Long term care insurance policy

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dave1054
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Long term care insurance policy

Post by dave1054 » Fri Jan 11, 2019 11:53 am

I am 59 and wife 58. We are both in good health. I am physician and will retire in about 5 years. No debt. No worries about retirement, paying bills, etc. Very lucky.
What are your thoughts about insuring against catastrophe of cost of nursing home, skilled care, etc and purchasing a policy? Thank you.

visualguy
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Re: Long term care insurance policy

Post by visualguy » Fri Jan 11, 2019 12:03 pm

Based on previous threads on this topic, it seems like if you have the assets to self-insure then that's a good way to go. If not, LTC insurance makes sense, but you need to do the research to find a good policy. Not that easy to find without a good agent who specializes in this area.

RickBoglehead
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Re: Long term care insurance policy

Post by RickBoglehead » Fri Jan 11, 2019 12:59 pm

My review of LTC policies is that it's nearly impossible to find one that makes any financial sense. Whether it be on limitations of payouts, thresholds that must be met, survivability of the issuing company, etc., there isn't any option out there that makes sense. Then you add in the ability to pay, and it's a done deal.

pintail07
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Re: Long term care insurance policy

Post by pintail07 » Fri Jan 11, 2019 1:26 pm

Self insuring is great as long as you never need care. If you need care it only takes a few months to recoup all premiums. Get a long term care specialist to review your options. Most of us will show you your options using a screen sharing program.

bearwithbear
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Re: Long term care insurance policy

Post by bearwithbear » Fri Jan 11, 2019 1:35 pm

pintail07,

What does "Self insuring is great as long as you never need care" mean?
What numbers are you using?

Bear

Silk McCue
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Re: Long term care insurance policy

Post by Silk McCue » Fri Jan 11, 2019 1:37 pm

RickBoglehead wrote:
Fri Jan 11, 2019 12:59 pm
My review of LTC policies is that it's nearly impossible to find one that makes any financial sense. Whether it be on limitations of payouts, thresholds that must be met, survivability of the issuing company, etc., there isn't any option out there that makes sense. Then you add in the ability to pay, and it's a done deal.
I think that you didn't work through an experienced broker when looking for a policy if that is what you came away with in your search. Payouts are clearly defined as to amount paid per period for care and total amount to be paid; , thresholds met are clearly defined and tied to ADL's and elimination period before any payments are made, strength of the insurer can reasonably be determined. If it doesn't fit you then fine but products are available that are good for those that want them.

Cheers

RickBoglehead
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Re: Long term care insurance policy

Post by RickBoglehead » Fri Jan 11, 2019 1:47 pm

Apparently some posters are in the industry.

I'm sure that of the firms that went bankrupt in the past ten years, it was very easy to see that when hundreds of thousands got policies with them... Penn Treaty, Conseco, ...

https://www.kiplinger.com/article/retir ... rance.html

Or when premiums skyrocketed:

https://www.kiplinger.com/article/insur ... -care.html

Proceed carefully. Treacherous waters ahead. Make sure you get all your questions answered by any broker and read every single line of any policy you are considering.

Silk McCue
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Re: Long term care insurance policy

Post by Silk McCue » Fri Jan 11, 2019 2:32 pm

RickBoglehead wrote:
Fri Jan 11, 2019 1:47 pm
Apparently some posters are in the industry.

I'm sure that of the firms that went bankrupt in the past ten years, it was very easy to see that when hundreds of thousands got policies with them... Penn Treaty, Conseco, ...

https://www.kiplinger.com/article/retir ... rance.html

Or when premiums skyrocketed:

https://www.kiplinger.com/article/insur ... -care.html

Proceed carefully. Treacherous waters ahead. Make sure you get all your questions answered by any broker and read every single line of any policy you are considering.
I am not in the industry. I am just well informed. You can look up problems in the past all day long for which many have been addressed with new regulations. Old policies have issues that new policies don't. You might want to spend more time doing your research to become familiar with the current state of the industry.

I owned a private duty home health agency that took care of the elderly in their home and experienced day in and day out those that needed help and couldn't afford it and those that had policies that would cover 24*7 care in their homes. The impact on the individuals and families was dramatic in both directions.

