long term care insurance

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capemaydiamond
Posts: 38
Joined: Mon Feb 27, 2012 9:32 pm

long term care insurance

Post by capemaydiamond » Fri Jun 08, 2018 8:42 am

Hi. I'm looking for input about LTCI for friends (a couple, in their 60's) who are looking into it.

Are the stand alone policies (expensive) the only ones worth considering, or are the hybrid life insurance with LTC attachments also worth looking into? Are there other options?

Can anyone recommend any resources, e.g. good unbiased websites, blogs, etc?

And, most important in my mind, can anyone recommend a knowledgeable and honest broker to work with?

Many thanks for any help.

glensos
Posts: 38
Joined: Sat Aug 01, 2009 7:09 pm

Re: long term care insurance

Post by glensos » Fri Jun 08, 2018 9:09 am

Long Term Care is a very challenging problem in so many ways. Insurance companies have been a nightmare in over promising- under delivering with their LTC policies and the hybrid policies.

The best solution is to be self insured. Is there a way you can do that with your investments, or by planning on using a reverse mortgage to cover the cost.

For poorer people they may qualify for State Aid.

If you are in the middle, unfortunately you are in a very bad place to try to figure out any solution that at best, might work.

I would start by calling TIAA CREF. They are a more reputable and honest insurance carrier, and they don’t pay agent commissions.

Please keep in mind that because LTC is a high probability and insurance companies have to invest very conservatively it’s unlikely over time that your premium payments to them will be any more then just pre-paid medical. The short term risk is you will need care at a young age. That’s when the insurance works for you. If you need care at a more predictable older age the insurance company has to be the winner and you have to be the loser.

Glen

dad2000
Posts: 642
Joined: Fri Feb 03, 2012 7:04 pm

Re: long term care insurance

Post by dad2000 » Fri Jun 08, 2018 9:25 am

I don't think a lot has changed since this was written: https://www.kitces.com/blog/can-increas ... ing-again/

Because of the high probability of claims, LTCI is largely just a prepaid plan.

I'm in my 50s and can self-insure for several years. I want what Kitces suggests... lower cost insurance for a low probability event much like term-life. I want 10 year or lifetime benefits with a 3 year or higher elimination period. AFAIK, state laws still won't allow this.

bsteiner
Posts: 3385
Joined: Sat Oct 20, 2012 9:39 pm
Location: NYC/NJ/FL

Re: long term care insurance

Post by bsteiner » Fri Jun 08, 2018 9:27 am

glensos wrote:
Fri Jun 08, 2018 9:09 am
... because LTC is a high probability and insurance companies have to invest very conservatively it’s unlikely over time that your premium payments to them will be any more then just pre-paid medical. ...
Agreed. Most of what's called long-term care insurance is really short-term care insurance, and is more in the nature of a prepaid expense.

Ideally there would be a policy that covers an unlimited time, but doesn't pay for the first 3 years. I'm not aware of any such policies.

The hybrids only make sense if you need or want both coverages, and even then they don't work because if you tap it for one, you no longer have the other.

NoHeat
Posts: 123
Joined: Sun Sep 18, 2016 10:13 am

Re: long term care insurance

Post by NoHeat » Fri Jun 08, 2018 9:28 am

regarding brokers, LTC Tree is the one that I used three years ago. They talked to me about what I was looking for (and provided some cost-of-care data specific to my state, for guidance in choosing how much benefit to select), then they got me quotes from a half-dozen insurers, and assembled a readable comparison that mentioned not only the policy terms but also the insurer's rating with A M Best. Their broker applied no sales pressure, although he did email me occasionally after sending the quotes, to see if I needed any help deciding. I ended up with a policy from Mutual of Omaha, which happened to offer a 5% discount for members of my professional society. I don't know how much commission the broker was paid.

www.ltctree.com
Last edited by NoHeat on Fri Jun 08, 2018 9:56 am, edited 2 times in total.

NoHeat
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Re: long term care insurance

Post by NoHeat » Fri Jun 08, 2018 9:33 am

bsteiner wrote:
Fri Jun 08, 2018 9:27 am

Ideally there would be a policy that covers an unlimited time
Actually they typically do cover an unlimited time.

Instead of time, money is what's limited, and in two ways: the policy limit (total number of dollars that they'll pay no matter how long it takes), and maximum monthly benefit. These are the two main limits, and you choose their values when you buy the policy.

Typically an insured person would seek in-home care (as nobody wants to go into a nursing home), and such care varies according to how much you need. If you don't need much per month, you could make claims for many years before exceeding your policy limit.

bsteiner
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Location: NYC/NJ/FL

Re: long term care insurance

Post by bsteiner » Fri Jun 08, 2018 9:55 am

NoHeat wrote:
Fri Jun 08, 2018 9:33 am
bsteiner wrote:
Fri Jun 08, 2018 9:27 am

Ideally there would be a policy that covers an unlimited time
Actually they typically do cover an unlimited time.

Instead of time, money is what's limited, and in two ways: the policy limit (total number of dollars that they'll pay no matter how long it takes), and maximum monthly benefit. These are the two main limits, and you choose their values when you buy the policy.

Typically an insured person would seek in-home care (as nobody wants to go into a nursing home), and such care varies according to how much you need. If you don't need much per month, you could make claims for many years before exceeding your policy limit.
That would be similar. What's needed is a policy that doesn't run out if you need care for a very long time.

Nate79
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Location: Portland, OR

Re: long term care insurance

Post by Nate79 » Fri Jun 08, 2018 9:55 am

Do NOT consider whole life with LTC rider. Whole life is a horrible product in part due to being very complicated because it is a combination of life insurance and investing/savings account. Now add in a third complication (LTC)? Yeah, no thanks. It's not like WL is going to solve the current LTC issue of high cost.

jimishooch
Posts: 193
Joined: Tue Nov 11, 2014 2:28 pm

Re: long term care insurance

Post by jimishooch » Fri Jun 08, 2018 10:41 am


CULater
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Re: long term care insurance

Post by CULater » Fri Jun 08, 2018 12:24 pm

Ed Slott seems to think that whole life with living benefits could be a good deal for some folks, subject to the idea that it should be held for many years to accumulate cash value (which is tax -free). Maybe that's an alternative. I know you can get it with a rider to pay LTC expenses as well but don't know much about that. Agree with others that LTCi does not really cover long term care because the benefit cap is usually too short (2-3 years). It seems it would be best to buy it with as long a coverage periods as possible, since actuarially the premiums for longer coverage are not proportionally higher (e.g., the premium for 5 years is not 67% higher than for 3 years, even though the coverage period is). You really want to insure against the possibility that you'll fall into the right tail and need a significantly longer period of care than the average, which is only a couple of years or so. Still, you have to deal with the large premiums and the possibility that they keep ramping up.
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

WoW2012
Posts: 225
Joined: Sun Dec 23, 2012 11:28 am

Re: long term care insurance

Post by WoW2012 » Fri Jun 08, 2018 1:39 pm

dad2000 wrote:
Fri Jun 08, 2018 9:25 am
I don't think a lot has changed since this was written: https://www.kitces.com/blog/can-increas ... ing-again/

Because of the high probability of claims, LTCI is largely just a prepaid plan.

