Long term care insurance - is it worth it?

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DKD
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Long term care insurance - is it worth it?

Post by DKD » Mon Jul 03, 2017 11:17 pm

There seems to be a lot of controversy over long term care insurance. I'm heading into retirement in a couple of years and I'm wondering if it's important to buy this. The few resources I've found on it suggest that one only should purchase long term care insurance, if one isn't impoverished or if one isn't wealthy. Obviously, impoverished people can't afford it, and Medicaid is suppose to kick in for them. Wealthy people can afford to take the gamble that they will never need long term care, because they can self-fund it, if it's really needed. That leaves the people in middle who have a significant nest egg, but one which might all be lost with 2-5 years of long term care. I know there are all sorts of policies one can buy, with various deductibles, terms, max limits, single or dual, etc.

Does anyone have a perspective on this? Thanks

munemaker
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Re: Long term care insurance - is it worth it?

Post by munemaker » Mon Jul 03, 2017 11:53 pm

There was a time, years ago, when long term care was worth it. But, if it was worth it at a cost of $X, is it worth it at a cost of $10X? If a certain make/model of car is worth a price of, say $30,000, is it worth a cost of $300,000? Well, that is what is going on in long term care insurance. Not only that, but then some providers fight you when you make a claim. You pay in for years and years, and then they jack up the rates. At that point, you are in a tough spot. Forget it and self insure.

bogglizer
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Re: Long term care insurance - is it worth it?

Post by bogglizer » Mon Jul 03, 2017 11:56 pm

I recently went through this exercise, and decided not to buy LTCI because I was unable to decide if it was worth it. So, following the general principal that one should never invest in a security that one does not understand, I steered clear.

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Watty
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Re: Long term care insurance - is it worth it?

Post by Watty » Tue Jul 04, 2017 12:06 am

Something to keep in mind is that long term care costs vary dramatically by where you are at so it being worthwhile on or may depend on your retirement budget and where you live.

https://www.genworth.com/about-us/indus ... -care.html

I live in Georgia which has relatively low costs so the cost to put one person in long term care will not be dramatically higher than my normal expected retirement budget.

The biggest risk is that LTC might be needed while my wife and I are both still alive so our other expensed might not drop , but we have the home equity in our paid off house that could be tapped if needed so that could be a safety net. Not perfect, but sometimes you can't eliminate all risks.

Vanguard Fan 1367
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Re: Long term care insurance - is it worth it?

Post by Vanguard Fan 1367 » Tue Jul 04, 2017 1:48 am

The great Dave Ramsey suggested getting Long Term Care insurance at around 60 so I took his advice. My sister, who works in insurance, decided to self fund. After a couple of years of over 4k premiums the cost went up to over 5k for me and my wife. I decided to cancel the policy after paying about 15k and self fund also.

Other threads have talked about the increasing cost of long term policies. That certainly has been my experience.

Limoncello402
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Re: Long term care insurance - is it worth it?

Post by Limoncello402 » Tue Jul 04, 2017 5:13 am

I bought a Genworth policy at 55. This year the premium went up significantly. I spent a lot of time reading about and studying LTC for some months not knowing whether I should renew. In the end I did renew and bit the bullet of paying the higher cost. I still think it is worth it for me. I'm single and my policy covers 5 years, generously, with in-home care. I pay 3400/year.
There are some good threads on LTC at Bogleheads, some of which helped me make this decision--just do a search for them.

basspond
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Re: Long term care insurance - is it worth it?

Post by basspond » Tue Jul 04, 2017 5:53 am

My parents had one of the better ones and because of deductible days it never was used for dad. Every situation is different, especially if a relative, like my mom, was able to care for him at home until it got really bad. It gives my parents/parent peace of mind.

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dia
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Re: Long term care insurance - is it worth it?

Post by dia » Tue Jul 04, 2017 6:21 am

My parents bought Genworth policies in their mid-50s. My Dad passed at 81 very quickly so never used his policy after putting in A LOT of money, including the huge huge increased bills that came as he got older. The best news was we did get a refund from them on his last huge payment because he passed only one month into the year of it.

My Mom is now 81 and doing well, but I told her to keep paying on her Genworth policy--there is way too much invested in it to stop now. I am on the fence on whether I will purchase one or not. On my list of many things to do thanks to this forum, was to read up on those postings.

From what I understand, Genworth was recently sold to a Chinese company. The vulnerability of these insurance policies concerns me. It's a tough decision and a huge financial commitment that you may never benefit from, nor your heirs (at least in my parents case).
Success is walking from failure to failure with no loss of enthusiasm. --Winston Churchill

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dia
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Re: Long term care insurance - is it worth it?

Post by dia » Tue Jul 04, 2017 6:24 am

Vanguard Fan 1367 wrote:The great Dave Ramsey suggested getting Long Term Care insurance at around 60 so I took his advice. My sister, who works in insurance, decided to self fund. After a couple of years of over 4k premiums the cost went up to over 5k for me and my wife. I decided to cancel the policy after paying about 15k and self fund also.

Other threads have talked about the increasing cost of long term policies. That certainly has been my experience.
Self funding sounds like a good option and I am also considering it. After my dad had a very expensive Genworth policy he paid on for 30 years, he passed so quick he never received any benefit in return. There has to be a better set up. After that I decided I would stash my own money away --at least if not used, it's not gone.
Success is walking from failure to failure with no loss of enthusiasm. --Winston Churchill

pintail07
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Re: Long term care insurance - is it worth it?