Cheers
Last edited by Silk McCue on Fri Jan 11, 2019 7:57 pm, edited 1 time in total.

pintail07
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Re: Long term care insurance policy

Post by pintail07 » Fri Jan 11, 2019 3:56 pm

Penn Treaty and Conseco are the poster boys for how to not run a company. Those of us that watched them take cases that no one else would take predicted the chickens would come home to roost.

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Watty
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Re: Long term care insurance policy

Post by Watty » Fri Jan 11, 2019 4:14 pm

dave1054 wrote:
Fri Jan 11, 2019 11:53 am
What are your thoughts about insuring against catastrophe of cost of nursing home, skilled care, etc and purchasing a policy?
A couple of sort of random points;

1) LTC costs vary dramatically across the country. If you live in a less expensive area it will be a lot more manageable.

https://www.genworth.com/aging-and-you/ ... -care.html

2) If you go into LTC many of your other expenses will stop. This means that even if LTC costs $100K a year, but your normal retirement budget was $80K a year you might not have all that big a gap. For us the biggest risk is that LTC could be needed while we are both alive so the other costs may not drop much.

3) If there is only one spouse surviving when LTC is needed and you have a paid off house then the house can be sold to help pay for LTC. My mom survived my dad and that was her plan. Her house was not terribly expensive but in addition to her normal budget the home equity could have paid for LTC for many years without dipping into her other savings.

RetiredCSProf
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Re: Long term care insurance policy

Post by RetiredCSProf » Fri Jan 11, 2019 8:25 pm

I purchased a single-premium, hybrid, life insurance policy with LTC insurance through a financial advisor. If I need it, I expect the LTC to supplement my expenses; the rest will come from pension and SS. There are posters on this forum who think a hybrid policy is a bad idea, but it makes the most sense for my financial situation.

Don't wait a long time to make a decision: I spent 2-3 years thinking about purchasing the policy before I committed to it. As each birthday passed, the one-time premium increased for the same policy. Luckily, I had no changes in my health that would have made me ineligible (e.g., Parkinson's, dementia, or other diseases that linger.)

Estimate the cost of care (in-home or at a facility) for your area: My Mom paid $4K a month for a private room in a nice assisted-living facility in 2013. But her costs increased to $20K per month once she needed 24/7 one-on-one caregivers. A new assisted-living facility is opening this year in my community. Estimated cost is $8K per month for a private room.

adamthesmythe
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Re: Long term care insurance policy

Post by adamthesmythe » Fri Jan 11, 2019 8:33 pm

Probably an MD has enough resources to fund many years of LTC. So there are two remaining issues:

1. Can you arrange things so that your spouse will still have sufficient income if you are in care?

2. Do you have a very strong bequest motive, so that you do not want to run even a very small risk that you will use most of your resources?

crankyoldguy34
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Re: Long term care insurance policy

Post by crankyoldguy34 » Fri Jan 11, 2019 8:54 pm

This is a difficult question to answer. You may know the cost of a LTC policy now, but the cost can increase in the future, perhaps making payments difficult. Your ability to self-fund care will depend on your assets, the cost of care, and how much your spouse would need to continue life (while you or vice-versa are getting care). These are all difficult numbers to discern and crunch. If you have assets or income to fund a 3-5 year nursing home stint and enough additional assets or income for the other of you to live independently until death does you part, then self-insuring may be ok. How much money does that require? I don't know. If a nursing home costs $120,000 per year and somebody needs 5y of care, that would be $600,000 from your income or assets. Can you pay that for one of you, with enough left for the other to continue living 'in the community'? What if you both need care?

This will depend on any income streams you have (pensions, social security, annuities, disability, etc) and your portfolio investment income.

Yet another option is a 'life care' community. They can be expensive but if you can afford it there are benefits. My parents live in one now and are very happy - they love it! They are in a fancy upscale apartment, but the facility has an ALF, and a rehab-type nursing home available, should either or both need that level of care. They are both 90+ and love the community nature of the facility, they have made many friends (living independently in a home led to old friends dying off or moving away and dwindling social opportunities), have lunch and dinner with multiple other persons daily, play pool and exercise with friends -- they are happy as can be with the decision to move into such a community. They believe this decision simplified their lives - they (hope they) can live in this community 'forever', whatever level of care they may need.

