Long Term Care Insurance - Should I Keep?

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Topic Author
Tony Angeleno
Posts: 18
Joined: Wed Sep 17, 2014 9:31 am

Long Term Care Insurance - Should I Keep?

Post by Tony Angeleno »

Greetings, and peace to all.

I am a new member and I do have a few questions; today I'll start with one – What should I do with my long term care insurance?

Back in 1997 when I was 54 and my wife was 52, we bought a long term care insurance policy at an annual premium of about $900 for each person. The benefit is “MDB of $100 x 365 days x Plan Selected: Unlimited,” provided the means tests are met. A “Compound Benefit Increase Rider,” included, provides a 5% annual increase to the benefit, to $229 today.

As I see it, I have three options: a) Cancel the policy, b) Keep it as is, and c) Expand it to stay abreast of current costs. Which one should I choose?

Back when we bought the policies, we did not have much money, maybe $250k on everything outside of some small rental properties and IRA and 401k. Our financial structure lacked depth, nothing more than a skeleton really. So we bought the policy to protect our cash position. Nowadays, we meet our needs with pensions and social securities, and have a robust (knock wood), seven figure investments that we have never touched except as IRA mandated RMD, and even that is plowed back to taxable investments.

I am leaning toward option a. It is self insurance. Sure, I'll run the risk of not getting money when qualified, but then I also don't have to worry about passing the means tests. And meanwhile I get to keep the premium.

Option b is ambivalent. If the plan is good, why shouldn't I buy more and insure myself to the hilt? If the plan is not good, why should I keep on bleeding money?

Option c is a question on whether $229 a day is sufficient, and whether premium has risen out of sight.

Is this a philosophical question, you may ask? Well, it's like I am walking on a dirt road, and a shard of gravel has worked its way between the palm of my foot and the shoe.

Thank you for your attention.
Tony Angeleno

Edited 5:23 PM, 10/22/14
Should I draw some parallel thinking with term life insurance?
Tony Angeleno
Last edited by Tony Angeleno on Wed Oct 22, 2014 7:25 pm, edited 1 time in total.
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BL
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Re: Long Term Care Insurance - Should I Keep?

Post by BL »

I have never heard of a means test for LTC ins. What exactly is your company and name of insurance?
Topic Author
Tony Angeleno
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Joined: Wed Sep 17, 2014 9:31 am

Re: Long Term Care Insurance - Should I Keep?

Post by Tony Angeleno »

To BL:

Thanks for the reply. I see where I have tripped myself up.

I did not mean "Means" as in financial ability, but in the ability to perform the seven daily activities.

In order to qualify for Residential Care Facility Benefit, the patient must:
1. be unable to perform two or more activities of Daily Living (bathing, dressing, eating, toileting, transferring, continence and ambulating); or
2. have a cognitive Impairment.

I suspect we can perform more daily living activities on a good day and less on a bad day.

Sorry for the confusion,
Tony Angeleno
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Ged
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Re: Long Term Care Insurance - Should I Keep?

Post by Ged »

For me the primary purpose of LTCI is protecting your legacy for your heirs.

If you don't care about this then maybe cancellation is a reasonable idea. Otherwise I think your policy is probably worth keeping. I would not expand it. I think your coverage is fairly decent as is.
mhalley
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Re: Long Term Care Insurance - Should I Keep?

Post by mhalley »

This is an entirely personal decision. At a million, technically you meet criteria for needing ltci. Not poor enough to get medicaid, not rich enough to self insure. I have heard several radio gurus talk about having some ltci, not enough to completely cover it, but enough that if something happens you won't be crippled by it. Seems like that is where you are right now. I think clark howard recommends a 5 yr policy with 6 mo waiting period to decrease the expense.
http://www.clarkhoward.com/news/clark-h ... roll/nFb3/
Mike
LongerPrimer
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Re: Long Term Care Insurance - Should I Keep?

Post by LongerPrimer »

means test: When we bought our LTCi, 12-14 year's ago (?), the rep gave us a pamphlet from the DHEW-State. Saying to the effect that your income should be enough to cover the premiums in retirement and future price increases. That the purchase is a decision to hold till death because a canceling of the insurance wastes the paid premium.