Post by pintail07 » Tue Jul 04, 2017 8:25 am

For those planning to use self insure option, how much do you plan to set aside for LTC? Do you segregate that amount in a separate account? If married, do you set aside enough for both?

Longdog
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Re: Long term care insurance - is it worth it?

Post by Longdog » Tue Jul 04, 2017 8:35 am

I suspect when these policies first came out, the insurers had little data, made assumptions about their potential liabilities, and priced the policies accordingly. These policies have now been around for quite a while, and the insurers no longer have to make assumptions - they have significant amounts of real-world data to base their premiums on, and those updated premiums are much more than they used to be. Medicine has also advanced and people are living longer, so the duration of payout is probably longer than it used to be. In my opinion, in the earlier days of these policies they underestimated liabilities and the policies were probably good deals to consumers and terrible deals to the insurers. That is no longer the case. However, I may be wrong! :happy
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FBN2014
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Re: Long term care insurance - is it worth it?

Post by FBN2014 » Tue Jul 04, 2017 8:47 am

Traditional LTCI is a waste of money IMO. The premiums are not guaranteed and many will drop coverage when they get hit with a big hike. Asset based policies are much better. In the event you never need it, your heirs will get a death benefit which can be more than you put into the policy. Lincoln, Nationwide and State all have good policies and are all rated very high by S&P, AM Best and Comdex.

dbr
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Re: Long term care insurance - is it worth it?

Post by dbr » Tue Jul 04, 2017 8:51 am

I suspect that if you have enough money to self-insure then you also have enough money to pay the LTC. The belt comes with suspenders attached.

The question would be if you save and invest the LTC premium for twenty or thirty years do you accumulate enough to really feel comfortable relying on that for whatever might happen. Admittedly premium increases may be far from over, and how effectively you can actually collect may be an issue.

It is a fair observation that expensive care may not be needed for much of a stay. My experience has been a range from zero to years to a person I know that will be in Medicaid nursing homes for another couple of decades most likely.

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BolderBoy
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Re: Long term care insurance - is it worth it?

Post by BolderBoy » Tue Jul 04, 2017 8:52 am

DKD wrote:Does anyone have a perspective on this? Thanks
I decided in the 1990s that I won't buy it. The actuaries working for the LTCI companies have long ago worked out that this insurance is a real moneymaker for the companies.

My parents were neither impoverished nor wealthy. They had LTCI policies (from a reputable company) for >25 years. Dad died one day after becoming sick enough to need the LTCI. Mom lamented that paying all those premiums for him for all those years was a complete waste. Then mom died one month after becoming sick (in her 90s). On her deathbed she lamented having paid for LTCI all those years. Both policies had 90 day waiting periods.

YMMV.
“Where you stand, depends on where you sit” - Rufus Miles | "Never underestimate one's capacity to overestimate one's abilities"

dbr
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Re: Long term care insurance - is it worth it?

Post by dbr » Tue Jul 04, 2017 8:54 am

BolderBoy wrote:
DKD wrote:Does anyone have a perspective on this? Thanks
I decided in the 1990s that I won't buy it. The actuaries working for the LTCI companies have long ago worked out that this insurance is a real moneymaker for the companies.

My parents were neither impoverished nor wealthy. They had LTCI policies (from a reputable company) for >25 years. Dad died one day after becoming sick enough to need the LTCI. Mom lamented that paying all those premiums for him for all those years was a complete waste. Then mom died one month after becoming sick (in her 90s). On her deathbed she lamented having paid for LTCI all those years. Both policies had 90 day waiting periods.

YMMV.
You could be right about the moneymaking -- or not. It is also true that lots of insurance is not needed. If it were a sure need it wouldn't be insurance. What is your plan if you do need expensive care at the end of your life?

Nova1967
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Re: Long term care insurance - is it worth it?

Post by Nova1967 » Tue Jul 04, 2017 9:00 am

I know LTC is promoted by financial gurus like Orman and Ramsey but for a middle of the road retiree it's subjective, If you want to leave a large inheritance it's a feasible option. If there is no desire to leave assets to heirs or charities I don't see how it is practical. There is much uncertainty and there are large rate increases. If you have Alzheimer's you are not going to be aware of your financial situation anyways.If you are in a nursing home or require home care there is not much you can do with your assets, it's unlikely you will need a new car or travel. Having a home paid could also provide for LTC. My perspective is based on someone who is not in a situation to provide for heirs or charities.

bsteiner
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Re: Long term care insurance - is it worth it?

Post by bsteiner » Tue Jul 04, 2017 9:06 am

FBN2014 wrote:Traditional LTCI is a waste of money IMO. The premiums are not guaranteed and many will drop coverage when they get hit with a big hike. Asset based policies are much better. In the event you never need it, your heirs will get a death benefit which can be more than you put into the policy. Lincoln, Nationwide and State all have good policies and are all rated very high by S&P, AM Best and Comdex.
The hybrid polices include life insurance or an annuity. Most older people don't need life insurance. Annuities usually have high expenses, and turn what would be qualified dividends, long-term capital gains and basis step-up to ordinary income.
dbr wrote:... It is a fair observation that expensive care may not be needed for much of a stay. My experience has been a range from zero to years to a person I know that will be in Medicaid nursing homes for another couple of decades most likely.
If many people will need care for a short time, insurance for that is more like a prepaid expense than insurance. Perhaps a policy that didn't pay for the first few years, but paid for everything after that, would make sense.
BolderBoy wrote:... My parents were neither impoverished nor wealthy. They had LTCI policies (from a reputable company) for >25 years. Dad died one day after becoming sick enough to need the LTCI. Mom lamented that paying all those premiums for him for all those years was a complete waste. Then mom died one month after becoming sick (in her 90s). On her deathbed she lamented having paid for LTCI all those years. Both policies had 90 day waiting periods.
The premiums weren't wasted. They went to pay for the benefits that others received, and for the expenses of running the insurance company (including paying the agents and the insurance company's profits). If most people need care for a short time (if at all), a policy with a longer 2 or 3 year waiting period ought to be much less expensive. Does anyone know of any such policies?
Nova1967 wrote:I know LTC is promoted by financial gurus like Orman and Ramsey ....
Are they gurus or entertainers?

