Long Term Care Insurance?

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pkcrafter
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Long Term Care Insurance?

Post by pkcrafter » Wed Jun 14, 2017 11:49 am

Here's an article on long term care and the rapidly rising costs. Comments on strategies?
Gagliardi isn’t a fan of long-term-care coverage. He argues that soaring premiums make the product unaffordable for many pre-retirees and retirees.

In 2016, most federal government employees and retirees faced an 83% rate hike to renew their policies. Civilian policyholders have confronted hefty increases as well.

“The cost of a long-term-care policy can significantly impact one’s lifestyle in retirement, regardless of whether they ever have to go into long-term care,” Gagliardi said.

He favors two alternatives. For some clients, he advises they buy hybrid long-term-care policies that combine traditional long-term-care coverage with cash-value life insurance that doubles as a savings and investment vehicle.

He’s growing increasingly fond of his second option: a reverse mortgage known as a home equity conversion mortgage (HECM).
http://www.marketwatch.com/story/this-a ... 2017-06-13


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nedsaid
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Re: Long Term Care Insurance?

Post by nedsaid » Wed Jun 14, 2017 12:02 pm

I considered Long Term Care insurance a few years ago but got cold feet when Met Life exited the business. That told me something. The prospect of huge premium increases in my eighties is not an attractive prospect.
A fool and his money are good for business.

TravelforFun
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Re: Long Term Care Insurance?

Post by TravelforFun » Wed Jun 14, 2017 12:12 pm

My wife and I have LTCi with Unum and whenever they have a rate increase, they give you the choice of paying the higher premium to keep the coverage, or stop paying and receive the amount of care equal to the amount of premium we have paid. We're now in our 10th year with Unum.

adamthesmythe
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Re: Long Term Care Insurance?

Post by adamthesmythe » Wed Jun 14, 2017 2:31 pm

> He’s growing increasingly fond of his second option: a reverse mortgage known as a home equity conversion mortgage (HECM).

I don't follow the reasoning. Hard for me to see a scenario where that makes sense, unless you have few other assets. Maybe someone can explain.

marcopolo
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Re: Long Term Care Insurance?

Post by marcopolo » Wed Jun 14, 2017 3:30 pm

I don't see the value of LTCI policies available today. What i want insurance for is long tail (catastrophic) risk. If my wife or I need long term care for 10+ years, that is where a policy would be useful. But, the policies available today all appear to have a cap (often pretty short ones) on how long they will pay. I would want quite the opposite, a big deductible (no coverage for the first year, or two, or three) then unlimited (or very long) coverage after that. Not sure why there is not a market for that. Most people would never collect, but you would be protected from a catastrophic event. Isn't that what insurance is supposed to do? The current policies seem the opposite of that.

Given, the rising rates on top of that, it does not make sense for us.
Once in a while you get shown the light, in the strangest of places if you look at it right.

pintail07
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Re: Long Term Care Insurance?

Post by pintail07 » Wed Jun 14, 2017 4:02 pm

marcopolo wrote:I don't see the value of LTCI policies available today. What i want insurance for is long tail (catastrophic) risk. If my wife or I need long term care for 10+ years, that is where a policy would be useful. But, the policies available today all appear to have a cap (often pretty short ones) on how long they will pay. I would want quite the opposite, a big deductible (no coverage for the first year, or two, or three) then unlimited (or very long) coverage after that. Not sure why there is not a market for that. Most people would never collect, but you would be protected from a catastrophic event. Isn't that what insurance is supposed to do? The current policies seem the opposite of that.

Given, the rising rates on top of that, it does not make sense for us.
There are policies that cover a long tail claim with rate guarantees and guarantees to return all premiums either in claims or a death benefit.

Miriam2
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Re: Long Term Care Insurance?

Post by Miriam2 » Wed Jun 14, 2017 8:47 pm

marcopolo wrote:I don't see the value of LTCI policies available today. What i want insurance for is long tail (catastrophic) risk. If my wife or I need long term care for 10+ years, that is where a policy would be useful. But, the policies available today all appear to have a cap (often pretty short ones) on how long they will pay. I would want quite the opposite, a big deductible (no coverage for the first year, or two, or three) then unlimited (or very long) coverage after that. Not sure why there is not a market for that. Most people would never collect, but you would be protected from a catastrophic event. Isn't that what insurance is supposed to do? The current policies seem the opposite of that.

Given, the rising rates on top of that, it does not make sense for us.
It seems to me that marcopolo has described in a nutshell the exact type of LTC policy many people would want.
pintail07 wrote:There are policies that cover a long tail claim with rate guarantees and guarantees to return all premiums either in claims or a death benefit.
Since so many would want these policies, and some exist - why don't we see the LTCi industry creating and promoting and advertising these policies?

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TD2626
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Re: Long Term Care Insurance?

Post by TD2626 » Wed Jun 14, 2017 8:55 pm

I'm working on a long, general post on LTCI but here are some ideas for now:

One could get the longest policy that a company offers with the longest elimination period. This makes it more catastrophic type insurance instead of forced savings for a likely ned.

LTCI can make sense for some and I feel that most in their 50s or 60s should carefully evaluate if LTCI is suitable for them based on their goals and preferences.

bayview
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Re: Long Term Care Insurance?

Post by bayview » Wed Jun 14, 2017 9:53 pm

Because of the reasons mentioned above, and because we don't have a lot of savings or cash flow in retirement, we are setting aside enough in safe investments to cover two years of the going rate for nursing home care in our area for each of us. If we don't need it, great; we have an estate. If we do, we can self-pay for LTC or similar levels of care (home care, assisted living) for up to two years or more.

