Business Innovators Radio - Interview with Arthur Cohen Founder of Arthur Cohen Insurance Discussing Long Term Care

Episode Date: June 5, 2024

With Over 40 years in the life insurance business. Creative and strategic ways of using our expertise in life insurance as a valuable tool to protect families and businesses. Expertise in Long Term Care insurance, having brought it to the attention of the public almost since its inception. Annuity planning using the most appropriate products for “safe money”. Board member of a nationally recognized neurocognitive research and care facility. Great reputation among our clients and peers for our dedication and devotion to our clients. Old-school sensibility and service combined with up-to-date expertise.Learn More: https://arthurcoheninsurance.com/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-arthur-cohen-founder-of-arthur-cohen-insurance-discussing-long-term-care

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with us Arthur Cohen, who's the founder of Arthur Cohen Insurance and we'll be talking about long-term care. Arthur, welcome back to the program. Thanks, Mike. I'm happy to talk about long-term care. I've been doing long-term care insurance pretty much since its inception. So, yeah, I'm happy to talk about it. Yeah, well, let's first start with defining it. What is long-term care?

Okay. So long-term care is all about the support services and care we need to help us live safely and independently. So by definition, it's the care that someone needs when they have an inability to perform their activities of daily living without assistance. The things we take for granted. This is an important concept, activities of daily living. So they're defined as bathing yourself, dressing yourself, feeding yourself, toileting, continents, and transferring, which means getting up and down. So think about this. You get up in the morning and you get out of bed. That's transferring.

You take a shower, you get dressed. These are all activities of daily living that we don't even think about. So if you can't do these things by yourself, for whatever reason, a stroke, a heart attack, an accident, a cognitive impairment, frailty because you're at an older age, then you need care. You need somebody to help you. And, you know, again, if you live a long life and old age said sin, then frailty becomes an issue. And long term means it's not for a broken arm or for when you have the flu. It's for something that'll last over 90 days. Oh, that's a good point.

Long term doesn't mean 19 years. It's something over 90 days is when that could trigger in. Exactly. That's a good clarification. Now, I know that sometimes people go, oh, look, the sky is falling or a meteor can hit Earth, and there's not much chance of that. But what's the chance that maybe someone could need long-term care? I never heard it quite put that way.

But if you get hit by a meteor, it's probably covered, you know. But this is our largest exposure. There's a 70% likelihood that we're going to need care. 70% and care is really, really expensive. And, you know, I could go into detail about how it affects a family. But, you know, there are different kinds of care. and we never know what kind of care we're going to need. So 70% is pretty huge.

Yeah, yes. So here are the different kinds of care. The skilled nursing, which focuses on medical care, like administering injections or drugs. There's intermediate care, which is like intermittent nursing or rehab, and custodial care. Most care, over 95% of care is custodial. helping people with their activities of daily living, helping them take a bath, helping them get dressed. That's custodial care. And that's what we need for the most part.

When we satisfy the fact in order to trigger a claim for long-term care insurance, we'll get into that, is if you suffer an impairment of two of your activities of daily living, or if you have a cognitive impairment like Alzheimer's. So, you know, again, care is very expensive. Medicare doesn't cover it. Health insurance typically doesn't cover it at all. And that's one of the reasons that we get long-term care insurance. Yeah. And so now let's think about something. And I'm asking this question as like someone learning along with you just talking here. The thought crosses my mind. Okay, long-term care insurance is similar. It makes me think like, okay, it's like car insurance or homeowners insurance.

You need it to cover that eventuality that maybe you make a claim. Well, what if you have long-term care insurance for one, two, three, four years and you don't make claims? I know that you can't go and get your money back from it, but are there different types of long-term cares that maybe it's like, oh, you didn't need it this year, but we've got a different type where, you know, it'll let your premiums roll into something where you don't feel like the money's lost. Okay, that's a good question because when I used to give seminars for Genworth, when it was called GE Financial, it was really at the infancy of long-term care insurance. And they would put a big ad in the Miami Herald and people would come and I would talk about long-term care. what is it and how do we use long-term care insurance to solve the problem? And the question that I would get almost always is, well, what if I buy a policy and I never use it?