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dia
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Re: Long term care insurance - is it worth it?

Post by dia » Tue Jul 04, 2017 9:27 am

FBN2014 wrote:Traditional LTCI is a waste of money IMO. The premiums are not guaranteed and many will drop coverage when they get hit with a big hike. Asset based policies are much better. In the event you never need it, your heirs will get a death benefit which can be more than you put into the policy. Lincoln, Nationwide and State all have good policies and are all rated very high by S&P, AM Best and Comdex.
When you get hit with the big premium bills, they give you options to reduce your benefit and pay less. Who after paying on it for maybe 25 years now wants less benefit? It's a mess. Not sure what to do. Also, you need a good family member or friend to push through all the paperwork and make all the phone calls to get the benefit activated. You can't do it once you are a nursing home candidate. I started that process with my dad, but then he passed prior to using it. If you don't have someone willing or smart enough to read thru the many many pages of the policy to understand what it really does cover and to do the administrative part--that's another mess. That's a topic for another talk show, however.
Success is walking from failure to failure with no loss of enthusiasm. --Winston Churchill

HANK1964
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Re: Long term care insurance - is it worth it?

Post by HANK1964 » Tue Jul 04, 2017 10:10 am

My wife and I got LTC policies in our fifties on the advice of our son who worked for the insurer. The policies had an escalator clause so our coverage grew substantially before my wife was diagnosed with dementia. She is now mid stage with a home health aide coming in two days each week and an adult day care program another two days each week. The daily reimbursement rate has covered the costs of both the home health aide and the adult day care program with the exception of the first 90 days after the initial claim was made. Another nice feature of our policies is that premiums are suspended once the initial claim is approved but the escalator continues. I am very happy with our decision to buy our LTC policies. Our insurer no longer writes individual LTC policies due to uncertainties such as reserve requirements.

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Watty
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Re: Long term care insurance - is it worth it?

Post by Watty » Tue Jul 04, 2017 10:12 am

pintail07 wrote:For those planning to use self insure option, how much do you plan to set aside for LTC? Do you segregate that amount in a separate account? If married, do you set aside enough for both?
My mom survived my dad and her always said that her paid off house was her long term care policy. She made it clear(as only a mother can :D ) that if she ever needed to go into long term care that we were to sell her house and put her in the best nursing home in the area. She also made sure that we had the right paperwork to sell the house if we needed to.

She lived in a moderate cost of living area so her house was not super expensive but her numbers would have worked. She had other funds for her normal retirement expenses and Social Security so with her home equity a good nursing home could easily have been paid for a very long time.

My house is paid off and I am planning to use it like that too. We live in a moderate cost of living area and out house is around a quarter of our net worth.

If one person was in LTC then our current house would be hard for one person to take care of anyway so downsizing would make sense for non-financial reasons. It helps that we live in a moderate cost of living area. I plan on delaying my Social Security until I am 70 to get a pretty good Social Security payment of around $35,000. One fall back plan would be for the person not in the nursing home to move to a modest paid off condo then the Social Security would be enough to cover most of their everyday costs so the other person's LTC cost would not quickly deplete our retirement savings.

If something happens like we both need LTC at the same time then we will just draw down our retirement funds since it would be unlikely that we would need the fund to last until we are 95 like we were planning. I didn't crunch the numbers but with our savings, home equity, and Social Security could pay for two people in LTC for a significant number of years. As I recall nursing homes like to see that you have enough to cover two years expenses when they admit you and we would have way more than that. We can't get into politics here but if we were both in LTC for a long time we would just spend down our retirement savings then go on Medicaid if it is still around then.

If something happens like we both live to be 90 and our savings are getting low when need LTC is needed then the home equity would be used to pay for it. It happens but few 90 year olds that go into LTC will need it for a long time.

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Re: Long term care insurance - is it worth it?

Post by neilpilot » Tue Jul 04, 2017 10:27 am

BolderBoy wrote:
DKD wrote: My parents were neither impoverished nor wealthy. They had LTCI policies (from a reputable company) for >25 years. Dad died one day after becoming sick enough to need the LTCI. Mom lamented that paying all those premiums for him for all those years was a complete waste. Then mom died one month after becoming sick (in her 90s). On her deathbed she lamented having paid for LTCI all those years. Both policies had 90 day waiting periods.

YMMV.
We have owned a home for decades, and have never had a fire or any other insurance claim. Since we have no mortgage, we could drop our homeowner's insurance (except then our umbrella policy would not cover the liability portion of our current homeowners policy). Does anyone view the need for homeowners insurance in a similar fashion as LTC, i.e. if you are wealthy enough to absorb a loss than insurance isn't required?

pintail07
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Re: Long term care insurance - is it worth it?

Post by pintail07 » Tue Jul 04, 2017 10:35 am

Long tern care insurance is expensive and long term care is very expensive. My advice is to spread sheet all options, including traditional insurance and the asset based hybrids. Expose everything that is guaranteed and what is not guaranteed. Determine where you want care.

jimishooch
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Re: Long term care insurance - is it worth it?