WoW2012
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Re: Long term care insurance policy

Post by WoW2012 » Sat Jan 12, 2019 12:58 pm

RickBoglehead wrote:
Fri Jan 11, 2019 1:47 pm
Apparently some posters are in the industry.

I'm sure that of the firms that went bankrupt in the past ten years, it was very easy to see that when hundreds of thousands got policies with them... Penn Treaty, Conseco, ...

https://www.kiplinger.com/article/retir ... rance.html

Or when premiums skyrocketed:

https://www.kiplinger.com/article/insur ... -care.html

Proceed carefully. Treacherous waters ahead. Make sure you get all your questions answered by any broker and read every single line of any policy you are considering.


Penn Treaty’s failure is because they ignored the federal guidelines for long term care insurance benefit triggers. The federal government recommended, and the rest of the long term care insurance industry used, “Activities of Daily Living” to determine when a policy would pay benefits. Penn Treaty used “Instrumental Activities of Daily Living“.

Needing help with bathing and dressing (ADL's) is a lot different than needing help with cooking and cleaning (IADL's).

That's why Penn Treaty went bankrupt.


To prevent future rate increases, regulators in 41 states require that every new long-term care policy must include all of the company’s prior rate increases in the new pricing, plus about 10% more premium as a "margin for error". These new regulations have also removed the profit incentive from rate increases. In order to get a rate increase approved for policies under the new rules, the insurer has to reduce their profits.

Northern Flicker
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Re: Long term care insurance policy

Post by Northern Flicker » Sat Jan 12, 2019 1:28 pm

It seems that there were major disruptions to the LTC insurance market. Originally, many insurance companies underpriced the risk and this led to sharp premium increases and many companies leaving the market.

Today, it seems a number of companies have returned to the LTC insurance market, and things are more predictable. I’m currently seeing policies where the premium is fixed once you start the policy and the premium is determined by the age of the insured at the start of the policy.

I’ve also become aware of a subtlety of coverage. In the past, say pre-1990, these just covered skilled nursing care, but would not cover assisted living expenses. Current policies cover assisted living expenses. However, an assisted living facility will bill in an itemized fashion. A $6000 monthly bill for a couple may be $4200 that covers apartment rent, meals, utilities, and other services like transportation, and $1800 for assisted living services. In that scenario, the insurance will reimburse you for $1800 not $6000 for that month.

If you have a LTC policy that covers up to $6000/month for up to 5 years, and as an example, you spend 4 years in assisted living and 2 years in a skilled nursing facility you may consume 4 of the 5 years of benefit receiving a much lower benefit than the max benefit and then only have one year of coverage left to cover the expensive skilled nursing care, which would be covered in full, and may well cost $6K/month or more.
Last edited by Northern Flicker on Sat Jan 12, 2019 6:53 pm, edited 1 time in total.
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WoW2012
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Re: Long term care insurance policy

Post by WoW2012 » Sat Jan 12, 2019 1:40 pm

jalbert wrote:
Sat Jan 12, 2019 1:28 pm
It seems that there were major disruptions to the LTC insurance market. Originally, many insurance companies underpriced the risk and this led to sharp premium increases and many companies leaving the market.

Today, it seems a number of companies have returned to the LTC insurance market, and things are more predictable. I’m currently seeing policies where the premium is fixed once you start the policy and the premium is determined by the age of the insured at the start of the policy.

I’ve also become aware of a subtlety of coverage. In the past, say pre-1990, these just covered skilled nursing care, but would not cover assisted living expenses. Current policies cover assisted living expenses. However, an assisted living facility will bill in an itemized fashion. A $6000 monthly bill for a couple may be $4200 that covers apartment rent, meals, utilities, and other services like transportation, and $1800 for assisted living services. In that scenario, the insurance will reimburse you for $1800 not $6000 for that month.

