aaron, make 'em a client first.

What are we trying to accomplish?" Because term insurance [00:16:00] is a great answer for a lot of people, but sometimes permanent insurance is a good solution as well, especially if you're doing [00:16:05] estate planning. If you're wealthy clients that are definitely gonna have an estate tax problem, life insurance is the only way to get [00:16:10] Uncle Sam out of your legacy.

Jeb Graham: Well, there's a lot of tax benefits there too, right? So for people that, that overfund. And we go, [00:16:25] we go through that, and I've done it, uh, a number of times, and I- I'll say that we, we probably [00:16:30] don't talk about it as much as we should with, with some of our clients.

Um, I, I'm as- I'm assuming you guys see a lot of that as well. [00:17:10]

You can only put so much money into a qualified plan. [00:17:25] So what are these people doing that have all this wealth? Well, what they're doing is they figured out a way in the tax [00:17:30] code. They, they learned years ago that, hey, if you take money out of a life insurance in the form of a loan, [00:17:35] it's not deemed as earned passive or portfolio income, therefore it's non-taxable.

But the whole [00:18:00] concept is, and you hear people saying it all the time, "Life insurance is a terrible investment." Well, you're right. It's not an [00:18:05] investment to begin with. It's actually an asset class. But what we can do is, you know, the, there's two [00:18:10] approaches. The front door approach, which is, "Hey, Jeb, I need a million dollars of life insurance.

Instead of saying- How much does it cost me to buy a million dollars [00:18:35] of life insurance? What if I said, "I want to put $100,000 into a policy over a period [00:18:40] of years. What's the minimum amount of insurance I can buy and stay in compliance with the tax code so that when I start [00:18:45] taking loans out, I don't have what's called a modified endowment contract," meaning that the growth inside my policy is now [00:18:50] taxable?

Mm-hmm.

We could probably spend some [00:19:30] more time on disability insurance. We could spend some more time on life insurance. So maybe, uh, you know, in the [00:19:35] coming months we can do that. But certainly appreciate you coming on. Uh, and I know, you know, [00:19:40] I guess for our, for our clients to know, like, when we work with, with you, Aaron, OCI is, is, [00:19:45] is the broker.

Aaron Clark: Yeah, my... So yeah, my... I'm local. I'm here in Kansas [00:20:10] City. OCI is actually out of Omaha, Nebraska. Uh, but I am, I'm remote and I'm here in Kansas City. My direct line is [00:20:15] 913-568-2040, and I, I'm just your educational hub, guys. I'm, [00:20:20] I am your back office support. Obviously, you can, anytime your client has a need, I can help you with your case [00:20:25] design and making sure that, that we have the right company.

It's, it's great to be back with you guys, and I certainly appreciate the [00:20:45] time today. You bet.

Voiceover: Thanks for tuning in to Metcalfe Money Moment, the podcast. [00:21:00] We hope today's episode provided valuable insights to help you unlock financial [00:21:05] clarity, confidence, and peace of mind. For more expert advice and resources, visit [00:21:10] metcalfepartners.com. Until next time, make every money moment [00:21:15] count.[00:21:20]

The opinions [00:21:35] voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To [00:21:40] determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.