Post by jimishooch » Tue Jul 04, 2017 11:06 am

another option,

due to family histories and being child free we went this route after genworth gouged us out.


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

pintail07
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Re: Long term care insurance - is it worth it?

Post by pintail07 » Tue Jul 04, 2017 11:17 am

jimishooch wrote:another option,

due to family histories and being child free we went this route after genworth gouged us out.


https://www.buaweb.com/cms/resource_lib ... ochure.pdf
Saw a recent illustration where couple in their 60's deposit 200,000 into policy, initial benefit for each is 8000 per month with a 3% benefit increase each year. Lifetime benefit, all guaranteed. From what I have discovered, the life/ltc hybrid works best with those under 70 and the annuity/ltc works best over age 70 or those with health issues.

NotWhoYouThink
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Re: Long term care insurance - is it worth it?

Post by NotWhoYouThink » Tue Jul 04, 2017 11:30 am

I'll put in another plug for at least considering a Continuing Care Retirement Community as one of your options. A couple of things are necessary to make this work:
- You need to admit that there likely will come a time when you can't take care of yourself in your own home
- You need to be willing to commit a big chunk of money up front, that may be unrefundable depending on the CCRC

You move in to an independent living apartment or cottage and pay a monthly fee, which stays roughly the same if you move to assisted living or skilled nursing care. I think often the "independent living" rate rises with inflation or slightly faster, but if you've bought in to the constant payment plan then the AL or NH fees stay the same as the current IL fee.

One big benefit to your kids is that it gets the family home emptied out and sold long before the really hard issues crop up.

Figuring out which CCRC, near which kid, when to move, etc. are still hard decisions. But it can take some of the uncertainty out of funding end of life care.

michaeljc70
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Re: Long term care insurance - is it worth it?

Post by michaeljc70 » Tue Jul 04, 2017 11:34 am

Vanguard Fan 1367 wrote:The great Dave Ramsey suggested getting Long Term Care insurance at around 60 so I took his advice. My sister, who works in insurance, decided to self fund. After a couple of years of over 4k premiums the cost went up to over 5k for me and my wife. I decided to cancel the policy after paying about 15k and self fund also.

Other threads have talked about the increasing cost of long term policies. That certainly has been my experience.
My Grandparents experienced this as well. They paid for decades but it got so expensive they kept downgrading the policy to the point it just wasn't worth it.

itstoomuch
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Re: Long term care insurance - is it worth it?

Post by itstoomuch » Tue Jul 04, 2017 11:39 am

Depends :oops:
We can afford the premiums after 15 yrs of paying and premium increases. The goal then and now is to provide asset protection by cost sharing. We have an Only son. We know that we relieved our Only much of the responsibility to care for us and believe that his spouse will have a significant say in this matter. We have homecared, 3 parents and a bil. Emotionally taxing and IMO, professional assistance would've been welcomed for knowledge, skill, respite and companionship. We did not have the funds and ability to pay at that time.
Our current benefit level is ~$220/day and equates to 10 hours of home care in our location.
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Re: Long term care insurance - is it worth it?

Post by EnjoyIt » Tue Jul 04, 2017 11:46 am

Regarding nursing home care and payments I found a pretty good link regarding cost
https://www.payingforseniorcare.com/lon ... homes.html

http://news.morningstar.com/articlenet/ ... ?id=564139

This could be a good resource of people who plan on retiring and want to make sure they won't be a burden to their families when requiring nursing home care:

1) The average cost of a shared nursing home room is $222/day or $81k/yr (which varies greatly based on location.) Please see first link above to asses cost in your own state.
2) The average length of stay for a nursing home patient is 2.44 years or 892 days.
3) 30% of the nursing home stays are under 100 days and fully covered by medicare with supplemental which I think every person should have.
4) 40% of all population who reaches 65 will spend some time in a nursing home.
5) 10% of nursing home patients stays in a nursing home over 5 years.

So what does all this math mean? You have a 70%*40% = 28% chance of being in a nursing home for more than 100 days of which the rest will need to be paid out of pocket or medicaid if qualified. 2.8% of that population has the chance of being in the nursing home for > 5 years which can destitute most people. 25.2% of the population will stay in a nursing home for 5 years or less which will cost on average $81k/yr or $405k or less (please check your state for costs in your area.) Remember that we all will get social security in some form or another which may offset some of those costs. You can expect that most of us even early retirees will get about 20k in social security at 70. Therefor we will have to come up with $81k-$20k over a potential 5 years. That is the equivalent of $61k or ~$305k. $305k would be enough to cover 97.2% of the possibilities based on todays statistics. Even less is needed if you don't go straight into a nursing home and allow time for commanding. Even less is needed if other expenses are decreased.

Personally I think we have too many people in nursing homes who have no quality of life and are provided unnecessary procedures and medication to sustain them. I would rather be dead than to live bed ridden with pressure ulcers and a feeding tube to my stomach. Luckily my wife and I agree that is not how we want to live and will do everything in our power to minimize the other person's suffering. The same exists for our parents. I highly doubt any of us will fall in the 2.8%. Since we plan to retire early we should have well over 10 years of compounding before even the thought of nursing home care is considered. We will be saving an extra $150k per person prior to retiring.

dbr
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Re: Long term care insurance - is it worth it?