I'm in my 50s and can self-insure for several years. I want what Kitces suggests... lower cost insurance for a low probability event much like term-life. I want 10 year or lifetime benefits with a 3 year or higher elimination period. AFAIK, state laws still won't allow this.
What do you mean by a "prepaid plan"?
Are you suggesting that the premiums paid would be about equal to the benefits received?

JoeRetire
Posts: 1337
Joined: Tue Jan 16, 2018 2:44 pm

Re: long term care insurance

Post by JoeRetire » Fri Jun 08, 2018 1:51 pm

capemaydiamond wrote:
Fri Jun 08, 2018 8:42 am
Are the stand alone policies (expensive) the only ones worth considering, or are the hybrid life insurance with LTC attachments also worth looking into?
You should definitely look at both options.

If the price of the stand alone policies seem prohibitive compared to the benefits, definitely consider hybrid policies. Expensive, but returns some money if the benefits aren't used.
Can anyone recommend any resources, e.g. good unbiased websites, blogs, etc?
Personally, I think this decision would benefit from a discussion with someone that understands your whole portfolio, your assets, your current plans, your goals, etc. Ideally, this would be a financial adviser with whom you already have a relationship. Barring that, you could spend a few hours with a fee-only fiduciary financial adviser. Such an adviser could tell you if you even need LTCi, and model the costs of various options for you.
And, most important in my mind, can anyone recommend a knowledgeable and honest broker to work with?
I found Accuquote very knowledgeable, honest, and extremely helpful.

WoW2012
Posts: 225
Joined: Sun Dec 23, 2012 11:28 am

Re: long term care insurance

Post by WoW2012 » Fri Jun 08, 2018 3:25 pm

bsteiner wrote:
Fri Jun 08, 2018 9:27 am
glensos wrote:
Fri Jun 08, 2018 9:09 am
... because LTC is a high probability and insurance companies have to invest very conservatively it’s unlikely over time that your premium payments to them will be any more then just pre-paid medical. ...
Agreed. Most of what's called long-term care insurance is really short-term care insurance, and is more in the nature of a prepaid expense.

Ideally there would be a policy that covers an unlimited time, but doesn't pay for the first 3 years. I'm not aware of any such policies.

The hybrids only make sense if you need or want both coverages, and even then they don't work because if you tap it for one, you no longer have the other.


What do you mean by a "prepaid expense"?
Are you suggesting that the premiums paid would be about equal to the benefits received?
That's not the point of insurance.

Limoncello402
Posts: 87
Joined: Wed May 03, 2017 3:58 pm

Re: long term care insurance

Post by Limoncello402 » Fri Jun 08, 2018 4:45 pm

Remember that the buzz phrase "self insure" just means having a whole lot of money set aside to cover years in a nursing facility or home health care of the quality you desire. Few people have actually done the research to price such facilities in their area and do the calculations for this potential future expense, and then earmark a large chunk of their portfolio for it.
I have Genworth policy that I renew each year even though the premium keeps rising because ultimately the "self-insure" numbers are out of my ballpark.
Do a search for LTC and you will find plenty of threads on it. There's no easy answer.

CULater
Posts: 1209
Joined: Sun Nov 13, 2016 10:59 am

Re: long term care insurance

Post by CULater » Fri Jun 08, 2018 6:41 pm

Let's look at one example. Using the LTCi premium estimator from Genworth, for a single male living in Missouri who is age 65, the annual premium estimate for a policy providing up to 3 years of benefits at $200/day is $3639.00. If we assume that this person qualifies for benefits at age 85, he would have paid $72,780 in total premium payments assuming no premium increases over that period of time. If he receives the maximum benefit, that would be $219,000 in today's dollars for a net benefit of $146,220 ($219,000 - $72,780).

If he had invested the $3,639 annually @4% instead, he would have $120,670 when he is 85 years old, which is $25,550 less than the net maximum benefit payout from LTCi. If he were to invest $4,400 annually @4%, an increase of $761 annually, he would end up with $145,905 at age 85 which is equal to the net maximum benefit he could receive from LTCi.

So we can see that self-insuring by investing the "premium payments" turns out to be about as good as buying LTCi in this example. It turns out that the older you are when you qualify for LTCi benefits, the less advantageous LTCi is because you've paid in a lot in premiums. The "winners" are the folks who qualify for benefits when they are younger and haven't paid much in premiums before they start collecting benefits; however, the catch-22 is that the younger you are when you qualify for benefits, the longer you might live and outlive your benefit ceiling. However, you'll still be better off net-net than if you had been investing to self-insure because you wouldn't have accumulated as much. So, what it kind of comes down to is that LTCi is best for insuring against the less probable event that you'll need long term care at a relatively young age during your retirement, and not as good for insuring against the more probable event that you'll need long term care late in your retirement. That's how insurance is supposed to work, but it's good to have a clear idea about what kinds of risks you are actually insuring yourself against with LTCi.

The caveats are that we don't know what long term care is going to cost in the future. Many LTCi policies have a rider that increases the benefit amount annually, so you need to pay close attention to that. But, unfortunately, it's likely that premiums will increase to offset the benefit rider; otherwise, the insurer will go broke. But you also need to pay attention to long term care costs if you are investing to self-insure, because you'll have to increase the amount you are setting aside annually in order to keep pace with that, which is sort of a self-imposed premium increase.

Also, it seems to me that - since LTCi is primarily insuring against early age long term care costs - it might be a good idea to have the highest maximum benefit amount you can afford since it's more likely you could live a long time and require care if you need it at a younger age.
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

WoW2012
Posts: 225
Joined: Sun Dec 23, 2012 11:28 am

Re: long term care insurance

Post by WoW2012 » Fri Jun 08, 2018 7:21 pm

CULater wrote:
Fri Jun 08, 2018 6:41 pm
Let's look at one example. Using the LTCi premium estimator from Genworth, for a single male living in Missouri who is age 65, the annual premium estimate for a policy providing up to 3 years of benefits at $200/day is $3639.00. If we assume that this person qualifies for benefits at age 85, he would have paid $72,780 in total premium payments assuming no premium increases over that period of time. If he receives the maximum benefit, that would be $219,000 in today's dollars for a net benefit of $146,220 ($219,000 - $72,780).

