Advice for Mom's LTC policy renewal

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Ginny'sMom
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Joined: Sun May 27, 2018 1:13 pm

Advice for Mom's LTC policy renewal

Post by Ginny'sMom » Sun May 27, 2018 3:57 pm

Hi Everyone, first time poster. My 79 yr. old widowed mother received a letter from Penn Treaty. Her options are to maintain coverage with a premium increase to $963 per year (max daily benefit $218.64 and current lifetime benefit of $327,971, with inflation rider to $500,000); 2nd option is to reduce premium to $579.73 keeping current benefits with no inflation rider; 3rd option is to convert to paid up with a max daily benefit of $218.64 and max lifetime benefit of $14,646; and 4th option is to surrender policy for cash payment of $41,683. She is in good health and good shape financially. House is paid off and she has an inherited spousal IRA of approx. $1,000,000, as well as a taxable account of $250,000 and other cash assets. She also gets the maximum SS benefit as my Dad didn't collect until he was 70. I think she should probably maintain coverage, but your advice is appreciated! Thanks.

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Stinky
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Location: Sweet Home Alabama

Re: Advice for Mom's LTC policy renewal

Post by Stinky » Mon May 28, 2018 10:17 am

We would need a lot more information to fully assess your mother's situation, but it seems that if she likes having the security of LTC, she should keep the policy. The premium and the increase are nominal, compared to what a lot of folks are paying.

The third (paid-up) option is clearly no good - why would someone take a max lifetime benefit of $15k when they can get cash (option 4) of $42k.

I'm a believer in LTC, as my mother's policy helped her to maintain more of her estate as she was in assisted living. Penn Treaty is in receivership, and the premiums they historically charged were less than the benefits that they incurred, so it's not like you're being ripped off on price.

My advice - follow your heart and pay the increase.
It's a GREAT day to be alive - Travis Tritt

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samsoes
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Re: Advice for Mom's LTC policy renewal

Post by samsoes » Mon May 28, 2018 10:29 am

$963 per year? That's a steal. Pay that premium today before they change their minds.
"Happiness Is Not My Companion" - Gen. Gouverneur K. Warren. | (Avatar is the statue of Gen. Warren atop Little Round Top @ Gettysburg National Military Park.)

student
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Re: Advice for Mom's LTC policy renewal

Post by student » Mon May 28, 2018 10:37 am

Given her assets, I think she can afford the premium increase and the policy seems relatively good.

donall
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Re: Advice for Mom's LTC policy renewal

Post by donall » Mon May 28, 2018 12:21 pm

Although Penn Treaty is in receivership, relative’s bills were paid and employees were professional. So I would continue paying the increased premium.

student
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Re: Advice for Mom's LTC policy renewal

Post by student » Mon May 28, 2018 12:25 pm


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GerryL
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Re: Advice for Mom's LTC policy renewal

Post by GerryL » Mon May 28, 2018 12:47 pm

Note that the options they give you in the letter may not be the only possibilities. If you're having trouble settling on one of the three, talk with your agent (or a rep at the company) and ask them to price out other options that are more in line with your mom's needs at her current age and state of health.

JoeRetire
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Re: Advice for Mom's LTC policy renewal

Post by JoeRetire » Mon May 28, 2018 1:15 pm

Ginny'sMom wrote:
Sun May 27, 2018 3:57 pm
Her options are to maintain coverage with a premium increase to $963 per year (max daily benefit $218.64 and current lifetime benefit of $327,971, with inflation rider to $500,000)

She is in good health and good shape financially. House is paid off and she has an inherited spousal IRA of approx. $1,000,000, as well as a taxable account of $250,000 and other cash assets. She also gets the maximum SS benefit as my Dad didn't collect until he was 70. I think she should probably maintain coverage
What does she think?

Assuming she agrees, I think you are right - $963/yr for that level of coverage is a bargain.
But if she thinks that's too expensive and doesn't have a spouse to worry about, I wouldn't argue. She could easily self-insure.

annielouise
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Re: Advice for Mom's LTC policy renewal

Post by annielouise » Mon May 28, 2018 2:23 pm

For reference, I pay more than that for a lower benefit. I am 53, and, before getting the policy, both of my parents had passed at relatively young ages with no LTC need. Your mom should be aware that she has a great deal there, even though it probably sounds like a lot of money to her.

Ginny'sMom
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Re: Advice for Mom's LTC policy renewal

Post by Ginny'sMom » Tue May 29, 2018 10:43 am

Appreciate all of the feedback. Mom brought the letter to me, because she wasn't sure what to do. My Dad died suddenly and never used his policy, so the idea of payout was tempting, but she feels more secure keeping the policy. Thanks!

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