Post by dbr » Tue Jul 04, 2017 12:00 pm

To get back to the original question ". . . is it worth it?" the suggestion is that insurance is never about what it is worth but rather about managing risk. The individual has to contemplate the possible scenarios and do what is effective to avoid consequences they want to avoid. That would really be the question. If self insurance is adequate to avoid most possible problems then LTCI is unnecessary. If self insurance would appear not to be adequate, a person would probably want to look seriously at LTCI, if they can afford it. If a person can't afford it then the issue is moot. It is interesting that there has been at least one thread lately addressing putting assets in a trust to avoid spending on nursing home costs and relying on Medicaid. There are all sorts of directions that can be taken here.

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BolderBoy
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Re: Long term care insurance - is it worth it?

Post by BolderBoy » Tue Jul 04, 2017 12:00 pm

dbr wrote:You could be right about the moneymaking -- or not. It is also true that lots of insurance is not needed. If it were a sure need it wouldn't be insurance. What is your plan if you do need expensive care at the end of your life?
Under the circumstances where LTC is needed "at the end of life", I'd control the actual end of it.

If I couldn't control it (dementia), then I'd also not care what was happening to me...or my assets.
“Where you stand, depends on where you sit” - Rufus Miles | "Never underestimate one's capacity to overestimate one's abilities"

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BolderBoy
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Re: Long term care insurance - is it worth it?

Post by BolderBoy » Tue Jul 04, 2017 12:05 pm

bsteiner wrote:The premiums weren't wasted. They went to pay for the benefits that others received, and for the expenses of running the insurance company (including paying the agents and the insurance company's profits). If most people need care for a short time (if at all), a policy with a longer 2 or 3 year waiting period ought to be much less expensive. Does anyone know of any such policies?
Hah! A 2-3 year waiting period would make most (like overwhelming) LTC policies cash cows for the insurance companies and worthless for most people who end up needing "LTC".

Actuaries are very good at what they do.
“Where you stand, depends on where you sit” - Rufus Miles | "Never underestimate one's capacity to overestimate one's abilities"

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BolderBoy
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Re: Long term care insurance - is it worth it?

Post by BolderBoy » Tue Jul 04, 2017 12:07 pm

dbr wrote:What is your plan if you do need expensive care at the end of your life?
Oh, I could have added that I could self-insure. A money magazine article in the mid-2000s talked about the self-insuring option for LTC if needed.
“Where you stand, depends on where you sit” - Rufus Miles | "Never underestimate one's capacity to overestimate one's abilities"

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BolderBoy
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Re: Long term care insurance - is it worth it?

Post by BolderBoy » Tue Jul 04, 2017 12:14 pm

neilpilot wrote:
BolderBoy wrote:
DKD wrote: My parents were neither impoverished nor wealthy. They had LTCI policies (from a reputable company) for >25 years. Dad died one day after becoming sick enough to need the LTCI. Mom lamented that paying all those premiums for him for all those years was a complete waste. Then mom died one month after becoming sick (in her 90s). On her deathbed she lamented having paid for LTCI all those years. Both policies had 90 day waiting periods.

YMMV.
We have owned a home for decades, and have never had a fire or any other insurance claim. Since we have no mortgage, we could drop our homeowner's insurance (except then our umbrella policy would not cover the liability portion of our current homeowners policy). Does anyone view the need for homeowners insurance in a similar fashion as LTC, i.e. if you are wealthy enough to absorb a loss than insurance isn't required?
Certainly. The purpose of insurance is to protect against financial catastrophe, not financial inconvenience! I'm not wealthy enough to self-insure against losing my home/contents, so I carry insurance for that purpose.
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MathWizard
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Re: Long term care insurance - is it worth it?

Post by MathWizard » Tue Jul 04, 2017 12:18 pm

neilpilot wrote:
BolderBoy wrote:
DKD wrote: My parents were neither impoverished nor wealthy. They had LTCI policies (from a reputable company) for >25 years. Dad died one day after becoming sick enough to need the LTCI. Mom lamented that paying all those premiums for him for all those years was a complete waste. Then mom died one month after becoming sick (in her 90s). On her deathbed she lamented having paid for LTCI all those years. Both policies had 90 day waiting periods.

YMMV.
We have owned a home for decades, and have never had a fire or any other insurance claim. Since we have no mortgage, we could drop our homeowner's insurance (except then our umbrella policy would not cover the liability portion of our current homeowners policy). Does anyone view the need for homeowners insurance in a similar fashion as LTC, i.e. if you are wealthy enough to absorb a loss than insurance isn't required?
I view them differently, since we are likely never to have a claim, and consequently the insurance is relatively cheap.

I do this with cars though. I've never had anything other than liability other than the 3 times I had car loans (early on when we had little money).

I understand the cost benefit with cars, but not with LTCi. In the latter case, building up a large cash cushion and paid off house
seems to make more sense to me. If there were a catastrophic insurance that was cheap (only for stays over 2 years) I might bite in that, since
it insures against a very high cost, but unlikely situation, which is precisely what insurance should be used for: pooling risk.

neilpilot
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Re: Long term care insurance - is it worth it?

Post by neilpilot » Tue Jul 04, 2017 12:19 pm

BolderBoy wrote:
neilpilot wrote:
BolderBoy wrote:
DKD wrote: My parents were neither impoverished nor wealthy. They had LTCI policies (from a reputable company) for >25 years. Dad died one day after becoming sick enough to need the LTCI. Mom lamented that paying all those premiums for him for all those years was a complete waste. Then mom died one month after becoming sick (in her 90s). On her deathbed she lamented having paid for LTCI all those years. Both policies had 90 day waiting periods.