If he had invested the $3,639 annually @4% instead, he would have $120,670 when he is 85 years old, which is $25,550 less than the net maximum benefit payout from LTCi. If he were to invest $4,400 annually @4%, an increase of $761 annually, he would end up with $145,905 at age 85 which is equal to the net maximum benefit he could receive from LTCi.

So we can see that self-insuring by investing the "premium payments" turns out to be about as good as buying LTCi in this example. It turns out that the older you are when you qualify for LTCi benefits, the less advantageous LTCi is because you've paid in a lot in premiums. The "winners" are the folks who qualify for benefits when they are younger and haven't paid much in premiums before they start collecting benefits; however, the catch-22 is that the younger you are when you qualify for benefits, the longer you might live and outlive your benefit ceiling. However, you'll still be better off net-net than if you had been investing to self-insure because you wouldn't have accumulated as much. So, what it kind of comes down to is that LTCi is best for insuring against the less probable event that you'll need long term care at a relatively young age during your retirement, and not as good for insuring against the more probable event that you'll need long term care late in your retirement. That's how insurance is supposed to work, but it's good to have a clear idea about what kinds of risks you are actually insuring yourself against with LTCi.

The caveats are that we don't know what long term care is going to cost in the future. Many LTCi policies have a rider that increases the benefit amount annually, so you need to pay close attention to that. But, unfortunately, it's likely that premiums will increase to offset the benefit rider; otherwise, the insurer will go broke. But you also need to pay attention to long term care costs if you are investing to self-insure, because you'll have to increase the amount you are setting aside annually in order to keep pace with that, which is sort of a self-imposed premium increase.

Also, it seems to me that - since LTCi is primarily insuring against early age long term care costs - it might be a good idea to have the highest maximum benefit amount you can afford since it's more likely you could live a long time and require care if you need it at a younger age.

CULater, your calculations are incorrect.

The annual premium estimate for a single, 65-year old male, for a policy providing up to 3 years of benefits at $200/day is $2,364
NOT $3,639.00.

The $3,639 estimated premium includes a 3% compound inflation protection. When you include the 3% compound inflation growth in the policy, by age 85, the daily benefit would be $361.22 and the policy limit would be $395,538.36.

CULater
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Re: long term care insurance

Post by CULater » Sat Jun 09, 2018 9:53 am

CULater, your calculations are incorrect.

The annual premium estimate for a single, 65-year old male, for a policy providing up to 3 years of benefits at $200/day is $2,364
NOT $3,639.00.

The $3,639 estimated premium includes a 3% compound inflation protection. When you include the 3% compound inflation growth in the policy, by age 85, the daily benefit would be $361.22 and the policy limit would be $395,538.36.
It isn't my calculation - it comes from Genworth, a major player in the LTCi arena. Where does yours come from?

https://www.genworth.com/products/care- ... lator.html

Also consider that premium rates are lower for males than for females because women are likely to live longer and require more care. The premium for a 65 year old woman for 3 years @$200/day is $5,095 quoted by Genworth, compared to $3,639 for a man.

I also pointed out that it's unlikely that inflation riders will come for nothing - premiums will have to increase to pay for it as they've already been doing or insurance carriers will go broke.
New Yorkers who bought long-term care insurance from Genworth, one of the few remaining carriers, were hit with a 60% premium increase in October. The same company has asked Pennsylvania state regulators for permission to raise premiums by as much as 130% for some policyholders.

Genworth has lost $2 billion on its long-term care policies overall and continues to lose between $100 and $150 million each year
http://time.com/money/4250147/long-term ... premiums/
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

WoW2012
Posts: 225
Joined: Sun Dec 23, 2012 11:28 am

Re: long term care insurance

Post by WoW2012 » Sat Jun 09, 2018 10:26 am

Before buying long-term care insurance I thought it would be a good idea to comparison shop and get quotes from a lot of different companies. Unfortunately, there's no way to do that for long-term care insurance because there's no "select quote" type website where you can get instant quotes from "all the top carriers".

So, I found this website: http://ltca.com/

They produce software that has the long-term care insurance premiums from about a dozen different insurance companies. They even have the rates from policies that were sold 15+ years ago, so you can go back and see what people used to pay.

It cost $299 + tax, but I figured it'd be worth it since we would be spending a lot more than that every year for the rest of our lives.

That's why I know that the $3,639 premium estimate you have includes a 3% compound inflation benefit.

Hubris
Posts: 34
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Re: long term care insurance

Post by Hubris » Sat Jun 09, 2018 10:31 am

OP, to the part of your question about hybrid policies, we have this type of coverage and are pretty pleased with it, especially the fixed pricing for life.

Here’s my post about it from 2016:


“My wife (53) and I (56)bought LTC last year, via a universal life product with a lump sum premium and annual premiums at fixed price for life. Not exactly Prepaid but very useful for us. If we don't use the LTC coverage, then we have the life insurance benefit for 2nd to die, therefore creating an estate which is a secondary priority for us. Also, lump sum accrues interest @4% annually. There are surrender charges but we can get entire lump sum amount back for 1st 7 yrs without penalty (and without interest.). After 1st 7 yrs, surrender charges apply but return will be original lump sum plus interest less surrender charges; and after 7 yrs surrender charges are less than accrued interest.

I won't go into our reasoning for buying the coverage other than to say some of it was driven by logic and some by emotion, boh of which seem valid to us. The fixed pricing for annual coverage was very appealing and we currently view this coverage as a fixed income-like holding given that we might decide to self insure in 7-10 years, and recover our principal and accrued interest (less surrender charges.)”

CULater
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Re: long term care insurance

Post by CULater » Sat Jun 09, 2018 11:43 am

Using the Genworth premium estimator, the premium for a 65-year old woman for 3 years @$200/day is $5,095 and for a 65-year old couple it is $5,290. So, the coverage for the Mister is practically a free bonus compared to the cost for the Missus alone. Shows you what the insurance company is thinking they might have to shell out for the guy, eh?
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

WoW2012
Posts: 225
Joined: Sun Dec 23, 2012 11:28 am

Re: long term care insurance

Post by WoW2012 » Sat Jun 09, 2018 12:27 pm

CULater wrote:
Sat Jun 09, 2018 11:43 am
Using the Genworth premium estimator, the premium for a 65-year old woman for 3 years @$200/day is $5,095 and for a 65-year old couple it is $5,290. So, the coverage for the Mister is practically a free bonus compared to the cost for the Missus alone. Shows you what the insurance company is thinking they might have to shell out for the guy, eh?
Not quite.
Dial down the confirmation bias a little bit.
The probability of a single woman needing care is very high.
The probability of a partnered female needing care is almost half that of a single woman.
Genworth charges couples the same rates, regardless if the couple is male/male, female/female, female/male.

There are 9 million people receiving long-term care at home.
I bet most of them are men (not women) and their daughters (or wives) are saddled with caring for them.