Somewhere in the WSJ, early 2014 (?), there was an article on BIG premium increases approve by the state's regulatory agency, by the carriers. We got a notice that ours will increase 30% sometime in April 2015 (?) Article said that the Carriers had poor returns on bonds, low lapse rates, continuing cost increases, and unknown exposure to "unlimited" coverage.

We have about $240/day (originally $100/day) x 1096 days (3 yrs). Having cared for two parents without outside help, Any supplemental help is very appreciated. I have come to realize that I was insufferable but my siblings should have been more supportive in money and giving me time outside of my responsibilities. $240/day would hire a caregiver with minimum duties for 10 hours, through an approved agency, and caregiver would be paid $10/hr before taxes.

I plan to keep policies. Current age 64/67. Parent 1, passed @91, #2 @ 97, #3 and#4 parents are doing OK at 95.

You may want to explore reduced time coverage, rather than reduced daily reimbursement.

GL
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GerryL
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Re: Long Term Care Insurance - Should I Keep?

Post by GerryL »

I have an LTC policy that seems similar to yours which I bought at about the same age. I have Alzheimer's in the family and no support system, so I went with the Unlimited policy. Over the years the premium has risen (surprisingly, not this year) and they have given me some options to mitigate the increase. For example, one year I agreed to give up the compounding for a year. My plan is this: keep the policy as unlimited and keep paying the annual policy until I am into my 80s. At that time, if my mind is still functioning, I may decide to downgrade to 5- or 3-year coverage.

As you look at it, consider not just that you may have enough money to self-insure, but whether you have enough money that you really don't require complete coverage of your long-term care expenses. (In other words, why bother paying a higher premium to increase the payout?) It's a tough call whether to buy LTC insurance and another tough call whether to give it up.
dhodson
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Re: Long Term Care Insurance - Should I Keep?

Post by dhodson »

You've already been paying into this for a while now, if it were me id keep it going since it sounds like the price isn't really a big problem for you. Now I wouldn't buy one if I were in your situation for a variety of reasons but keeping a policy in force at this point is a different story.
Topic Author
Tony Angeleno
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Re: Long Term Care Insurance - Should I Keep?

Post by Tony Angeleno »

Thanks everybody for your reply.

I apologize again for using the wrong terminology "Means," thereby steering a number of the posters down the wrong path.

Special thanks for the Clark Howard link. Although not explicitly stated earlier, the value of my investable assets is in compliance with guideline 3 on the good side, which means - and I wish I knew his rationale - I need not buy LTCI.

The answer from the first reply enticed me to google for reviews of the insurance company. About two-third of the reviewers gave this company a very dissatisfied rating. Now what do I do?! I really do not want to name that company.

Tony Angeleno
IowaFarmBoy
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Re: Long Term Care Insurance - Should I Keep?

Post by IowaFarmBoy »

From observing my parents and in-laws, the cost of long term care isn't so much of a big deal if the person needing long term care doesn't have a spouse remaining. Long term care may cost more than living independently but there are no longer auto expenses, rent, etc., so total expenses can be close to a wash depending on lifestyle. It is much more of an issue when there is one spouse needing long term care and the other is maintaining an independent lifestyle so their combined expenses likely will more than double.

Your premium isn't a lot of money. How many years of care will it cover?
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Phineas J. Whoopee
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Re: Long Term Care Insurance - Should I Keep?

Post by Phineas J. Whoopee »

Ged wrote:For me the primary purpose of LTCI is protecting your legacy for your heirs.

If you don't care about this then maybe cancellation is a reasonable idea. Otherwise I think your policy is probably worth keeping. I would not expand it. I think your coverage is fairly decent as is.
I, respectfully, maintain LTCi for a different purpose: staying out of nursing homes. Medicaid covers them, where I live, not very nice ones but they're there, but does not cover less drastic measures. For me, LTCi is about staying home rather than going to an institution, and, again for me, the cost of my policy is worth the reduced risk.
PJW
bluemarlin08
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Re: Long Term Care Insurance - Should I Keep?

Post by bluemarlin08 »

A lot depends on the company underwriting the policy. If it is a Conseco/Penn Treaty or company no longer writing new business I might get out. IMO, a company like John Hancock and Genworth, and the premiums doesn't impact your standard of living, I would hold on, although you will have rate increases in the future. Some suggest planning on 5% increase every 5 years, but who knows.
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