YMMV.
We have owned a home for decades, and have never had a fire or any other insurance claim. Since we have no mortgage, we could drop our homeowner's insurance (except then our umbrella policy would not cover the liability portion of our current homeowners policy). Does anyone view the need for homeowners insurance in a similar fashion as LTC, i.e. if you are wealthy enough to absorb a loss than insurance isn't required?
Certainly. The purpose of insurance is to protect against financial catastrophe, not financial inconvenience! I'm not wealthy enough to self-insure against losing my home/contents, so I carry insurance for that purpose.
I have both LTC and homeowner's insurance. From the standpoint of maximum "loss" potential, the potential cost of LTC for my wife and/or I is certainly in the same order of magnitude as a (total) loss of our home & contents. I'm not sure, but I suspect the odds of a claim against our LTC policy maybe greater than a large claim against our homeowner's policy. We could self-insure against either or both, but we don't. I suspect it's partially an emotional decision.

BTW the annual cost of our homeowner coverage exceeds the cost of our 2 LTC policies. But that's Apples & Oranges.

mnnice
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Re: Long term care insurance - is it worth it?

Post by mnnice » Tue Jul 04, 2017 12:45 pm

neilpilot wrote:
BolderBoy wrote:
DKD wrote: My parents were neither impoverished nor wealthy. They had LTCI policies (from a reputable company) for >25 years. Dad died one day after becoming sick enough to need the LTCI. Mom lamented that paying all those premiums for him for all those years was a complete waste. Then mom died one month after becoming sick (in her 90s). On her deathbed she lamented having paid for LTCI all those years. Both policies had 90 day waiting periods.

YMMV.
We have owned a home for decades, and have never had a fire or any other insurance claim. Since we have no mortgage, we could drop our homeowner's insurance (except then our umbrella policy would not cover the liability portion of our current homeowners policy). Does anyone view the need for homeowners insurance in a similar fashion as LTC, i.e. if you are wealthy enough to absorb a loss than insurance isn't required?
I think there are people in hurricane prone areas that buy "renters " coverage for their paid for house. While my declaration page on my homeowners insurance doesn't provide me with a breakdown I suspect that the contents, liability, and loss of use are pretty big deals. In my case homeowners insurance is about $550 a year and if I rented in my present zip code I bet it would b $350 for decent renters insurance. In other words not the savings that skipping LTCi would be unless you live in the most hurricane prone place around.

In my situation I am inclined to take the risk and skip the LTCi. I am not willing to take the same roll of the dice on my homeowners not because I didn't think I could afford to sustain the loss but why bother for $200 bucks a year.

neilpilot
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Re: Long term care insurance - is it worth it?

Post by neilpilot » Tue Jul 04, 2017 12:54 pm

mnnice wrote:
We have owned a home for decades, and have never had a fire or any other insurance claim. Since we have no mortgage, we could drop our homeowner's insurance (except then our umbrella policy would not cover the liability portion of our current homeowners policy). Does anyone view the need for homeowners insurance in a similar fashion as LTC, i.e. if you are wealthy enough to absorb a loss than insurance isn't required?
I think there are people in hurricane prone areas that buy "renters " coverage for their paid for house. While my declaration page on my homeowners insurance doesn't provide me with a breakdown I suspect that the contents, liability, and loss of use are pretty big deals. In my case homeowners insurance is about $550 a year and if I rented in my present zip code I bet it would b $350 for decent renters insurance. In other words not the savings that skipping LTCi would be unless you live in the most hurricane prone place around.

In my situation I am inclined to take the risk and skip the LTCi. I am not willing to take the same roll of the dice on my homeowners not because I didn't think I could afford to sustain the loss but why bother for $200 bucks a year.[/quote]

Very different situation. My homeowners is $2330/year (excluding earthquake coverage, a whole nother discussion). Our LTC coverage, which we were fortunate to start years ago at a locked in low premium, is $800 each, or $1600.

FBN2014
Posts: 219
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Re: Long term care insurance - is it worth it?

Post by FBN2014 » Tue Jul 04, 2017 1:25 pm

jimishooch wrote:another option,

due to family histories and being child free we went this route after genworth gouged us out.


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

FBN2014
Posts: 219
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Re: Long term care insurance - is it worth it?

Post by FBN2014 » Tue Jul 04, 2017 1:29 pm

neilpilot wrote:
BolderBoy wrote:
DKD wrote: My parents were neither impoverished nor wealthy. They had LTCI policies (from a reputable company) for >25 years. Dad died one day after becoming sick enough to need the LTCI. Mom lamented that paying all those premiums for him for all those years was a complete waste. Then mom died one month after becoming sick (in her 90s). On her deathbed she lamented having paid for LTCI all those years. Both policies had 90 day waiting periods.

YMMV.
We have owned a home for decades, and have never had a fire or any other insurance claim. Since we have no mortgage, we could drop our homeowner's insurance (except then our umbrella policy would not cover the liability portion of our current homeowners policy). Does anyone view the need for homeowners insurance in a similar fashion as LTC, i.e. if you are wealthy enough to absorb a loss than insurance isn't required?
Sure, a small loss is no big deal but if your house burned to the ground I don't think many people could absorb that. A high deductible policy of say 5-10K should be dirt cheap.

TravelforFun
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Re: Long term care insurance - is it worth it?

Post by TravelforFun » Tue Jul 04, 2017 1:44 pm

BolderBoy wrote:
DKD wrote:Does anyone have a perspective on this? Thanks
I decided in the 1990s that I won't buy it. The actuaries working for the LTCI companies have long ago worked out that this insurance is a real moneymaker for the companies.