If the stay is longer than that, then sorry, but we've done our best, and we will then go on Medicaid, plus our SS and my eensie pension. Many good nursing homes will accept patients with two years of self-funding assured and then keep them with Medicaid funding afterwards.

We could possibly turn over every penny of assets we have to a local CCRC, but all those pictures on the websites of happy, sociable residents doing their gardening and water aerobics and ceramics freak us out. We would happily do that on our own if interested, but we really don't want to be in a situation where someone is badgering us to do this. Instead, we hope to maintain our ornery, quirky, antisocial lives in our own home until we are carried out on stretchers with sheets over our faces. :D (That's the goal, anyway.) DH's parents moved to an apartment retirement community with a staffer whose title was "Director of Fun." After learning this, we promised one another that we would drink hemlock before living in a setting with a Director of Fun. :beer (Although there is a local Episcopalian CCRC with a bar/pub, which did make DH's ears perk up a bit, devout atheist that he is.)

Sorry, but we don't have millions lying around for an alternative. This is the most honorable solution we can afford.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

TravelforFun
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Re: Long Term Care Insurance?

Post by TravelforFun » Wed Jun 14, 2017 10:16 pm

bayview wrote:If we do, we can self-pay for LTC or similar levels of care (home care, assisted living) for up to two years or more.

If the stay is longer than that, then sorry, but we've done our best, and we will then go on Medicaid, plus our SS and my eensie pension. Many good nursing homes will accept patients with two years of self-funding assured and then keep them with Medicaid funding afterwards.
If I were in this situation, I would not want to burden the society... I would go to Canada where physician assisted suicide is allowed. Why live if we just merely exist?

We do have LTCi by the way because we don't want to burden our children ... or the society.

bayview
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Re: Long Term Care Insurance?

Post by bayview » Wed Jun 14, 2017 10:19 pm

TravelforFun wrote:
bayview wrote:If we do, we can self-pay for LTC or similar levels of care (home care, assisted living) for up to two years or more.

If the stay is longer than that, then sorry, but we've done our best, and we will then go on Medicaid, plus our SS and my eensie pension. Many good nursing homes will accept patients with two years of self-funding assured and then keep them with Medicaid funding afterwards.
If I were in this situation, I would not want to burden the society... I would go to Canada where physician assisted suicide is allowed. Why live if we just merely exist?

We do have LTCi by the way because we don't want to burden our children ... or the society.
Well, that was implied by the "drinking the hemlock" remark.

About a year ago, there was a obituary in our local paper for a married couple who died on the same day, in their nineties. They'd been together for 70 years. Per the obituary, their daughter was present when they died. I seriously doubt that this was coincidental.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

Miriam2
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Re: Long Term Care Insurance?

Post by Miriam2 » Wed Jun 14, 2017 10:52 pm

TD2626 wrote:One could get the longest policy that a company offers with the longest elimination period. This makes it more catastrophic type insurance instead of forced savings for a likely ned.
Yes, this is what it would be or what it is - catastrophic LTC insurance - for the dreaded 5 (Parkinsons, Alzheimers, other dementias, ALS & one other I can't remember). Are there serious policies out there for catastrophic LTCi, or just a few here and there? Is the industry beginning to focus on this?

Could you explain what you mean by "instead of forced savings for a likely ned [need]?" :?:

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TD2626
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Re: Long Term Care Insurance?

Post by TD2626 » Wed Jun 14, 2017 11:22 pm

Miriam2 wrote:
TD2626 wrote:One could get the longest policy that a company offers with the longest elimination period. This makes it more catastrophic type insurance instead of forced savings for a likely ned.
Yes, this is what it would be or what it is - catastrophic LTC insurance - for the dreaded 5 (Parkinsons, Alzheimers, other dementias, ALS & one other I can't remember). Are there serious policies out there for catastrophic LTCi, or just a few here and there? Is the industry beginning to focus on this?

Could you explain what you mean by "instead of forced savings for a likely ned [need]?" :?:
There is a relatively high chance that someone will need at least some long term care (be it 3 months, or 6 months or even a year or two). It's not a certainty, but it's very common. Many people suggest 30-50% will need long term care. Insurance companies (who want to scare people into buying LTC) even claim 70% of people will need long term care (for a short period - needing 10 years of care is rare). Insurance is supposed to be for things that are very uncommon. Homeowners insurance is relatively inexpensive (compared to many LTCI policies). Very few houses are hit by tornadoes or fires. If 70% of houses were expected to be hit by tornadoes, homeowners insurance would be very expensive. Term life for a young person is similar.

When there's a very high chance of needing insurance (or in the case of whole life, a 100% chance of needing it), it isn't insurance in my opinion. One is saving for a very likely future expense. Insurance companies generally invest a lot of their money in bonds... so it's a bond fund with a high expense ratio (doing your investing through insurance is expensive). Even worse, you don't even know what the expense ratio is.

People's saving for likely needs of <1 year LTC costs should be saved for through mutual funds- people should be disciplined enough to do the savings themselves. Getting a insurance policy that's like this converts your own savings through investing into forced savings by putting money into an insurance pool. You get a "bill" from the company and are "paying the bill" instead of investing yourself.

It is only when buying cheaper insurance like what I described (longer-term, longer elimination period) that one can get true insurance - where risk pooling allows one to pay the average cost of an unlikely risk. Catastrophic costs (like having to pay six figures a year for 10 years for things like Parkinson's and Alzheimer's are possible but relatively rare so this risk is easier (cheaper) to insure against.

