THE GARTENHAUS REPORT Volume 1006

THE FED BLINKS

I don’t know about you, but I am so tired of hearing the talking heads pontificate about whether or not the Fed would finally raise interest rates ¼%. The majority of economists and “experts” expected the Fed to make the move, but when push came to shove they caved. The Fed cited the malaise in China’s economy as one of the factors in their decision. So it seems our central bank is now the “World Central Bank” and the interest rate discussions will continue for who knows how long!

There certainly are signs that the global economy is slowing. I would point to commodities as one very good barometer of the globes’ economic health and they are tumbling in value. This points to slow demand for oil, metals and other essential items that are in great demand when economies are chugging forward. Today we are witnessing just the opposite.

Stock markets around the world have reacted to the global slowdown by breaking downward, after recent all-time highs. Even here in the US where the economy is stronger than just about any other region in the world, the stock market has taken notice. As this is written, the S&P 500¹ index is about 6% off of its all-time highs from earlier this year. The market dropped after the Fed’s decision to hold rates at zero. It is unknowable what the markets would have done had there been a rate rise.

The US stock market is now at a critical juncture. As you can see on the chart below, we have enjoyed a long bull market as you can see from the rising trend line. It is my belief that this line marks the spot. In other words, if we were to break below the line, I would have to conclude that a new bear market is in place. On the other hand, should we hold the line, the bull market continues. I think it is really that simple. So we wait and see what kind of resolution we will get and we will keep you posted.

¹S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in the index

UNDERSTANDING LONG-TERM CARE INSURANCE

It's a fact: people today are living longer. Although that's good news, the odds of requiring some sort of long-term care increase as you get older. And as the costs of home care, nursing homes, and assisted living escalate, you probably wonder how you're ever going to be able to afford long-term care. One solution that is gaining in popularity is long-term care insurance (LTCI).

What is long-term care?

Most people associate long-term care with the elderly. But it applies to the ongoing care of individuals of all ages who can no longer independently perform basic activities of daily living (ADLs)--such as bathing, dressing, or eating--due to an illness, injury, or cognitive disorder. This care can be provided in a number of settings, including private homes, assisted-living facilities, adult day-care centers, hospices, and nursing homes.

Why you need long-term care insurance (LTCI)

Even though you may never need long-term care, you'll want to be prepared in case you ever do, because long-term care is often very expensive. Although Medicaid does cover some of the costs of long-term care, it has strict financial eligibility requirements--you would have to exhaust a large portion of your life savings to become eligible for it. And since HMOs, Medicare, and Medigap don't pay for most long-term care expenses, you're going to need to find alternative ways to pay for long-term care. One option you have is to purchase an LTCI policy.

However, LTCI is not for everyone. Whether or not you should buy it depends on a number of factors, such as your age and financial circumstances. Consider purchasing an LTCI policy if some or all of the following apply:

·        You are between the ages of 40 and 84

·        You have significant assets that you would like to protect

·        You can afford to pay the premiums now and in the future

·        You are in good health and are insurable

How does LTCI work?

Typically, an LTCI policy works like this: You pay a premium, and when benefits² are triggered, the policy pays a selected dollar amount per day (for a set period of time) for the type of long-term care outlined in the policy.

Most policies provide that certain physical and/or mental impairments trigger benefits. The most common method for determining when benefits are payable is based on your inability to perform certain activities of daily living (ADLs), such as eating, bathing, dressing, continence, toileting (moving on and off the toilet), and transferring (moving in and out of bed). Typically, benefits are payable when you're unable to perform a certain number of ADLs (e.g., two or three).

Some policies, however, will begin paying benefits only if your doctor certifies that the care is medically necessary. Others will also offer benefits for cognitive or mental incapacity, demonstrated by your inability to pass certain tests.

Comparing LTCI policies

Before you buy LTCI, it's important to shop around and compare several policies. Read the Outline of Coverage portion of each policy carefully, and make sure you understand all of the benefits, exclusions, and provisions. Once you find a policy you like, be sure to check insurance company ratings from services such as A. M. Best, Moody's, and Standard & Poor's to make sure that the company is financially stable.

When comparing policies, you'll want to pay close attention to these common features and provisions:

·        Elimination period: The period of time before the insurance policy will begin paying benefits (typical options range from 20 to 100 days). Also known as the waiting period.

·        Duration of benefits: The limitations placed on the benefits you can receive (e.g., a dollar amount such as $150,000 or a time limit such as two years).

·        Daily benefit: The amount of coverage you select as your daily benefit (typical options range from $50 to $350).

·        Optional inflation rider: Protection against inflation.

·        Range of care: Coverage for different levels of care (skilled, intermediate, and/or custodial) in care settings specified in policy (e.g., nursing home, assisted living facility, at home).

·        Pre-existing conditions: The waiting period (e.g., six months) imposed before coverage will go into effect regarding treatment for pre-existing conditions.

·        Other exclusions: Whether or not certain conditions are covered (e.g., Alzheimer's or Parkinson's disease).

·        Premium increases: Whether or not your premiums will increase during the policy period.

·        Guaranteed renewability: The opportunity for you to renew the policy and maintain your coverage despite any changes in your health.

·        Grace period for late payment: The period during which the policy will remain in effect if you are late paying the premium.

·        Return of premium: Return of premium or nonforfeiture benefits if you cancel your policy after paying premiums for a number of years.

·        Prior hospitalization: Whether or not a hospital stay is required before you can qualify for LTCI benefits.

When comparing LTCI policies, you may wish to seek assistance. Consult a financial professional, attorney, or accountant for more information.

What's it going to cost?

There's no doubt about it: LTCI is often expensive. Still, the cost of LTCI depends on many factors, including the type of policy that you purchase (e.g., size of benefit, length of benefit period, care options, optional riders). Premium cost is also based in large part on your age at the time you purchase the policy. The younger you are when you purchase a policy, the lower your premiums will be.

²Guarantees, ratings, and benefits provided by life insurance products are subject to the claims-paying ability of the issuing insurance company.

1^st ANNUAL GARTENHAUS DOG EVENT

Fun was had by all, including all the big and little critters that were in attendance. The weather was picture perfect and the food was yummy. Dog trainers combed the group to problem solve and Homeward Trails brought a 3-legged foster dog from Peru! Quite a story behind that little fellow. We hope even more can attend the party next year.

Humans: HP, Howard, Sue of Homeward Trails, Bryan
Dogs: Spike, Pepe, Lola from Peru, Pharoah

The opinions and forecasts expressed in this commentary are those of the author and may not necessarily reflect those held by NFP Advisor Services, LLC. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a guarantee of future results. It is not guaranteed by NFP Advisor Services, LLC for accuracy does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. The indices mentioned are unmanaged and cannot be directly invested into. Past performance is no guarantee of future results. NFP Advisor Services, LLC does not offer tax or legal advice. Securities and Investment Advisory Services offered through NFP Advisor Services, LLC, member FINRA/SIPC.  NFP Advisor Services, LLC is not affiliated with Gartenhaus Financial.