WoW2012
Posts: 225
Joined: Sun Dec 23, 2012 11:28 am

Re: long term care insurance

Post by WoW2012 » Sat Jun 09, 2018 12:34 pm

Hubris wrote:
Sat Jun 09, 2018 10:31 am
OP, to the part of your question about hybrid policies, we have this type of coverage and are pretty pleased with it, especially the fixed pricing for life.

Here’s my post about it from 2016:


“My wife (53) and I (56)bought LTC last year, via a universal life product with a lump sum premium and annual premiums at fixed price for life. Not exactly Prepaid but very useful for us. If we don't use the LTC coverage, then we have the life insurance benefit for 2nd to die, therefore creating an estate which is a secondary priority for us. Also, lump sum accrues interest @4% annually. There are surrender charges but we can get entire lump sum amount back for 1st 7 yrs without penalty (and without interest.). After 1st 7 yrs, surrender charges apply but return will be original lump sum plus interest less surrender charges; and after 7 yrs surrender charges are less than accrued interest.

I won't go into our reasoning for buying the coverage other than to say some of it was driven by logic and some by emotion, boh of which seem valid to us. The fixed pricing for annual coverage was very appealing and we currently view this coverage as a fixed income-like holding given that we might decide to self insure in 7-10 years, and recover our principal and accrued interest (less surrender charges.)”

Is the annual premium you pay each year enough to guarantee the current death benefit through age 100?
If not, then your premium could go up and/or your policy could lapse

Most universal life insurance policies are designed to lapse before you die.

Pull out your illustration and look at the page containing the "guaranteed values". Look at the value of the death benefit at age 100. Hopefully, it's not zero.

Also, how much is the death benefit?
Does it grow every year or does it remain the same for life?
Can you take 2% of the death benefit each month for long-term care, or 3% or 4%?
Does it have a "chronic illness rider" or does it have a "long-term care rider"?

WoW2012
Posts: 225
Joined: Sun Dec 23, 2012 11:28 am

Re: long term care insurance

Post by WoW2012 » Sat Jun 09, 2018 12:49 pm


fyi... this article in Time is fake news.
This statement in the article is false: "Her monthly premiums have nearly quadrupled over the past two years."
The journalist who wrote the article miss-calculated.
The woman pays her premiums quarterly.
The journalist thought the premiums were monthly.

Over a 17-year period (not over 2 years) the woman in the article had 3 rate increases:
13%, 41.6%, and 57.31%.

Those are terribly high rate increases. I agree with that.
But the article itself is incorrect about the size of the rate increases.

CULater
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Joined: Sun Nov 13, 2016 10:59 am

Re: long term care insurance

Post by CULater » Sat Jun 09, 2018 1:02 pm

Genworth charges couples the same rates, regardless if the couple is male/male, female/female, female/male.
Good catch. I hadn't checked that. It would be to their advantage if a couple of ladies could insure as a couple and each only pay about half the cost of insuring individually. I wonder if you can just do that by naming both on the policy, or have to legally be married? Hey, maybe a bunch of friends can get a group rate! Let's start up a Boglehead Long Term Insurance Group.
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

CULater
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Re: long term care insurance

Post by CULater » Sat Jun 09, 2018 1:09 pm

WoW2012 wrote:
Sat Jun 09, 2018 12:49 pm

fyi... this article in Time is fake news.
This statement in the article is false: "Her monthly premiums have nearly quadrupled over the past two years."
The journalist who wrote the article miss-calculated.
The woman pays her premiums quarterly.
The journalist thought the premiums were monthly.

Over a 17-year period (not over 2 years) the woman in the article had 3 rate increases:
13%, 41.6%, and 57.31%.

Those are terribly high rate increases. I agree with that.
But the article itself is incorrect about the size of the rate increases.
How do you know these things? I didn't see this information in the article. It is simply stated that the woman's premiums have quadrupled over the last two years. Are you providing your own facts and imputing them to the author of the article?
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

MDfan
Posts: 63
Joined: Tue Oct 18, 2016 7:32 am

Re: long term care insurance

Post by MDfan » Sat Jun 09, 2018 1:19 pm

We just got policies from Mutual of Omaha after doing some pretty lengthy research. Ages 56 and 54, $150/day benefit, 3% compound inflation rider, total policy is about $3100/year for both of us. I'm a federal employee but this seemed like a little better deal than the federal long-term care plan.

dknightd
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Re: long term care insurance

Post by dknightd » Sat Jun 09, 2018 1:28 pm

I've pretty much decided that if you can afford it you do not need it. If you can't afford it then, um, you can't afford it. Catch 22. I've decided to take my chances. If I, or wife, need long term care we will pay for it until me we run out of money, or the will to live. If we don't need it, the kids will get more than they expect. Risky, perhaps. But I do not see a different sensible way to deal with this.

dknightd
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Re: long term care insurance

Post by dknightd » Sat Jun 09, 2018 1:32 pm

MDfan wrote:
Sat Jun 09, 2018 1:19 pm
We just got policies from Mutual of Omaha after doing some pretty lengthy research. Ages 56 and 54, $150/day benefit, 3% compound inflation rider, total policy is about $3100/year for both of us. I'm a federal employee but this seemed like a little better deal than the federal long-term care plan.
On the surface this does look fair. My concern is when you turn 66, then 76, what happens then?

WoW2012
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Re: long term care insurance

Post by WoW2012 » Sat Jun 09, 2018 1:38 pm

dknightd wrote:
Sat Jun 09, 2018 1:32 pm
MDfan wrote:
Sat Jun 09, 2018 1:19 pm
We just got policies from Mutual of Omaha after doing some pretty lengthy research. Ages 56 and 54, $150/day benefit, 3% compound inflation rider, total policy is about $3100/year for both of us. I'm a federal employee but this seemed like a little better deal than the federal long-term care plan.
On the surface this does look fair. My concern is when you turn 66, then 76, what happens then?

What is special about ages 66 and 76?

WoW2012
Posts: 225
Joined: Sun Dec 23, 2012 11:28 am

Re: long term care insurance

Post by WoW2012 » Sat Jun 09, 2018 1:45 pm

CULater wrote:
Sat Jun 09, 2018 1:09 pm
WoW2012 wrote:
Sat Jun 09, 2018 12:49 pm

fyi... this article in Time is fake news.
This statement in the article is false: "Her monthly premiums have nearly quadrupled over the past two years."
The journalist who wrote the article miss-calculated.
The woman pays her premiums quarterly.
The journalist thought the premiums were monthly.

Over a 17-year period (not over 2 years) the woman in the article had 3 rate increases:
13%, 41.6%, and 57.31%.

Those are terribly high rate increases. I agree with that.
But the article itself is incorrect about the size of the rate increases.
How do you know these things? I didn't see this information in the article. It is simply stated that the woman's premiums have quadrupled over the last two years. Are you providing your own facts and imputing them to the author of the article?