Most companies don't offer lifetime policies. I don't know of anyone doing anything that's specifically "catastrophic" that has a reasonable cost/benefit tradeoff. It may be due to regulations on what kinds of policies that insurers can offer, I'm not sure. (Also, insurers don't want to take on too much risk).

One can, though, get as close as possible to a catastrophic policy by getting a relatively cheap, plain vanilla policy from a highly rated company that focuses on the long-term and largely ignores insuring for short-term risk. Insurance is expensive -- but recall the potential costs of LTC are staggering. However, this is something that people will need to individually consider in light of their own situations and needs. Other routes like the Medicaid planning route are also viable for many.

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Re: Long Term Care Insurance?

Post by itstoomuch » Wed Jun 14, 2017 11:48 pm

We expect to use our LTCi as a way to extend retirement assets and it we are lucky to leave a legacy.
Our LTCi was designed to cover about 30-60% of care with SS monies covering the initial 1st dollar of each month. Once SS and LTCi is fully used in that month, other retirement assets will makeup the difference. IOW, for each month care costs will be paid by: 1st SS; 2nd LTCi; 3rd Income from GLWB annuities; 4th Discretionary money.

We were presented by FA last year(?) an GWLB annuity that paid 2x of Income if you go into LTCi. I cannot remember if this is standard option or a fee option.

YMMV.
Rev90517; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax 25%. Early SS. FundRatio (FR) >1.1 67/70yo

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Re: Long Term Care Insurance?

Post by itstoomuch » Wed Jun 14, 2017 11:49 pm

We expect to use our LTCi as a way to extend retirement assets and hope if lucky, leave a legacy.
Our LTCi was designed to cover about 30-60% of care with SS monies covering the initial 1st dollar of each month. Once SS and LTCi is fully used in that month, other retirement assets will makeup the difference. IOW, for each month care costs will be paid by: 1st SS; 2nd LTCi; 3rd Income from GLWB annuities; 4th Discretionary money.

We were presented by FA last year(?) an GWLB annuity that paid 2x of Income if you go into LTCi. I cannot remember if this is standard option or a fee option.

YMMV.
Last edited by itstoomuch on Thu Jun 15, 2017 11:08 am, edited 2 times in total.
Rev90517; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax 25%. Early SS. FundRatio (FR) >1.1 67/70yo

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Re: Long Term Care Insurance?

Post by Limoncello402 » Thu Jun 15, 2017 3:58 am

I've had a Genworth policy for 8 years (I'm 60) and the premium went up quite a bit this year. They gave options to reduce coverage. After hemming and hawing for months, I finally chose to just renew it as is. Reducing coverage for just a few hundred dollars depending on the options seemed a slippery slope. I'm not happy with the cost, but I also am keenly aware that as a single person I don't have relatives that could care for me and I need to cover all bases in taking care of potential future needs. I have a 5 year policy that is pretty generous in coverage, for a current rate of $3200./year. Of course, I fully expect it to keep rising.

annielouise
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Re: Long Term Care Insurance?

Post by annielouise » Thu Jun 15, 2017 6:31 am

I guess I am looking at LTC differently than most. We bought policies when we were relatively young. My thinking is that the biggest risk is one of us needing LTC in the years leading up to retirement or early in retirement, because that will hurt the other one the most financially (reducing or eliminating ability to work during prime earning years or depleting retirement accounts when the other has a long time still to live). I do not necessarily see us keeping the policies (or continuing to accept the increased cost for the same coverage) all the way through retirement. Our retirement assets are projected to grow faster than we will spend them, so the need for LTC insurance should actually decrease as we enter our twilight years. (Also, leaving an estate will become less important - for our unique situation).

We have joined policies for a total of 6 years (either can use) that pay about 50 - 80% of cost (depending on care used). Current combined yearly premium is $3100.

adamthesmythe
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Re: Long Term Care Insurance?

Post by adamthesmythe » Thu Jun 15, 2017 10:07 am

pintail07 wrote:
marcopolo wrote:I don't see the value of LTCI policies available today. What i want insurance for is long tail (catastrophic) risk. If my wife or I need long term care for 10+ years, that is where a policy would be useful. But, the policies available today all appear to have a cap (often pretty short ones) on how long they will pay. I would want quite the opposite, a big deductible (no coverage for the first year, or two, or three) then unlimited (or very long) coverage after that. Not sure why there is not a market for that. Most people would never collect, but you would be protected from a catastrophic event. Isn't that what insurance is supposed to do? The current policies seem the opposite of that.

Given, the rising rates on top of that, it does not make sense for us.
There are policies that cover a long tail claim with rate guarantees and guarantees to return all premiums either in claims or a death benefit.
Link please?

rgs92
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Re: Long Term Care Insurance?

Post by rgs92 » Thu Jun 15, 2017 10:49 am

My John Hancock policy cannot raise premiums or reduce benefits.

ChrisC
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Re: Long Term Care Insurance?

Post by ChrisC » Thu Jun 15, 2017 11:10 am

I wonder what are the chances or probality of a general member of the public using LTCI insurance because of impairments and due to cognitive decline or failure to perform 2 of 6 ADLs which might in turn result from old age, some horrible accident, or some medical condition like Parkinson's or MS, compared to using disability insurance or 100 year flood plan insurance?

Regardless of the chances or probability, you have a 100 percent chance if the risk you're insuring against happens to you, right?

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Re: Long Term Care Insurance?

