A useful terminology guide for LTCI

Here are the key words that LTCi agents need to know:

• Wealth management platform — A Broker-Dealer's (or bank's) financial management toolset designed to provide advisors with standard methodologies and strategies for the management of a client's portfolio.
• Accumulation phase vs. distribution phase — The part of life when a client is concentrating on accumulating assets vs. the time when the client will need those assets distributed.
• The 4 percent rule — The amount of total assets under management that advisors will set aside for an annual payment to a client and still retain principal.
• Commission vs. fees — Many clients pay their registered independent advisor an annual fee which is a percentage of assets under management, rather than paying commissions on trades.
• Average expected rate of return — A rate the advisor's clients may expect their assets to earn when fully invested in equities. A figure that's frequently used is a seven percent annual rate of return.

What information should the LTC agent be discussing with the financial planner? Here is Randy's list of buzzwords and suggested definitions.

• Medigap policies — Health insurance sold by private insurance companies to fill the "gaps" in original Medicare plan coverage. Lack of coverage can eat away assets.
• Nursing home vs. assisted living vs. in-home skilled nurse visit vs. in-home aide — In descending order of cost, these are the four different levels of LTC.
• Average costs of LTC by region — Costs vary widely. According to a study by the AARP, the average monthly cost of a nursing home in California was $6,306. In South Carolina, average monthly nursing home cost was $4,867.
• Morbidity — The probability of the health event occurring. It measures the frequency and severity of the sicknesses and accidents that result in a need for LTC.

As boomers age, the clients who preserve the greatest amount of wealth may be those whose advisors converged in providing financial solutions to meet that stage in life.