The California Dept. of Ins. does an excellent job of protecting consumers. I did not think it likely that the California Dept. of Ins. would approve such a large rate increase over such a short period of time. In fact, I didn't think it was likely that the California Dept. of Ins. would approve a "quadrupling" of premiums over 30 years, let alone over two years.

So, I did a little research. There's a picture the journalist took that shows the name of the policy the woman bought. I went to the California Dept. of Ins. and looked up the rate increase history for that particular policy and my hunch was correct. To double check, I emailed the woman in the story through LinkedIn and she confirmed for me that her premium did not quadruple. She confirmed that she had her policy for 17 years. She had 3 premium increases: 13%, 41.6%, and 57.31%.

dknightd
Posts: 567
Joined: Wed Mar 07, 2018 11:57 am

Re: long term care insurance

Post by dknightd » Sat Jun 09, 2018 1:55 pm

WoW2012 wrote:
Sat Jun 09, 2018 1:38 pm


What is special about ages 66 and 76?
Nothing, except you are getting older, so are more likely to need the coverage. So the rates might increase.
Worth it if they will still cover you at the same rate, and pay the daily rate until you die. Sometimes these policies are structured so that no matter what the insurance company makes money. Buy your policy early, at low rates, then get $150 a day for three years if you are unluckily enough to need it. That might work fine for most people, but what if you outlive the policy payout? I have not looked carefully at these policies lately, but, last time I did I was likely better off keeping my premiums in my retirement account. That could be because wife and I are high risk, and did not look at this until it was too late. I'd pay $3100 year for the benefit advertised. As long as the premium and payout was more or less fixed.

dknightd
Posts: 567
Joined: Wed Mar 07, 2018 11:57 am

Re: long term care insurance

Post by dknightd » Sat Jun 09, 2018 1:58 pm

WoW2012 wrote:
Sat Jun 09, 2018 1:45 pm


So, I did a little research. There's a picture the journalist took that shows the name of the policy the woman bought. I went to the California Dept. of Ins. and looked up the rate increase history for that particular policy and my hunch was correct. To double check, I emailed the woman in the story through LinkedIn and she confirmed for me that her premium did not quadruple. She confirmed that she had her policy for 17 years. She had 3 premium increases: 13%, 41.6%, and 57.31%.
So basically they made the insurance unaffordable. I would consider 13%, 41.6%, and 57.31% compounded rate increase a reason to drop the policy. Which is what they want!

WoW2012
Posts: 225
Joined: Sun Dec 23, 2012 11:28 am

Re: long term care insurance

Post by WoW2012 » Sat Jun 09, 2018 2:03 pm

dknightd wrote:
Sat Jun 09, 2018 1:58 pm
WoW2012 wrote:
Sat Jun 09, 2018 1:45 pm


So, I did a little research. There's a picture the journalist took that shows the name of the policy the woman bought. I went to the California Dept. of Ins. and looked up the rate increase history for that particular policy and my hunch was correct. To double check, I emailed the woman in the story through LinkedIn and she confirmed for me that her premium did not quadruple. She confirmed that she had her policy for 17 years. She had 3 premium increases: 13%, 41.6%, and 57.31%.
So basically they made the insurance unaffordable. I would consider 13%, 41.6%, and 57.31% compounded rate increase a reason to drop the policy. Which is what they want!
She didn't drop the policy.
Her cumulative rate increase (151.71%) is one of the biggest cumulative rate increases listed on California's website.
That's why California changed their rules (along with 40 other states).
Unfortunately this woman bought her policy a few years before California changed the rules so her policy is not protected by the new rules.

WoW2012
Posts: 225
Joined: Sun Dec 23, 2012 11:28 am

Re: long term care insurance

Post by WoW2012 » Sat Jun 09, 2018 2:05 pm

dknightd wrote:
Sat Jun 09, 2018 1:55 pm
WoW2012 wrote:
Sat Jun 09, 2018 1:38 pm


What is special about ages 66 and 76?
Nothing, except you are getting older, so are more likely to need the coverage. So the rates might increase.
Worth it if they will still cover you at the same rate, and pay the daily rate until you die. Sometimes these policies are structured so that no matter what the insurance company makes money. Buy your policy early, at low rates, then get $150 a day for three years if you are unluckily enough to need it. That might work fine for most people, but what if you outlive the policy payout? I have not looked carefully at these policies lately, but, last time I did I was likely better off keeping my premiums in my retirement account. That could be because wife and I are high risk, and did not look at this until it was too late. I'd pay $3100 year for the benefit advertised. As long as the premium and payout was more or less fixed.
Depending upon which state you live in, policies purchased today have premiums and payouts that are "more or less fixed". Today's policies have much different pricing regulations than the old ones.

dknightd
Posts: 567
Joined: Wed Mar 07, 2018 11:57 am

Re: long term care insurance

Post by dknightd » Sat Jun 09, 2018 2:09 pm

Just for fun, $150 a day, for 365 days is 54750. I suspect long term care costs more than that in most markets. And that number is less than what I expect to live on.

WoW2012
Posts: 225
Joined: Sun Dec 23, 2012 11:28 am

Re: long term care insurance

Post by WoW2012 » Sat Jun 09, 2018 2:11 pm

dknightd wrote:
Sat Jun 09, 2018 2:09 pm
Just for fun, $150 a day, for 365 days is 54750. I suspect long term care costs more than that in most markets. And that number is less than what I expect to live on.
plus 3% compounded growth every year.

Quick question: if/when you ever need long-term care, will all of your other living expenses magically disappear?

MDfan
Posts: 63
Joined: Tue Oct 18, 2016 7:32 am

Re: long term care insurance

Post by MDfan » Sat Jun 09, 2018 2:18 pm

We are looking at the LTC policy as only a supplement to assets we should already have. So basically to put a dent into the expenses if we should ever need them. Not sure if this is the right way to go, but we discussed it pretty thoroughly with a LTC broker and that was the premium level/benefit level we felt most comfortable with right now. We hope to have in the $2-3 mil (plus pension and SS) range when we retire so I think we are in that "in between" group. Maybe I'm looking at it all wrong because I'm certainly no expert. We went for what we thought was the best compromise solution and certainly don't expect the policy to pay for everything. We have been told by a couple of advisors that this was a sound plan given our level of assets.

By the way, the average daily cost of a private nursing home room in 2017 in South Carolina (where we hope to retire), is about $225.
Last edited by MDfan on Sat Jun 09, 2018 2:39 pm, edited 1 time in total.