Post by jimishooch » Thu Jun 15, 2017 11:47 am

adamthesmythe wrote:
pintail07 wrote:
marcopolo wrote:I don't see the value of LTCI policies available today. What i want insurance for is long tail (catastrophic) risk. If my wife or I need long term care for 10+ years, that is where a policy would be useful. But, the policies available today all appear to have a cap (often pretty short ones) on how long they will pay. I would want quite the opposite, a big deductible (no coverage for the first year, or two, or three) then unlimited (or very long) coverage after that. Not sure why there is not a market for that. Most people would never collect, but you would be protected from a catastrophic event. Isn't that what insurance is supposed to do? The current policies seem the opposite of that.

Given, the rising rates on top of that, it does not make sense for us.
There are policies that cover a long tail claim with rate guarantees and guarantees to return all premiums either in claims or a death benefit.
Link please?
https://www.buaweb.com/cms/resource_lib ... ochure.pdf

jimishooch
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Re: Long Term Care Insurance?

Post by jimishooch » Thu Jun 15, 2017 11:51 am

marcopolo wrote:I don't see the value of LTCI policies available today. What i want insurance for is long tail (catastrophic) risk. If my wife or I need long term care for 10+ years, that is where a policy would be useful. But, the policies available today all appear to have a cap (often pretty short ones) on how long they will pay. I would want quite the opposite, a big deductible (no coverage for the first year, or two, or three) then unlimited (or very long) coverage after that. Not sure why there is not a market for that. Most people would never collect, but you would be protected from a catastrophic event. Isn't that what insurance is supposed to do? The current policies seem the opposite of that.

Given, the rising rates on top of that, it does not make sense for us.
https://www.buaweb.com/cms/resource_lib ... ochure.pdf

itstoomuch
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Re: Long Term Care Insurance?

Post by itstoomuch » Thu Jun 15, 2017 11:56 am

try this link to Kitces' comments on LTCi.
https://www.kitces.com/blog/can-increas ... ing-again/
I have heard of elimination periods of 6 months - 12months. See a broker of LTCi.
YMMV
Rev90517; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax 25%. Early SS. FundRatio (FR) >1.1 67/70yo

marcopolo
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Re: Long Term Care Insurance?

Post by marcopolo » Thu Jun 15, 2017 12:01 pm

itstoomuch wrote:try this link to Kitces' comments on LTCi.
https://www.kitces.com/blog/can-increas ... ing-again/
I have heard of elimination periods of 6 months - 12months. See a broker of LTCi.
YMMV
Had not seen that article, thanks for the link.
I agree whole-heartedly with his comments. I would seriously consider that type of LTCI policy.
Once in a while you get shown the light, in the strangest of places if you look at it right.

marcopolo
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Re: Long Term Care Insurance?

Post by marcopolo » Thu Jun 15, 2017 12:10 pm

jimishooch wrote:
marcopolo wrote:I don't see the value of LTCI policies available today. What i want insurance for is long tail (catastrophic) risk. If my wife or I need long term care for 10+ years, that is where a policy would be useful. But, the policies available today all appear to have a cap (often pretty short ones) on how long they will pay. I would want quite the opposite, a big deductible (no coverage for the first year, or two, or three) then unlimited (or very long) coverage after that. Not sure why there is not a market for that. Most people would never collect, but you would be protected from a catastrophic event. Isn't that what insurance is supposed to do? The current policies seem the opposite of that.

Given, the rising rates on top of that, it does not make sense for us.
https://www.buaweb.com/cms/resource_lib ... ochure.pdf
Perhaps I missed something, but this appears to have a 60 day waiting period. The lifetime coverage is an added rider. Have not priced it, but I suspect this policy would be quite expensive. It also completely distorts the idea of insurance as risk mitigation technique for low-probability events, as opposed to pre-paying for highly likely event.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Avo
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Re: Long Term Care Insurance?

Post by Avo » Thu Jun 15, 2017 12:21 pm

The basic policy is awful, IMO: "$100,000 Single Premium Asset-Care = $170,896 death/long-term care benefits". That's a 3.6% growth rate over 15 years. They don't mention what the lifetime rider costs.

adamthesmythe
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Re: Long Term Care Insurance?

Post by adamthesmythe » Thu Jun 15, 2017 2:13 pm

jimishooch wrote:
marcopolo wrote:I don't see the value of LTCI policies available today. What i want insurance for is long tail (catastrophic) risk. If my wife or I need long term care for 10+ years, that is where a policy would be useful. But, the policies available today all appear to have a cap (often pretty short ones) on how long they will pay. I would want quite the opposite, a big deductible (no coverage for the first year, or two, or three) then unlimited (or very long) coverage after that. Not sure why there is not a market for that. Most people would never collect, but you would be protected from a catastrophic event. Isn't that what insurance is supposed to do? The current policies seem the opposite of that.

Given, the rising rates on top of that, it does not make sense for us.
https://www.buaweb.com/cms/resource_lib ... ochure.pdf
Thanks for the link. The standard policy has a limited payout. Correct, there are optional lifetime benefits. So now the question is how much the additional cost is.

I would expect this to depend strongly on age and perhaps health. Does anybody have a data point to offer??

AlwaysBeClimbing
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Re: Long Term Care Insurance?

Post by AlwaysBeClimbing » Thu Jun 15, 2017 3:16 pm

I decided some time ago that LTCI wasn't a good fit or value for me. Maintaining my health to be as good as I possibly can is my insurance against needed long term care. If/when my health deteriorates to the point where I need the sort of extended care LTCI covers, I'd rather just drink the hemlock or whatever final cocktail de jour is the least unappealing. This assumes my prognosis won't allow me to return to a self-supporting/minimally assisted living lifestyle after a treatment of some kind.

imabeliever
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Re: Long Term Care Insurance?