Which, you know, it's kind of a silly question because you buy homeowners insurance and you hope your house is never going to burn down. And you're happy when you don't use it, but you keep paying your premiums, but you're thrilled so why should there be a difference? Yeah, right, right. Right, you're happy that you don't need it. Well, you know, and back in those days, you know, the answer was, well, you know, you buy it and you hope you never need it. Nowadays, everything is different. You see, back in those days, insurance companies really didn't know how to plan for how the premiums, how much a policy should cost. Because life insurance is based on mortality and long-term care insurance is based on morbidity. So they weren't price correct. and a lot of companies stopped writing business. Most companies stopped because they were taking such a beating on claims because the policies

were used so much. So now to overcome the, well, rates went up for those existing policies. And so now to solve that problem and overcome the objection of what if I never use it, even though there's a 70% likelihood we're going to need it, we do these hybrid policies now. They're partially life insurance, partially long-term care insurance. So, for example, if you have a $500,000 life insurance policy that's considered a hybrid, you would get 2% if we design it this way of that $500,000 every month for as long as you need care until the $500,000 is exhausted.

If you never use it, your beneficiary gets $500,000. If you use half of it, your beneficiary gets $250,000. So somebody's always going to benefit from having that policy. And if I could just make another point, the older policies used to be what's called reimbursement policies as opposed to indemnity policies, which are the newer policies. So the difference is, let's say you're on claim and there's a nice person coming to take care of you every day. for eight hours a day or four hours a day. At the end of the month, they would fill out a time sheet, send it to the insurance company,

and they get reimbursed for the time, and you get reimbursed for the time that they were there. That's a reimbursement benefit. Nowadays, it's indemnity. So you get a check every month, in the example I used, for $10,000, do whatever you want with it, you know, to take care of you. So that's indemnity versus reimbursement.

In order to trigger a claim, it's still the standard of having an inability to perform two activities of daily living. And it has to look like it last 90 days or a cognitive impairment. But the difference is how the benefit is paid. And doesn't that give more control to the policy holder? Like if they're, they can make decisions and they can, you know, have an in-home care nurse come through or they can, you know, it just gives some more flexibility. Or they can hire somebody who's not from an agency. Right. If you hire someone who's not from an agency, you know, you get more bang for your buck.

So if your housekeeper, for example, is capable of helping you, you know, bathe or toilet or get dressed, why not pay your housekeeper with the money? Yeah, and you're not limited to, oh, here's the people on the approved list, and you're like, I don't know these people. But, yeah, in your example, the housekeeper, it's like, okay, I'm going to have them do it. I get the money. I pay the housekeeper, and I feel like I'm in control, and I made those decisions. Right. Or somebody who used to be a nurse in the old country. Yeah.

It doesn't have to be somebody through an agency. And, you know, what I think is an important thing to touch upon, I know you're asking the questions, but, but. This is a conversation. I'm enjoying it. Okay. So I feel compelled to talk about what are the reasons that people get long-term care insurance, you know, to begin with? Yeah. And I've written articles about this. Nobody wants to be a burden to their family. I mean, think about it as the person who actually needs the care. Oh, my God. Now I have, you know, my daughter is coming over to change my diapers or to help me get up and down. or to, you know, I don't want to be a burden. And then there's also the financial burden. Long-term care is really expensive. In Miami, it's like $26 an hour to take care of somebody.

If you hire somebody from an agency or $20 an hour, maybe if it's not from an agency. So if you need eight hours of care a day or if you need round-the-clock care, you know, do the math. it could wipe out somebody's entire life savings easily. And if it's an Alzheimer's situation, you know, there's half a million dollars right there on the average. So where's the money going to come from? Are you going to have to mortgage your house? Are you going to have to, you know, drain your life savings or reach out to family members?

So it creates a tremendous emotional and financial strain to the loved ones, you know? Now, now your loved one is throwing. into the role of a caregiver, and that creates embarrassment on your part, sometimes resentment on their part, even though it's hard to admit you start resenting the person you love the most because now you have to worry about who's taking care of them. I bet you get over there. And in the meantime, you might have your own children to take care of. And for those people, by the way, those are called sandwich generation people.

You have to worry about your parents and you have to worry about your children. So it's a tremendous, tremendous rollercross door of emotions. Well, and I would even think, too, that like you said, about the family having that opportunity to know this is taking care of in the event of, well, you already mentioned that there's a 70% chance. So it very well could happen. That gives that peace of mind to the parents. who are making sure this policy is in place for their eventual care because they realize I'm not going to be a burden of my family. I feel better. It gives them that peace of mind. And then when they explain that to the family or the kids that, you know, hey, if in the event this happens, I've got this

taken care of. Here's the policy. Here's what to do. Yeah. So it, I would venture to say it's kind of like when you, you know, when you plan your vacation, it's like, okay, we've got our 10-day vacation plan. Here's what doing every day. You look at the plan and you go, ah, that just feels good. Well, when you have this kind of thing in place, it just kind of feels good. Yeah, yes, yes. And, you know, something else, it doesn't have to be about the family. What if you're a single person? What if you're a single person that doesn't have a partner, you know, not married or not a domestic partner or you're all alone, who's going to take care of you? So having a policy, especially for a single person, is very, very important. You know what? That's huge.