CULater
Posts: 1209
Joined: Sun Nov 13, 2016 10:59 am

Re: long term care insurance

Post by CULater » Sat Jun 09, 2018 2:33 pm

WoW2012 wrote:
Sat Jun 09, 2018 1:45 pm
CULater wrote:
Sat Jun 09, 2018 1:09 pm
WoW2012 wrote:
Sat Jun 09, 2018 12:49 pm

fyi... this article in Time is fake news.
This statement in the article is false: "Her monthly premiums have nearly quadrupled over the past two years."
The journalist who wrote the article miss-calculated.
The woman pays her premiums quarterly.
The journalist thought the premiums were monthly.

Over a 17-year period (not over 2 years) the woman in the article had 3 rate increases:
13%, 41.6%, and 57.31%.

Those are terribly high rate increases. I agree with that.
But the article itself is incorrect about the size of the rate increases.
How do you know these things? I didn't see this information in the article. It is simply stated that the woman's premiums have quadrupled over the last two years. Are you providing your own facts and imputing them to the author of the article?

The California Dept. of Ins. does an excellent job of protecting consumers. I did not think it likely that the California Dept. of Ins. would approve such a large rate increase over such a short period of time. In fact, I didn't think it was likely that the California Dept. of Ins. would approve a "quadrupling" of premiums over 30 years, let alone over two years.

So, I did a little research. There's a picture the journalist took that shows the name of the policy the woman bought. I went to the California Dept. of Ins. and looked up the rate increase history for that particular policy and my hunch was correct. To double check, I emailed the woman in the story through LinkedIn and she confirmed for me that her premium did not quadruple. She confirmed that she had her policy for 17 years. She had 3 premium increases: 13%, 41.6%, and 57.31%.
Goodness, that's one piece of research! Did you really do this?
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

WoW2012
Posts: 225
Joined: Sun Dec 23, 2012 11:28 am

Re: long term care insurance

Post by WoW2012 » Sat Jun 09, 2018 2:35 pm

CULater wrote:
Sat Jun 09, 2018 2:33 pm
WoW2012 wrote:
Sat Jun 09, 2018 1:45 pm
CULater wrote:
Sat Jun 09, 2018 1:09 pm
WoW2012 wrote:
Sat Jun 09, 2018 12:49 pm

fyi... this article in Time is fake news.
This statement in the article is false: "Her monthly premiums have nearly quadrupled over the past two years."
The journalist who wrote the article miss-calculated.
The woman pays her premiums quarterly.
The journalist thought the premiums were monthly.

Over a 17-year period (not over 2 years) the woman in the article had 3 rate increases:
13%, 41.6%, and 57.31%.

Those are terribly high rate increases. I agree with that.
But the article itself is incorrect about the size of the rate increases.
How do you know these things? I didn't see this information in the article. It is simply stated that the woman's premiums have quadrupled over the last two years. Are you providing your own facts and imputing them to the author of the article?

The California Dept. of Ins. does an excellent job of protecting consumers. I did not think it likely that the California Dept. of Ins. would approve such a large rate increase over such a short period of time. In fact, I didn't think it was likely that the California Dept. of Ins. would approve a "quadrupling" of premiums over 30 years, let alone over two years.

So, I did a little research. There's a picture the journalist took that shows the name of the policy the woman bought. I went to the California Dept. of Ins. and looked up the rate increase history for that particular policy and my hunch was correct. To double check, I emailed the woman in the story through LinkedIn and she confirmed for me that her premium did not quadruple. She confirmed that she had her policy for 17 years. She had 3 premium increases: 13%, 41.6%, and 57.31%.
Goodness, that's one piece of research! Did you really do this?
I like researching.

dknightd
Posts: 567
Joined: Wed Mar 07, 2018 11:57 am

Re: long term care insurance

Post by dknightd » Sat Jun 09, 2018 2:38 pm

WoW2012 wrote:
Sat Jun 09, 2018 2:11 pm
dknightd wrote:
Sat Jun 09, 2018 2:09 pm
Just for fun, $150 a day, for 365 days is 54750. I suspect long term care costs more than that in most markets. And that number is less than what I expect to live on.
plus 3% compounded growth every year.

Quick question: if/when you ever need long-term care, will all of your other living expenses magically disappear?
Is it the premium that compounds 3% a year, or, the daily payout? Or the actual cost? Or all three?

Quick question, do you sell this product?

Quick answer. My assumption is I'll take care of wife, if she goes bad first. She'll take care of me if I go bad first. So we might have expenses beyond what we can afford. If we both go bad at about the same time, we are forked, and there will be nothing left for the kids. I guess that is a risk I'm willing to take. If we have no money left, and still want to stay alive, I'm hoping that the taxes I've paid in the past will at least provide for food, water, and shelter. Honestly I don't expect to reach that stage, but I guess it is possible. If it happens we'll both probably have dementia, and will not even know. Maybe

WoW2012
Posts: 225
Joined: Sun Dec 23, 2012 11:28 am

Re: long term care insurance

Post by WoW2012 » Sat Jun 09, 2018 2:41 pm

dknightd wrote:
Sat Jun 09, 2018 2:38 pm
WoW2012 wrote:
Sat Jun 09, 2018 2:11 pm
dknightd wrote:
Sat Jun 09, 2018 2:09 pm
Just for fun, $150 a day, for 365 days is 54750. I suspect long term care costs more than that in most markets. And that number is less than what I expect to live on.
plus 3% compounded growth every year.

Quick question: if/when you ever need long-term care, will all of your other living expenses magically disappear?
Is it the premium that compounds 3% a year, or, the daily payout? Or the actual cost? Or all three?

For someone who has already decided that long-term care insurance is not right for him, you're asking some very basic questions. Maybe you should do a little bit more research before you decide it's such a bad deal.

CULater
Posts: 1209
Joined: Sun Nov 13, 2016 10:59 am

Re: long term care insurance

Post by CULater » Sat Jun 09, 2018 2:42 pm

I have the feeling that insurance companies were so far off in their calculations in the early years of LTCi that the only winners are the people who bought it way back then, and that the losers are going to be the people who are buying it now.

I have a question: I see ads constantly for insurance products on TV: home insurance, car insurance, health insurance, etc. but I can't recall seeing any for long term care insurance with smiling people enjoying their zero cost care in the nursing home and gratefully endorsing their purchase. Why is that?
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

MDfan
Posts: 63
Joined: Tue Oct 18, 2016 7:32 am

Re: long term care insurance

Post by MDfan » Sat Jun 09, 2018 2:44 pm

3% inflation protection - "Increases your policy benefits by a specified percentage each year to help cover the rising cost of long-term care services"

WoW2012
Posts: 225
Joined: Sun Dec 23, 2012 11:28 am

Re: long term care insurance

Post by WoW2012 » Sat Jun 09, 2018 2:51 pm

CULater wrote:
Sat Jun 09, 2018 2:42 pm
I have the feeling that insurance companies were so far off in their calculations in the early years of LTCi that the only winners are the people who bought it way back then, and that the losers are going to be the people who are buying it now.