Post by imabeliever » Thu Jun 15, 2017 3:25 pm

itstoomuch wrote:We expect to use our LTCi as a way to extend retirement assets and hope if lucky, leave a legacy.
Our LTCi was designed to cover about 30-60% of care with SS monies covering the initial 1st dollar of each month. Once SS and LTCi is fully used in that month, other retirement assets will makeup the difference. IOW, for each month care costs will be paid by: 1st SS; 2nd LTCi; 3rd Income from GLWB annuities; 4th Discretionary money.

We were presented by FA last year(?) an GWLB annuity that paid 2x of Income if you go into LTCi. I cannot remember if this is standard option or a fee option.

YMMV.

i did something very similar. both my wife and i, through our respective employers, have a LTC policy at a very reasonable rate. Each policy is also, for lack of a better term "exportable" if we leave our jobs. The premium is very mild, and we have structured each policy with the same mindset as you did; more of an "insurance" to our retirement assets and in the event this care is needed for either one or both of us, we should be well positioned to not drain our retirement portfolios nor be a financial burden to our child.

i do agree there's a lot of FUD (fear uncertainty and doubt) about this topic and ultimately there's no perfect answer. in our case, because the premiums are so minimal and even in the event we are in retirement we will easily be able to continue the premium coverage. as is the case for most insurance, would rather have it and not need it then the other way around. combine that with a few custom "riders" that policies can have for return of premium should one of us pass away before coverage is used, having the coverage period "reset" based on in/out care, etc. feels like we've taken as reasonable steps we can along with our other financial planning actions.
yes you can do this!

Iorek
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Re: Long Term Care Insurance?

Post by Iorek » Thu Jun 15, 2017 3:51 pm

rgs92 wrote:My John Hancock policy cannot raise premiums or reduce benefits.

That is almost certainly not true. Most likely you have a policy where JH would have to go the state insurance commissioner and seek permission to raise rates for the entire class of policyholders on the ground that it's needed to ensure the financial stability of the policies/company (admittedly I don't know exactly what test they use but I think it's something like that).

JH has been a little better than some companies on doing that but I have a relative who bought in the last 10 years and in the last few years JH hit her with a large (maybe 20 or 30%) premium increase.

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Re: Long Term Care Insurance?

Post by Fallible » Thu Jun 15, 2017 4:10 pm

The hybrid long-term policy alternative is interesting and it would be good to know what other planners think about it. I think he is right about the HECM and how it has improved. In her recent book, Making Your Money Last, Jane Bryant Quinn explains these reverse mortgage improvements in great detail.

Good article and thanks for the link.
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Re: Long Term Care Insurance?

Post by bsteiner » Thu Jun 15, 2017 4:33 pm

Fallible wrote:The hybrid long-term policy alternative is interesting and it would be good to know what other planners think about it. ....
It means you have to also buy either a life insurance policy or an annuity, which you may or may not otherwise need.

mnecon
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Re: Long Term Care Insurance?

Post by mnecon » Thu Jun 15, 2017 4:40 pm

While I am not advocating the purchase of LTC insurance, I just want to throw out one more benefit of LTC insurance that I witnessed. My mother has Parkinson's, one of the dreaded diseases noted above. Both of my parents have LTC insurance with a 1 year 'waiting period'. you pay for 365 days of care once approved for benefits.

My mother has been in a nursing home for close to 3 years now but the transition to the nursing home from my parents' independent living cottage and the decision to make that transfer is still vivid in my mind. It is a very difficult thing to send your spouse/parent to a nursing home. In most of these chronic and increasingly debilitating diseases the progression is subtle. The caregiver is slowly doing more and more over a period of months to years until eventually it is 'too much'. But how do you define 'too much'? Even with some Home Health aides coming in, my dad had lost 25 lbs in 3 months because he finally didn't have time to eat or was too exhausted to eat. He still resisted the transfer and felt enormous levels of 'survivor' guilt. Adding significant financial worry about paying for the cost would have been an added burden I am thankful he didn't have.

My parents are classic bogleheads - were part of 'investment clubs' in the 50s and 60s and early 70s before mutual funds became easily accessible. Always saved, lived below means, also had SS and pensions. Nursing home costs are extremely high and can be hard to swallow for someone used to driving used cars and looking at prices. But putting off the transfer could be catastrophic. I spent a lot of time worried that my father would fall and break a hip or hit his head while helping/ holding up my mother. And in your eighties a fall leads to significant mortality.

If you have a partner, having insurance or at least an account where money is put labelled 'care' may help keep them from burning out or ruining their own health trying to avoid nursing costs. When you have a disease with good and bad days and slowly moving to more bad than good, there is no clear demarcation for those who think they would simply opt out of everything.

Current available LTC policies are expensive but at the minimum, earmarking an account for future care could be more valuable than you think. I have already discussed treating one of my retirement accounts as the 'care fund' for our household and we are in our mid forties. It helps to frame it this way in my mind.

Miriam2
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Re: Long Term Care Insurance?

Post by Miriam2 » Thu Jun 15, 2017 4:58 pm

TD2626 wrote:Most companies don't offer lifetime policies. I don't know of anyone doing anything that's specifically "catastrophic" that has a reasonable cost/benefit tradeoff. It may be due to regulations on what kinds of policies that insurers can offer, I'm not sure. (Also, insurers don't want to take on too much risk).
Thank you for your thoughts and analysis.