If you have a LTC policy that covers up to $6000/month for up to 5 years, and as an example, you spend 4 years in assisted living and 2 years in a skilled nursing facility you may consume 4 of the 5 years of benefit receiving a much lower benefit than the max benefit and then only have one year of coverage left to cover the expensive skilled nursing care, which would be covered in full, and may well cost $6K/month or more.


Keep in mind that "leaving the market" just means those companies stopped selling new LTCi policies.
No insurance company can cancel your long-term care policy because they stopped selling new LTCi policies.
Every insurance company must service and pay claims on every long-term care policy they ever sold.
Currently, there are about 7,000,000 people insured for long-term care by about 100 different companies but only about 13 insurance companies that sell new LTCi policies.

Also, there are no long-term care insurance policies that have premiums that are guaranteed to remain level for life. Only hybrid policies do that, but they usually cost a lot more because the life insurance part of a hybrid is very expensive.

hirlaw
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Re: Long term care insurance policy

Post by hirlaw » Sat Jan 12, 2019 1:50 pm

We have two Genworth LTC policies that we purchased over 10 years ago. If you are considering a Genworth policy, you will want to carefully research Genworth's current financial situation prior to purchase.

Havingfun1950
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Re: Long term care insurance policy

Post by Havingfun1950 » Sat Jan 12, 2019 2:31 pm

DW and I bought LTC insurance at about your age and have had policies over 8 years. Premium increases have been about 4%, total. We intentionally avoided companies with large exposures to unlimited duration policies. The agent knew I was a cost sensitive customer and guided us to successfully apply for a preferred health premium rate. I also avoided a rate increase by buying soon before my birthday, not after. DW valued the "peace of mind" argument more than my argument that income tax deductions might lower the effective costs of long term care. Today this point is clearer and we recently learned that some continuing care communities discount charges for applicants with LTC insurance.

Northern Flicker
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Re: Long term care insurance policy

Post by Northern Flicker » Sat Jan 12, 2019 4:17 pm

Deleted
Last edited by Northern Flicker on Sat Jan 12, 2019 6:51 pm, edited 1 time in total.
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WoW2012
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Re: Long term care insurance policy

Post by WoW2012 » Sat Jan 12, 2019 4:24 pm

jalbert wrote:
Sat Jan 12, 2019 4:17 pm
Also, there are no long-term care insurance policies that have premiums that are guaranteed to remain level for life.
I have rate table and info on a policy with level premiums for life.
Is it a life insurance policy with an LTC rider?

OR

is it a traditional long-term care insurance policy?

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Artful Dodger
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Re: Long term care insurance policy

Post by Artful Dodger » Sat Jan 12, 2019 4:53 pm

jalbert wrote:
Sat Jan 12, 2019 4:17 pm
Also, there are no long-term care insurance policies that have premiums that are guaranteed to remain level for life.
I have rate table and info on a policy with level premiums for life. There also are policies where the premium is discounted back to a single up-front premium, which is a de facto level premium.
I think most policies sold have level premiums for life. But, all that I know of have language to the effect the company may increase rates, but only if the increase applies to all past buyers of that particular product line, i.e. they can't just raise yours, but have to raise premiums for all in that class. We bought our policies 10 years ago, and premiums were level for the first 9 years, then we got a 50% increase. But, everybody who bought that particular product at the time we bought got the same increase. As noted above, states have adopted new regulations to review increases, and hopefully future occurrences will be fewer and less dramatic.

DrGoogle2017
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Re: Long term care insurance policy

Post by DrGoogle2017 » Sat Jan 12, 2019 4:58 pm

I don’t think there is a lifetime LTC any more, they might have been in the past, I bought mine in 2010, it’s only covered for 3 years, I cancelled it and budget for 6 years for LTC.

WoW2012
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Re: Long term care insurance policy

Post by WoW2012 » Sat Jan 12, 2019 5:26 pm

DrGoogle2017 wrote:
Sat Jan 12, 2019 4:58 pm
I don’t think there is a lifetime LTC any more, they might have been in the past, I bought mine in 2010, it’s only covered for 3 years, I cancelled it and budget for 6 years for LTC.
Four different companies sell policies that have lifetime/unlimited benefits.
A few companies offer couples the ability to share 15 years of benefits.
Most companies offer couples the ability to share 10 years of benefits.