I have a question: I see ads constantly for insurance products on TV: home insurance, car insurance, health insurance, etc. but I can't recall seeing any for long term care insurance with smiling people enjoying their zero cost care in the nursing home and gratefully endorsing their purchase. Why is that?
Because it's not a very profitable product.
The ROI on LTC insurance is single-digits for most insurance companies.
Insurance companies prefer ROI in the high teens.

My MIL is enjoying her ALF with zero cost of care for her. Her LTCi policy is paying every penny of her ALF expenses each month. If you'd like, I can post a smiling picture of her (and her kids). We're all very happy she has the policy. Instead of liquidating her assets, her assets are increasing each month. Plus she's preserving her dignity because her daughter doesn't have to bathe her or help her on and off the toilet every day. Whoever posted that his/her plan is to have each spouse take care of the other one has never seen an 81-year old man with a heart condition try to get a 79-year old woman off the toilet.

dknightd
Posts: 567
Joined: Wed Mar 07, 2018 11:57 am

Re: long term care insurance

Post by dknightd » Sat Jun 09, 2018 3:05 pm

WoW2012 wrote:
Sat Jun 09, 2018 2:41 pm


For someone who has already decided that long-term care insurance is not right for him, you're asking some very basic questions. Maybe you should do a little bit more research before you decide it's such a bad deal.
Feel free to make me look like an idiot. I'm perfectly happy to admit I am, and change my mind.
It would not be the first, or last time. I admit my research is a year old. Maybe things have changed. Thanks

CULater
Posts: 1209
Joined: Sun Nov 13, 2016 10:59 am

Re: long term care insurance

Post by CULater » Sat Jun 09, 2018 3:34 pm

WoW2012 wrote:
Sat Jun 09, 2018 2:51 pm
CULater wrote:
Sat Jun 09, 2018 2:42 pm
I have the feeling that insurance companies were so far off in their calculations in the early years of LTCi that the only winners are the people who bought it way back then, and that the losers are going to be the people who are buying it now.

I have a question: I see ads constantly for insurance products on TV: home insurance, car insurance, health insurance, etc. but I can't recall seeing any for long term care insurance with smiling people enjoying their zero cost care in the nursing home and gratefully endorsing their purchase. Why is that?
Because it's not a very profitable product.
The ROI on LTC insurance is single-digits for most insurance companies.
Insurance companies prefer ROI in the high teens.

My MIL is enjoying her ALF with zero cost of care for her. Her LTCi policy is paying every penny of her ALF expenses each month. If you'd like, I can post a smiling picture of her (and her kids). We're all very happy she has the policy. Instead of liquidating her assets, her assets are increasing each month. Plus she's preserving her dignity because her daughter doesn't have to bathe her or help her on and off the toilet every day. Whoever posted that his/her plan is to have each spouse take care of the other one has never seen an 81-year old man with a heart condition try to get a 79-year old woman off the toilet.
I'm glad to hear that about your MIL. Do you think the policy she has would be available now at a reasonable cost?
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

WoW2012
Posts: 225
Joined: Sun Dec 23, 2012 11:28 am

Re: long term care insurance

Post by WoW2012 » Sat Jun 09, 2018 4:34 pm

CULater wrote:
Sat Jun 09, 2018 3:34 pm
WoW2012 wrote:
Sat Jun 09, 2018 2:51 pm
CULater wrote:
Sat Jun 09, 2018 2:42 pm
I have the feeling that insurance companies were so far off in their calculations in the early years of LTCi that the only winners are the people who bought it way back then, and that the losers are going to be the people who are buying it now.

I have a question: I see ads constantly for insurance products on TV: home insurance, car insurance, health insurance, etc. but I can't recall seeing any for long term care insurance with smiling people enjoying their zero cost care in the nursing home and gratefully endorsing their purchase. Why is that?
Because it's not a very profitable product.
The ROI on LTC insurance is single-digits for most insurance companies.
Insurance companies prefer ROI in the high teens.

My MIL is enjoying her ALF with zero cost of care for her. Her LTCi policy is paying every penny of her ALF expenses each month. If you'd like, I can post a smiling picture of her (and her kids). We're all very happy she has the policy. Instead of liquidating her assets, her assets are increasing each month. Plus she's preserving her dignity because her daughter doesn't have to bathe her or help her on and off the toilet every day. Whoever posted that his/her plan is to have each spouse take care of the other one has never seen an 81-year old man with a heart condition try to get a 79-year old woman off the toilet.
I'm glad to hear that about your MIL. Do you think the policy she has would be available now at a reasonable cost?
Yes.

Hubris
Posts: 34
Joined: Thu Sep 15, 2016 10:55 pm

Re: long term care insurance

Post by Hubris » Sat Jun 09, 2018 8:25 pm

WoW2012 wrote:
Sat Jun 09, 2018 12:34 pm
Hubris wrote:
Sat Jun 09, 2018 10:31 am
OP, to the part of your question about hybrid policies, we have this type of coverage and are pretty pleased with it, especially the fixed pricing for life.

Here’s my post about it from 2016:


“My wife (53) and I (56)bought LTC last year, via a universal life product with a lump sum premium and annual premiums at fixed price for life. Not exactly Prepaid but very useful for us. If we don't use the LTC coverage, then we have the life insurance benefit for 2nd to die, therefore creating an estate which is a secondary priority for us. Also, lump sum accrues interest @4% annually. There are surrender charges but we can get entire lump sum amount back for 1st 7 yrs without penalty (and without interest.). After 1st 7 yrs, surrender charges apply but return will be original lump sum plus interest less surrender charges; and after 7 yrs surrender charges are less than accrued interest.

I won't go into our reasoning for buying the coverage other than to say some of it was driven by logic and some by emotion, boh of which seem valid to us. The fixed pricing for annual coverage was very appealing and we currently view this coverage as a fixed income-like holding given that we might decide to self insure in 7-10 years, and recover our principal and accrued interest (less surrender charges.)”

Is the annual premium you pay each year enough to guarantee the current death benefit through age 100?
If not, then your premium could go up and/or your policy could lapse

Most universal life insurance policies are designed to lapse before you die.

Pull out your illustration and look at the page containing the "guaranteed values". Look at the value of the death benefit at age 100. Hopefully, it's not zero.

Also, how much is the death benefit?
Does it grow every year or does it remain the same for life?
Can you take 2% of the death benefit each month for long-term care, or 3% or 4%?
Does it have a "chronic illness rider" or does it have a "long-term care rider"?
Good questions, I’ll dig out my policy and post some follow up. And, we were/are hoping this coverage would/will get us through the gap of “can’t afford not to have it” to “self insure” given a potential (positive) liquidity event of uncertain duration and magnitude. Looks like that event is likely to happen this year and at certain thresholds might cause us to self insure going forward.