Here are some threads where this issue was discussed. Do you know anything about the policies being discussed in these threads?

viewtopic.php?f=2&t=199124 - LTC Quandary
viewtopic.php?f=2&t=199389 - Long term care rate increase
viewtopic.php?f=2&t=199581 - Prepaid LTC Insurance to Lock in Costs

Miriam2
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Re: Long Term Care Insurance?

Post by Miriam2 » Thu Jun 15, 2017 5:04 pm

Here is more information on jimishooch's policy {blue emphasis added}:
bsteiner wrote:
nisiprius wrote:... Within the circle of my acquaintances I know a woman who was in her fifties when she suffered a spinal injury from a car accident that put her in the nursing home for twelve years. People with Alzheimer's can easily spend ten years or more in a nursing home. ....
The risk that you might want to insure against isn't the first two or three years, since it's not uncommon for someone to need care for two or three years. The risk that you might want to insure against is that you need care for 10 or 12 years or longer.

Can you buy a policy that will cover you for life, excluding the first two or three years?
pshonore wrote:
jimishooch wrote:here's an option,

https://www.buaweb.com/cms/resource_lib ... ochure.pdf

only company out there that has joint coverage. I did my due diligence and called two independent brokers to price check. if you sign up/pay for the LTC rider monthly payments are for life.

same deal happened to me genworth increased premium by 50%.

just did a single premium policy and went thru the medical underwriting (a phone call) and we had no problems getting approved. I'm 63 and my wife 55.

good luck
jim
The option in the brochure is a hybrid policy which requires an initial single premium of $100K. It will provide 50 months of care at approx. $3400/month for a couple (in total). It does not mention inflation protection. And an optional rider provides lifetime care but doesn't mention the cost. If you don't need the LTC you can get most of your money back (minus surrender charges and any LTC benefits paid). And there is life insurance benefit for your heirs when you both die if the LTC was not used, equal to the LTC benefit (approx. $170K).
viewtopic.php?f=2&t=199124-LTC Quandary

itstoomuch
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Re: Long Term Care Insurance?

Post by itstoomuch » Thu Jun 15, 2017 6:14 pm

pkcrafter,
The LTCi problem is the about the same for Inflation adjusted SPIAs. :oops: :annoyed :mrgreen:
Futurism is fascinating :twisted:
YMMV :confused .
Rev90517; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax 25%. Early SS. FundRatio (FR) >1.1 67/70yo

Limoncello402
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Re: Long Term Care Insurance?

Post by Limoncello402 » Thu Jun 15, 2017 6:48 pm

I investigated the new hybrid products but didn't find them any better deal, and many times worse, than traditional LTC. Kytes has a number of good articles on them.
LTC is something I will remain conflicted about and have to reevaluate every year at premium time. About all I can say is that right now I think it is still a good idea for me. As someone else mentioned, I may well not need it in the future at some point and will then drop it. At least I do have the option of getting all my premiums back as insurance when needed.
I recently took a tour of a senior facility in my area that I'd target if I were headed for such a thing. It has the whole gamut from independent living, assisted living, nursing, etc. I asked the staff whether they'd recommend LTC and if such policies "work" in their facility. They were quite encouraging of LTC policies ("They sure can help," they stated), and these are professionals who work with seniors and health care needs all the time.

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TD2626
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Re: Long Term Care Insurance?

Post by TD2626 » Thu Jun 15, 2017 11:28 pm

Miriam2 wrote:
TD2626 wrote:Most companies don't offer lifetime policies. I don't know of anyone doing anything that's specifically "catastrophic" that has a reasonable cost/benefit tradeoff. It may be due to regulations on what kinds of policies that insurers can offer, I'm not sure. (Also, insurers don't want to take on too much risk).
Thank you for your thoughts and analysis.

Here are some threads where this issue was discussed. Do you know anything about the policies being discussed in these threads?

viewtopic.php?f=2&t=199124 - LTC Quandary
viewtopic.php?f=2&t=199389 - Long term care rate increase
viewtopic.php?f=2&t=199581 - Prepaid LTC Insurance to Lock in Costs
Miriam2 wrote:Here is more information on jimishooch's policy {blue emphasis added}:
bsteiner wrote:
nisiprius wrote:... Within the circle of my acquaintances I know a woman who was in her fifties when she suffered a spinal injury from a car accident that put her in the nursing home for twelve years. People with Alzheimer's can easily spend ten years or more in a nursing home. ....
The risk that you might want to insure against isn't the first two or three years, since it's not uncommon for someone to need care for two or three years. The risk that you might want to insure against is that you need care for 10 or 12 years or longer.

Can you buy a policy that will cover you for life, excluding the first two or three years?
pshonore wrote:
jimishooch wrote:here's an option,

https://www.buaweb.com/cms/resource_lib ... ochure.pdf

only company out there that has joint coverage. I did my due diligence and called two independent brokers to price check. if you sign up/pay for the LTC rider monthly payments are for life.

same deal happened to me genworth increased premium by 50%.

just did a single premium policy and went thru the medical underwriting (a phone call) and we had no problems getting approved. I'm 63 and my wife 55.

good luck
jim
The option in the brochure is a hybrid policy which requires an initial single premium of $100K. It will provide 50 months of care at approx. $3400/month for a couple (in total). It does not mention inflation protection. And an optional rider provides lifetime care but doesn't mention the cost. If you don't need the LTC you can get most of your money back (minus surrender charges and any LTC benefits paid). And there is life insurance benefit for your heirs when you both die if the LTC was not used, equal to the LTC benefit (approx. $170K).
viewtopic.php?f=2&t=199124-LTC Quandary

I don't much specifically about this policy. However in my opinion it doesn't seem too cost-effective. Say someone pays $100k for $170k in coverage. In 25 years they need the coverage (or the heirs get the death benefit). Could they have done better than $170k in a diversified portfolio of some stock and mostly bond index funds? Very much possibly. Remember the insurance company puts premium money in things like corporate bonds. This type of policy seems more like a bond fund with a high expense ratio than an insurance product.