WoW2012
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Re: Long term care insurance policy

Post by WoW2012 » Sat Jan 12, 2019 5:29 pm

Artful Dodger wrote:
Sat Jan 12, 2019 4:53 pm

I think most policies sold have level premiums for life. But, all that I know of have language to the effect the company may increase rates, but only if the increase applies to all past buyers of that particular product line, i.e. they can't just raise yours, but have to raise premiums for all in that class. We bought our policies 10 years ago, and premiums were level for the first 9 years, then we got a 50% increase. But, everybody who bought that particular product at the time we bought got the same increase. As noted above, states have adopted new regulations to review increases, and hopefully future occurrences will be fewer and less dramatic.

Correct. There are no long-term care insurance policies that have premiums that are guaranteed to remain level for life. The insurance regulators won't approve them. Fortunately, the rate stability regulation is now in effect in 41 states and that has helped to curb rate increases on the policies that were sold after the regulation took effect.

Wakefield1
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Re: Long term care insurance policy

Post by Wakefield1 » Sat Jan 12, 2019 5:38 pm

RickBoglehead wrote:
Fri Jan 11, 2019 1:47 pm
Apparently some posters are in the industry.

I'm sure that of the firms that went bankrupt in the past ten years, it was very easy to see that when hundreds of thousands got policies with them... Penn Treaty, Conseco, ...

https://www.kiplinger.com/article/retir ... rance.html

Or when premiums skyrocketed:

https://www.kiplinger.com/article/insur ... -care.html

Proceed carefully. Treacherous waters ahead. Make sure you get all your questions answered by any broker and read every single line of any policy you are considering.
There is a topic on Vanguard Blog about LTC insurance,some participants seem to be favorable about their experiences with such insurance and some participants are quite negative about it,such as having experienced difficulties with getting the insurance to pay.
"Long-term care...what you see ISN'T all there is" (article by Jean Young) (dated Nov. 16, 2018) about 69 replies and still on the front page that appears when you navigate to Vanguard Blog page-but in a few days as more articles are added might drop to page 2

WoW2012
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Re: Long term care insurance policy

Post by WoW2012 » Sat Jan 12, 2019 5:54 pm

Wakefield1 wrote:
Sat Jan 12, 2019 5:38 pm
RickBoglehead wrote:
Fri Jan 11, 2019 1:47 pm
Apparently some posters are in the industry.

I'm sure that of the firms that went bankrupt in the past ten years, it was very easy to see that when hundreds of thousands got policies with them... Penn Treaty, Conseco, ...

https://www.kiplinger.com/article/retir ... rance.html

Or when premiums skyrocketed:

https://www.kiplinger.com/article/insur ... -care.html

Proceed carefully. Treacherous waters ahead. Make sure you get all your questions answered by any broker and read every single line of any policy you are considering.
There is a topic on Vanguard Blog about LTC insurance,some participants seem to be favorable about their experiences with such insurance and some participants are quite negative about it,such as having experienced difficulties with getting the insurance to pay.

There's a simple trick to making long-term care insurance claims easy: Don't file the claim yourself.

We contacted one of the national home care agencies and they handled it for us. This particular home care agency processes thousands of long-term care insurance claims every year. All we had to do was sign a couple of HIPAA forms and they took care of the rest. They handled the claim for free. It was approved in only 3 weeks. It makes sense. The home care agencies get paid by the long-term care insurance companies. They have a financial incentive to set up a system to speedily process long-term care insurance claims.

I don't file my own medical insurance claims. My doctor's office files them. The same is true for LTCi claims.