Hubris
Posts: 34
Joined: Thu Sep 15, 2016 10:55 pm

Re: long term care insurance

Post by Hubris » Sun Jun 10, 2018 10:26 am

WoW2012 wrote:
Sat Jun 09, 2018 12:34 pm
Hubris wrote:
Sat Jun 09, 2018 10:31 am
OP, to the part of your question about hybrid policies, we have this type of coverage and are pretty pleased with it, especially the fixed pricing for life.

Here’s my post about it from 2016:


“My wife (53) and I (56)bought LTC last year, via a universal life product with a lump sum premium and annual premiums at fixed price for life. Not exactly Prepaid but very useful for us. If we don't use the LTC coverage, then we have the life insurance benefit for 2nd to die, therefore creating an estate which is a secondary priority for us. Also, lump sum accrues interest @4% annually. There are surrender charges but we can get entire lump sum amount back for 1st 7 yrs without penalty (and without interest.). After 1st 7 yrs, surrender charges apply but return will be original lump sum plus interest less surrender charges; and after 7 yrs surrender charges are less than accrued interest.

I won't go into our reasoning for buying the coverage other than to say some of it was driven by logic and some by emotion, boh of which seem valid to us. The fixed pricing for annual coverage was very appealing and we currently view this coverage as a fixed income-like holding given that we might decide to self insure in 7-10 years, and recover our principal and accrued interest (less surrender charges.)”
I just checked the policy, and here's what I've found, and technically, I guess the coverage is based on whole life, rather than universal as I had previously stated.

Is the annual premium you pay each year enough to guarantee the current death benefit through age 100? Yes, and the annual premium is fixed for duration of the policy which has a premium period of 48 yrs, which takes us from our "Joint Equal Age" of 52 to age 102 even though the policy benefit tables run out to age 121 "and thereafter".
If not, then your premium could go up and/or your policy could lapse

Most universal life insurance policies are designed to lapse before you die.

Pull out your illustration and look at the page containing the "guaranteed values". Look at the value of the death benefit at age 100. Hopefully, it's not zero.

Also, how much is the death benefit? $300,000 death benefit (2nd to die), $600,000 LTC benefit, and with a total of 100 months of full care @ $6,000 per month for the base policy and an increasing amount for the continuation rider (see compounding below) initially set at $6,615 per month.
Does it grow every year or does it remain the same for life? The death benefit stays the same but $300,000 of the LTC benefit is set as a "continuation rider" and this amount compounds at 5% annually from day one. Effectively, this compounding could easily provide $900K of total benefits if say, we began using the care 10 yrs from policy initation and used 100 months straight through. If we began using the policy later, the math only gets better.
Can you take 2% of the death benefit each month for long-term care, or 3% or 4%? Yes, if I'm understanding this correctly. The benefits are viewed as a fixed pool (but growing due to compounding noted above) and draws on the total pool of assets say for inhome care or even for a few months of facility-based care, then return home) result in the total asset pool being reduced. Assets are drawn from the base policy first (fixed coverage amount of $300K) and then from the growing benefits of the continuation rider only after the base policy benefit is depleted.
Does it have a "chronic illness rider" or does it have a "long-term care rider"? LTC

WoW2012
Posts: 225
Joined: Sun Dec 23, 2012 11:28 am

Re: long term care insurance

Post by WoW2012 » Sun Jun 10, 2018 3:44 pm

Hubris wrote:
Sun Jun 10, 2018 10:26 am
WoW2012 wrote:
Sat Jun 09, 2018 12:34 pm
Hubris wrote:
Sat Jun 09, 2018 10:31 am
OP, to the part of your question about hybrid policies, we have this type of coverage and are pretty pleased with it, especially the fixed pricing for life.

Here’s my post about it from 2016:


“My wife (53) and I (56)bought LTC last year, via a universal life product with a lump sum premium and annual premiums at fixed price for life. Not exactly Prepaid but very useful for us. If we don't use the LTC coverage, then we have the life insurance benefit for 2nd to die, therefore creating an estate which is a secondary priority for us. Also, lump sum accrues interest @4% annually. There are surrender charges but we can get entire lump sum amount back for 1st 7 yrs without penalty (and without interest.). After 1st 7 yrs, surrender charges apply but return will be original lump sum plus interest less surrender charges; and after 7 yrs surrender charges are less than accrued interest.

I won't go into our reasoning for buying the coverage other than to say some of it was driven by logic and some by emotion, boh of which seem valid to us. The fixed pricing for annual coverage was very appealing and we currently view this coverage as a fixed income-like holding given that we might decide to self insure in 7-10 years, and recover our principal and accrued interest (less surrender charges.)”
I just checked the policy, and here's what I've found, and technically, I guess the coverage is based on whole life, rather than universal as I had previously stated.

Is the annual premium you pay each year enough to guarantee the current death benefit through age 100? Yes, and the annual premium is fixed for duration of the policy which has a premium period of 48 yrs, which takes us from our "Joint Equal Age" of 52 to age 102 even though the policy benefit tables run out to age 121 "and thereafter".
If not, then your premium could go up and/or your policy could lapse

Most universal life insurance policies are designed to lapse before you die.

Pull out your illustration and look at the page containing the "guaranteed values". Look at the value of the death benefit at age 100. Hopefully, it's not zero.

Also, how much is the death benefit? $300,000 death benefit (2nd to die), $600,000 LTC benefit, and with a total of 100 months of full care @ $6,000 per month for the base policy and an increasing amount for the continuation rider (see compounding below) initially set at $6,615 per month.
Does it grow every year or does it remain the same for life? The death benefit stays the same but $300,000 of the LTC benefit is set as a "continuation rider" and this amount compounds at 5% annually from day one. Effectively, this compounding could easily provide $900K of total benefits if say, we began using the care 10 yrs from policy initation and used 100 months straight through. If we began using the policy later, the math only gets better.
Can you take 2% of the death benefit each month for long-term care, or 3% or 4%? Yes, if I'm understanding this correctly. The benefits are viewed as a fixed pool (but growing due to compounding noted above) and draws on the total pool of assets say for inhome care or even for a few months of facility-based care, then return home) result in the total asset pool being reduced. Assets are drawn from the base policy first (fixed coverage amount of $300K) and then from the growing benefits of the continuation rider only after the base policy benefit is depleted.
Does it have a "chronic illness rider" or does it have a "long-term care rider"? LTC
Thankfully, you did not buy a universal life policy.
I'm not a big fan of any of these single-premium products because of the opportunity cost.
I'd rather keep the $100,000 or so (single-premium) in my own portfolio and use a portion of my earnings each year to buy richer long-term care benefits.

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