Who's going to take care of your older self, except your younger self? Yeah. Yeah. And when your mental faculties are in place to make sure you're planning these things ahead of time, It makes me think, is there a specific age? When's the range, the age range that people should be thinking about this type of planning for a long term? Okay, I love that question because, again, when I used to do the seminars, I would get that question. And I used to say, you know, mid-50s is a good time to start that planning because you already have your life insurance probably. You already have your health insurance covered. You're saving for the future probably.

But no, I've changed my way of thinking about that. From my experience, you need to get, people need to get long-term care insurance as soon as they can see clear financially to get a policy because you could only buy it with your health. So I have stories of people. Somebody has rheumatoid arthritis starting at when she was age 38. She's uninsurable because the claim is triggered when you have an impairment of two activities of daily living. If you have rheumatoid arthritis, the odds are, you know, you're going to be unclaimed one of these days. It's almost like an insurance company, you know, offering home orders insurance while your house is on fire.

You know, that's not. I like how you said you can only buy the coverage with your health. Right. And that's a huge point. Yeah. And the younger you are, the less expensive it is. So, you know, all those reasons, it's important to get it as soon as you could see how to do it comfortably financially. And sometimes we can move things around when we do a policy review so that it's easily affordable because you can move some assets, you know, reallocate something so that it throws off enough money to pay for the insurance.

You don't even feel it, you know. And that's what I take pride in doing. Well, and I like the fact, too, that it's like, oh, man, I don't want to have one extra expense for something that may or may not happen decades down the road. But like you mentioned, we're not going to get into the weeds and the details of it. But with those kind of hybrid type of policies, you've got some benefit on this direction and some benefit. And you've got all your bases covered. So I think that's a great thought to keep in mind. Yes, yes, agreed.

Well, I tell you, this has been really eye-opened. for me just to kind of learn about this type of care, what, you know, 70% is staggering. If we were talking about this and it was like, well, you got a 20% chance. Well, that's not much of a chance, but 70% that you'll need some type of long-term care. And it might not mean decades of long-term care. It might mean months at a time. But the fact that it's that high of a percentage, it means you should be doing something about it. And earlier the better because I I actually love, love, love what you said. You buy these things, air quotes, with your health.

And you don't know what your health will be tomorrow or next month or next year. So that's just a huge piece. So any last thoughts, Arthur, on long-term care that we should keep in mind? Well, what I think you should keep in mind or what we should keep in mind is that it's not a one-size-fits-all type of policy. I look at every situation, and the policies have, you know, what I call different moving parts. So do we need an inflation rider? Do we need a lifetime benefit? Maybe we only need a four-year benefit.

Or if somebody has a history of Alzheimer's in the family, you know, they might be predisposed to that. So we want to make sure there's a longer benefit, and those all affect the premium. So it's absolutely in most cases affordable, depending on how we design the policy. and I design policies to make sure they fit the person's needs. You know, I'm always attentive and attuned to certain words people say, and you said a couple times here, design. So that gives me the feeling that this is not something you go Google, click a box,

set it up, and you're good to go. This needs to be thought of, constructed, and designed. So is that an accurate thought process? Absolutely. That's a great way of putting it. because everybody's needs are different. Everybody's family situation is different. And sometimes we put two spouses together on the same policy.

It saves money that way, and maybe one person needs more than the other, but there's a pool of money there for both of them to tap into. So, yes, designing the policy appropriately for the situation is very, very important. Huge. Well, I'll tell you, Arthur, it's been really eye-opening if someone is interested in having a conversation with you to check out their opportunities for long-term care. What's the best way they can learn more and also reach out and connect with you? Sure. Well, you can find me at Arthur Cohen Insurance.com.

That's my website. Or my phone number is in Miami 305, 5950001. And I'm licensed in many states around the country. and if I'm not, I could be licensed in that state. You're here to serve. Yeah, I'm very amenable to helping people wherever they are. Arthur, well, thank you so much for coming back on. It's a real pleasure talking with you.

Thank you, Mike. You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show or listen to past episodes, Visit www. www. influential entrepreneurs radio.com.