My parents were neither impoverished nor wealthy. They had LTCI policies (from a reputable company) for >25 years. Dad died one day after becoming sick enough to need the LTCI. Mom lamented that paying all those premiums for him for all those years was a complete waste. Then mom died one month after becoming sick (in her 90s). On her deathbed she lamented having paid for LTCI all those years. Both policies had 90 day waiting periods.

YMMV.
Had they gotten dementia or a stroke and stayed in a nursing home for a few years, you would be singing a different tune.

LTCi is an insurance and just like any other insurance, some people win and others lose. I've paid my home insurance premium for over 30 years and filed one claim. I'm pretty sure I've lost the home insurance bet.

ResearchMed
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Re: Long term care insurance - is it worth it?

Post by ResearchMed » Tue Jul 04, 2017 1:45 pm

FBN2014 wrote:
neilpilot wrote:
BolderBoy wrote:
DKD wrote: My parents were neither impoverished nor wealthy. They had LTCI policies (from a reputable company) for >25 years. Dad died one day after becoming sick enough to need the LTCI. Mom lamented that paying all those premiums for him for all those years was a complete waste. Then mom died one month after becoming sick (in her 90s). On her deathbed she lamented having paid for LTCI all those years. Both policies had 90 day waiting periods.

YMMV.
We have owned a home for decades, and have never had a fire or any other insurance claim. Since we have no mortgage, we could drop our homeowner's insurance (except then our umbrella policy would not cover the liability portion of our current homeowners policy). Does anyone view the need for homeowners insurance in a similar fashion as LTC, i.e. if you are wealthy enough to absorb a loss than insurance isn't required?
Sure, a small loss is no big deal but if your house burned to the ground I don't think many people could absorb that. A high deductible policy of say 5-10K should be dirt cheap.
It's that "(except then our umbrella policy would not cover the liability portion of our current homeowners policy)" that would worry us. Anyone with enough assets to cover "if the house burned down" and LTC self-coverage... the lack of liability coverage could wipe it all out, including claims against future income.

Too risky to drop that!

RM
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neilpilot
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Re: Long term care insurance - is it worth it?

Post by neilpilot » Tue Jul 04, 2017 1:51 pm

FBN2014 wrote:

Sure, a small loss is no big deal but if your house burned to the ground I don't think many people could absorb that. A high deductible policy of say 5-10K should be dirt cheap.
I roughly estimate an uninsured total loss of my home and contents would amount to about $400k (value of home + contents + cost to demolish structure less value of vacant lot). That does not take account a possible Federal Tax loss credit.

The cost of my mother's 4 years (to date) in a Alzheimer facility has been about $67k/year, or $268k. She's still going strong, and I suspect the cost will likely exceed a total loss of my home.

My point in the earlier post was that the cost of LTC could easily exceed the uninsured value of a total home loss, and the odds are likely just as great.

BTW you can cover liability limits in a modified umbrella policy WITHOUT having homeowners insurance, at a very low additional cost. I've checked.

pshonore
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Re: Long term care insurance - is it worth it?

Post by pshonore » Tue Jul 04, 2017 2:13 pm

EnjoyIt wrote:Regarding nursing home care and payments I found a pretty good link regarding cost
https://www.payingforseniorcare.com/lon ... homes.html

http://news.morningstar.com/articlenet/ ... ?id=564139

This could be a good resource of people who plan on retiring and want to make sure they won't be a burden to their families when requiring nursing home care:

1) The average cost of a shared nursing home room is $222/day or $81k/yr (which varies greatly based on location.) Please see first link above to asses cost in your own state.
2) The average length of stay for a nursing home patient is 2.44 years or 892 days.
3) 30% of the nursing home stays are under 100 days and fully covered by medicare with supplemental which I think every person should have.
Note that stays covered by Medicare in a nursing home are for rehab purposes and may require prior hospitalization (major surgery, joint replacement, etc.) Custodial care is not covered.

neilpilot
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Re: Long term care insurance - is it worth it?

Post by neilpilot » Tue Jul 04, 2017 3:23 pm

This thread prompted me to review my LTC, which I purchased way back in 1999; we were both 49. At the time I thought it might be extravagant, but I'm starting to realize that starting the policy at a relatively young age made the premiums cost effective. Each policy has total coverage of $250k, with daily nursing home and assisted living limits of $100 and $50 daily. Each annual premium is locked in at $800, and this includes an annual 5% inflation rider on the benefits.

So fast forward 18 years later, we have each so far paid $14,400 in total premiums. Coverage has increased to $602k total, $240 daily for nursing home, and $120 daily for assisted living. We're currently 67, and there's little doubt we will continue the policy.

If I was shopping for similar coverage today, at age 67, I would not be buying LTC.

Jack FFR1846
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Re: Long term care insurance - is it worth it?

Post by Jack FFR1846 » Tue Jul 04, 2017 3:50 pm

Are premium escalations defined when buying the policy? It's pretty scary to think that one could pay premiums expecting to be provided for when needed only to have the premium double one year, double again, double again.....

I've paid attention to some of the numbers talked about.....averages.....experiences.....and must think I live in a higher cost area. My wife's aunt was in a nursing home then rest home following a bad accident. This was 10 years ago and the nursing home was $12k a month and rest home $6k a month. We took care of finances while she was recovering. I also remember that after two years of full pay, the rest home would keep the resident for whatever social security/pension was available.