True insurance isn't something where one can give $100k and get back $170k in insurance benefit OR $170k death benefit. True insurance would more be like pay $100k in aggregate via annual premiums (annual premiums may be better because you can keep your money invested longer, though you risk premium hikes). Then you get $300k in insurance if it's needed and loose it all (no death benefit) if it isn't. Most people can't stomach the risk of loosing the whole $100k but many fail to plan for the potentially staggering cost of long term care.

Notes:

-The insurance company's solvency is very important. Don't go with very shaky firms when you need the company to be there for decades.

-Hybrid policies may work for some - people should consider their own situations and look at quotes from companies for themselves.

-Ltci isn't for everyone as many are better off with Medicaid especially they can't afford premiums and/or have few assets.

-It is a very personal and very difficult decision for pretty much all - if it's easy you're doing it wrong. There are six figure somes of money at stake... and this insurance coverage is for when you or a loved one is in an awful medical condition.

pintail07
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Re: Long Term Care Insurance?

Post by pintail07 » Fri Jun 16, 2017 8:08 am

The disadvantage with these hybrid policies is the lost opportunity cost of what could be earned on the deposit with the insurance company. IMO, these hybrids only look attractive with the lifetime rider. Recent client with type 2 diabetes and substantial wealth that is the caregiver for his wife asked about LTC insurance options. I have been leary of traditional products and the hybrid policies of the past. I investigated the One America policies and liked the rate guarantees and lifetime benefits. Client purchased the annuity hybrid, 200,000 deposit, 8200 per month benefit with inflation option of 3%, lifetime benefit. If no claims are paid 200,000 returned at death. These are not for everyone. I have shown these to many CPA's and other advisors and no one was familiar that a lifetime benefit was available. Make sure the broker you choose knows these policies well and will compare with self insuring in many different scenarios. Ask them to provide a sample policy before considering to read and digest. For folks that are concerned about a long tail claim, and don't need the de[posit that is required, it can solve the problem in a cost effective manner. Understand the cost.

rgs92
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Re: Long Term Care Insurance?

Post by rgs92 » Sun Jun 18, 2017 1:07 pm

Iorek wrote:
rgs92 wrote:My John Hancock policy cannot raise premiums or reduce benefits.

That is almost certainly not true. Most likely you have a policy where JH would have to go the state insurance commissioner and seek permission to raise rates for the entire class of policyholders on the ground that it's needed to ensure the financial stability of the policies/company (admittedly I don't know exactly what test they use but I think it's something like that).

JH has been a little better than some companies on doing that but I have a relative who bought in the last 10 years and in the last few years JH hit her with a large (maybe 20 or 30%) premium increase.
It is true. Why do you say it can't be with such confidence? Did you look up John Hancock for all of its history? (It's from 2001 FYI.)
Do others here have policies with fixed premiums? I guess this comment would apply to them also. I signed up for it when I worked for a large corporation and that's what it said in the info I got. The premium is fixed. It didn't say anything about state commissions.
I've gotten no information ever saying they could raise raise the premium or cancel the policy without my permission.
I have several friends in this and another corporation who got these JH policies and they all say and assume that the premiums are fixed.
And you are asserting that this type of contract does not exist.

Miriam2
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Re: Long Term Care Insurance?

Post by Miriam2 » Sun Jun 18, 2017 1:25 pm

rgs92 wrote:
Iorek wrote:
rgs92 wrote:My John Hancock policy cannot raise premiums or reduce benefits.
That is almost certainly not true. Most likely you have a policy where JH would have to go the state insurance commissioner and seek permission to raise rates for the entire class of policyholders on the ground that it's needed to ensure the financial stability of the policies/company . . .
It is true. . . . I signed up for it when I worked for a large corporation and that's what it said in the info I got. The premium is fixed. It didn't say anything about state commissions.
I've gotten no information ever saying they could raise raise the premium or cancel the policy without my permission.
I have several friends in this and another corporation who got these JH policies and they all say and assume that the premiums are fixed.
And you are asserting that this type of contract does not exist.
Perhaps lorek is talking about John Hancock policies sold on the open market, but rgs92 is talking about JH policies sold through employers.

Perhaps if rgs92 is still employed by his large corporation, there is an agreement between JH and the corporation that premiums will never be raised for employees once they sign up. Maybe this extends to employees even when they leave the company but retain their JH policy.

** edited to correct the names of the posters
Last edited by Miriam2 on Mon Jun 19, 2017 2:46 am, edited 2 times in total.

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TD2626
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Re: Long Term Care Insurance?

Post by TD2626 » Sun Jun 18, 2017 1:27 pm

rgs92 wrote:
Iorek wrote:
rgs92 wrote:My John Hancock policy cannot raise premiums or reduce benefits.

That is almost certainly not true. Most likely you have a policy where JH would have to go the state insurance commissioner and seek permission to raise rates for the entire class of policyholders on the ground that it's needed to ensure the financial stability of the policies/company (admittedly I don't know exactly what test they use but I think it's something like that).