I don't see this as being the same as homeowner insurance. Homeowner insurance doesn't dramatically increase every year....at least mine hasn't.

We self insure.
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pintail07
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Re: Long term care insurance - is it worth it?

Post by pintail07 » Tue Jul 04, 2017 4:01 pm

Jack FFR1846 wrote:Are premium escalations defined when buying the policy? It's pretty scary to think that one could pay premiums expecting to be provided for when needed only to have the premium double one year, double again, double again.....

I've paid attention to some of the numbers talked about.....averages.....experiences.....and must think I live in a higher cost area. My wife's aunt was in a nursing home then rest home following a bad accident. This was 10 years ago and the nursing home was $12k a month and rest home $6k a month. We took care of finances while she was recovering. I also remember that after two years of full pay, the rest home would keep the resident for whatever social security/pension was available.

I don't see this as being the same as homeowner insurance. Homeowner insurance doesn't dramatically increase every year....at least mine hasn't.

We self insure.
Some policies guarantee no change in premium or benefits or benefit period. For those that self insure they can be very attractive.

neilpilot
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Location: Memphis area

Re: Long term care insurance - is it worth it?

Post by neilpilot » Tue Jul 04, 2017 4:04 pm

Jack FFR1846 wrote:
I don't see this as being the same as homeowner insurance. Homeowner insurance doesn't dramatically increase every year....at least mine hasn't.

We self insure.
Everyone's experience is different. My homeowners cost has increased by almost 40% since 2008, but my home coverage (value) has only appreciated 15-20% during the same period. As I posted above, our LTC policy premium has stayed the same since we began coverage in 1999. The initial literature states that "your premium is designed to remain level and won't increase even though your coverage amounts increase each year", due to the 5% annual inflation rider.

I don't know if we were lucky and bought a good policy, or if the company will try to raise our premium. It's a Hartford policy that, since 2003, has been administered by MedAmerica Insurance.

mnnice
Posts: 219
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Re: Long term care insurance - is it worth it?

Post by mnnice » Tue Jul 04, 2017 6:23 pm

neilpilot wrote:
mnnice wrote:
We have owned a home for decades, and have never had a fire or any other insurance claim. Since we have no mortgage, we could drop our homeowner's insurance (except then our umbrella policy would not cover the liability portion of our current homeowners policy). Does anyone view the need for homeowners insurance in a similar fashion as LTC, i.e. if you are wealthy enough to absorb a loss than insurance isn't required?
I think there are people in hurricane prone areas that buy "renters " coverage for their paid for house. While my declaration page on my homeowners insurance doesn't provide me with a breakdown I suspect that the contents, liability, and loss of use are pretty big deals. In my case homeowners insurance is about $550 a year and if I rented in my present zip code I bet it would b $350 for decent renters insurance. In other words not the savings that skipping LTCi would be unless you live in the most hurricane prone place around.

In my situation I am inclined to take the risk and skip the LTCi. I am not willing to take the same roll of the dice on my homeowners not because I didn't think I could afford to sustain the loss but why bother for $200 bucks a year.
Very different situation. My homeowners is $2330/year (excluding earthquake coverage, a whole nother discussion). Our LTC coverage, which we were fortunate to start years ago at a locked in low premium, is $800 each, or $1600.[/quote]

Interesting. My spouse and I had LTCI as an employer paid benefit for about 10 years. At the time we were in our early 30's to early 40's. We had the opportunity to keep the coverage at the cost of about the same cost per year as you pay but with no price lock. At the time we passed as we had just survived the Great Recession and thought the odds of needing to lapse to feed our kids was way bigger than needing LTC.

newstreetnj
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Re: Long term care insurance - is it worth it?

Post by newstreetnj » Tue Jul 04, 2017 6:51 pm

I got LTCI ~15 yrs ago, when I was recently divorced, through TIAA due to my strong family history of dementia. It's now "administered" by Metlife and I've had 2 premium increases since I got it. I do sleep better knowing that I have it and the premiums are still < 2K/ yr.

So much of the decision to buy is or should be based on your family history!! Just finished reading "The Gene" by Sidharthe Murkeejee(sp?)

Bob

WillRetire
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Re: Long term care insurance - is it worth it?

Post by WillRetire » Tue Jul 04, 2017 7:26 pm

To us (spouse and me), LTCi is worth it for protecting one another from financial destitution: If one of us gets sick or is in an accident and needs long-term care, the policy pays the bills instead of depleting financial assets. The healthy spouse maintains a good standard of living, at least while the policy is in effect. When one of us dies, the LTCi need is less; It becomes more about preserving the estate, or is a means to buy into a facility of choice. The survivor might decline future premium increases in favor of a reduced benefit if there is no need to preserve finances for someone else.

Our policies are fixed premium. That just means that the insurer has to petition the state insurance commission in order to increase premiums, which they did after 10 years (100% increase), and again after another 3 years (30% increase). Don't like it, but the premiums are still affordable & worth it for the benefit, and I would rather have that than be in a state that declines the petitions, resulting in the insurer becoming insolvent in my state. Then my money really was wasted. For each increase, the insurer gave us a reasonable option to keep premiums the same.

If I were single and faced with the decision today (to buy LTCi or not), I'd be inclined to buy a different insurance product, one that gives the option to use the money for income or for LTC (such as some annuities). Or I might look at CCRCs. The problem with CCRCs, though, is some of them want you entering in a relatively healthy state. Debilitating health problems don't always give you warning. Maybe it's just me, but when I'm healthy & happy, I don't want to go to a CCRC and be around old folks! Catch-22

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