JH has been a little better than some companies on doing that but I have a relative who bought in the last 10 years and in the last few years JH hit her with a large (maybe 20 or 30%) premium increase.
It is true. Why do you say it can't be with such confidence? Did you look up John Hancock for all of its history? (It's from 2001 FYI.)
Do others here have policies with fixed premiums? I guess this comment would apply to them also. I signed up for it when I worked for a large corporation and that's what it said in the info I got. The premium is fixed. It didn't say anything about state commissions.
I've gotten no information ever saying they could raise raise the premium or cancel the policy without my permission.
I have several friends in this and another corporation who got these JH policies and they all say and assume that the premiums are fixed.
And you are asserting that this type of contract does not exist.
There probably are a few people somewhere with this sort of contract. Maybe in the context of employer-provided coverage this might be possible.

These sorts of policies are very, very rare. The standard policy is guaranteed renewable but they can raise premiums.

There are far more people that wrongly assume their premiums are fixed (and are in for a rude awakening) than there are that have truly fixed premiums. If you have truly read the contract and it says the premiums are guaranteed, that's great for you - you've gotten an exceptional and wonderful deal. I'm certainly envious.

However, in terms of those looking at getting policies today (not the more lax policies that were sold in 2001), people need to know that virtually all (with the exception of single-premium hybrid policies) can have premium hikes.

Jackson12
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Re: Long Term Care Insurance?

Post by Jackson12 » Sun Jun 18, 2017 7:36 pm

Iorek wrote:
rgs92 wrote:My John Hancock policy cannot raise premiums or reduce benefits.

That is almost certainly not true. Most likely you have a policy where JH would have to go the state insurance commissioner and seek permission to raise rates for the entire class of policyholders on the ground that it's needed to ensure the financial stability of the policies/company (admittedly I don't know exactly what test they use but I think it's something like that).

JH has been a little better than some companies on doing that but I have a relative who bought in the last 10 years and in the last few years JH hit her with a large (maybe 20 or 30%) premium increase.

I agree. Premiums can very likely be raised.

There are several facts about long-term insurance thst aren't generally clarified for policyholders


1. Even if John Hancock or many other long-term insurers had a guarantee against being able to raise premiums, they could still have to pony up extensive funds if another long- term insurance provider, such as Penn Treaty, goes bankrupt , . This happened not so long ago.

I do not know if it is common knowledge but Here's how much other insurance companies were assessed when Penn Treaty went under , based on Dec 2016 info
Source: : http://www.josephmbelth.com/2017/03/no- ... -penn.html

The above source also has a link to the Penn Treaty website
Aetna: $230 million.

AFLAC: $10 million to $20 million.

Anthem: $190 million to $220 million.

Centene: Nothing found in 10-K.

CIGNA: $85 million after tax.

CNO Financial: Nothing found in 10-K.

Genworth: Referred me to the 10-K, in which the company said in part: "[W]e have not established any accruals for guaranty fund assessments associated with Penn Treaty as of December 31, 2016. We will continue to monitor the situation and may record a liability and expense in future reporting periods."

Humana: $30 million.

Manulife: The Canadian parent of John Hancock. Manulife did not respond to my inquiry, and the relevant financial statement for the year ended December 31, 2016 has not yet been filed with the SEC.

MetLife: A spokesman said there is no estimate yet.

Prudential: $47.9 million for Penn Treaty, Executive Life, and Lincoln Memorial combined.

UnitedHealth: $350 million.

Unum: $12 million to $15 million after tax.


The amounts assessed are based on each surviving company's health insurance premiums.

2. Each state has a guaranty association ( see following link) which has limits on how much policyholders can receive if their company fails.

If you have $400,000 of "coverage" and your state guaranty amount is capped at 300,000 that $300,000 is the max you can recover from the state. At least one state has a guaranty of only $150,000.... Not a drop in the bucket but perhaps far less than a policyholder expected..or paid for.

State guaranty limits can be seen here: http://www.penntreaty.com/Portals/0/PDF ... %20LTC.pdf

.
,

rgs92
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Re: Long Term Care Insurance?

Post by rgs92 » Mon Jun 19, 2017 2:26 am

No, I don't work for the company anymore (I have not for a long time) but that's the way the company and JH described it at the time (fixed premiums).
It's about $1.1 million for each of us (I got it for my wife and me).
This was a pretty common offering to employees of this and another company I worked for back in the 1990s.
I got the policy when my wife and I were in our 40s so the premiums would be reasonable.
The policy actually names the company in the literature for it as being part of group-agreement.

pkcrafter
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Re: Long Term Care Insurance?

Post by pkcrafter » Fri Jun 23, 2017 12:05 pm

Thanks to all for creating an informative thread.

I'm in the Kitces camp when it comes to a good plan that starts coverage after a few years in care. I guess you can't start long term care and then after a few years buy insurance.

I found this info for CA and I assume other states have similar information. I noticed the insurance commissioner is Dave Jones, and I wonder if he's related to Edward. :happy

http://www.insurance.ca.gov/01-consumer ... /index.cfm

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

Beth*
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Re: Long Term Care Insurance?

Post by Beth* » Sat Jun 24, 2017 10:44 am

I think that people often make the mistake of looking at the cost of nursing home care and thinking that they need long-term care insurance to cover the entire cost. Most people, including almost everyone posting in this forum, has other sources of income and only needs long-term care insurance to cover the projected difference between the other sources of income and the cost of the nursing home. That's much less expensive than buying a policy that covers the complete cost of care.

bogglizer
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Re: Long Term Care Insurance?

Post by bogglizer » Sat Jun 24, 2017 12:31 pm

Some years ago I asked my insurance agent about LTCI. His take was that LTCI is for people who have otherwise saved enough money for their retirement, and are looking for something more to spend their cash on. He suggested buying the entire policy up front.

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