Wakefield1
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Re: Long term care insurance policy

Post by Wakefield1 » Sat Jan 12, 2019 5:59 pm

I take it that most LTC policies are sold to people who want protection for a spouse when the other ends up in permanent nursing care because of dementia but I have known someone in a nursing home who was quite lucid but totally unable to care for himself because of paralysis/extreme weakness (unable to stand,support body weight,transfer from bed to wheelchair or even to sit up in bed) (he died after having been there for about a year,actually knew a few days before he died such as to want to make sure that his burial in Arlington National Cemetery was in good order (was a W.W. I vet) Quite a character (in a positive sense) and a Consulting Rosarian

Northern Flicker
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Re: Long term care insurance policy

Post by Northern Flicker » Sat Jan 12, 2019 6:41 pm

WoW2012 wrote:
Sat Jan 12, 2019 4:24 pm
jalbert wrote:
Sat Jan 12, 2019 4:17 pm
Also, there are no long-term care insurance policies that have premiums that are guaranteed to remain level for life.
I have rate table and info on a policy with level premiums for life.
Is it a life insurance policy with an LTC rider?

OR

is it a traditional long-term care insurance policy?
Traditional LTC. I double-checked and I was misinterpreting the language. The level payment feature is defined so that the premium is based on age at time of enrollment and is not age-based moving forward. If you enroll say at age 60 then you always will pay the premium offered to newly enrolled 60-year-olds of your gender regardless of your own age. That premium can increase however.
Taking a break from Bogleheads.

RickBoglehead
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Re: Long term care insurance policy

Post by RickBoglehead » Sat Jan 12, 2019 11:08 pm

Wakefield1 wrote:
Sat Jan 12, 2019 5:38 pm

There is a topic on Vanguard Blog about LTC insurance,some participants seem to be favorable about their experiences with such insurance and some participants are quite negative about it,such as having experienced difficulties with getting the insurance to pay.
"Long-term care...what you see ISN'T all there is" (article by Jean Young) (dated Nov. 16, 2018) about 69 replies and still on the front page that appears when you navigate to Vanguard Blog page-but in a few days as more articles are added might drop to page 2
Thanks!

WoW2012
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Re: Long term care insurance policy

Post by WoW2012 » Sun Jan 13, 2019 11:09 am

Wakefield1 wrote:
Sat Jan 12, 2019 5:59 pm
I take it that most LTC policies are sold to people who want protection for a spouse when the other ends up in permanent nursing care because of dementia but I have known someone in a nursing home who was quite lucid but totally unable to care for himself because of paralysis/extreme weakness (unable to stand,support body weight,transfer from bed to wheelchair or even to sit up in bed) (he died after having been there for about a year,actually knew a few days before he died such as to want to make sure that his burial in Arlington National Cemetery was in good order (was a W.W. I vet) Quite a character (in a positive sense) and a Consulting Rosarian
According to the Congressional Budget Office, only 13% of people who need long-term care are in nursing homes. 80% of the people who need long-term care are receiving their care at home. I think that's the main reason people buy long-term care insurance--so that they can stay in their own home.

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willthrill81
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Re: Long term care insurance policy

Post by willthrill81 » Sun Jan 13, 2019 11:40 am

visualguy wrote:
Fri Jan 11, 2019 12:03 pm
Based on previous threads on this topic, it seems like if you have the assets to self-insure then that's a good way to go. If not, LTC insurance makes sense, but you need to do the research to find a good policy. Not that easy to find without a good agent who specializes in this area.
That's my assessment as well.

Until long-term care policies with long elimination periods (e.g. 5 years) are offered, we'll definitely go the self-insure route. For those with more than about $2 million in their investments, it definitely seems to be the superior path.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

RetiredCSProf
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Re: Long term care insurance policy

Post by RetiredCSProf » Sun Jan 13, 2019 1:45 pm

What does "self-insure" mean?

"Insurance" implies that I'm pooling money together with a group of people, such that the cost of care is spread across the group. When I had dental insurance, I came out ahead most of time. When I had pet insurance for my dog, the insurance company came out ahead, all but one year.

Does "self-insure" mean keep enough in savings to cover the possibility of LTC? How much would that be? Or does it mean to put savings aside each year toward LTC (in lieu of paying insurance premiums)? Neither of these approaches has anything to do with pooling money and spreading it across a group, so why call it "insurance"?

I think that "self-insure" just means that you have decided to "set aside" money to cover the entire cost of LTC, in case it is needed. And then the discussion can focus on what is a reasonable amount to set aside and whether that should be incremental or in a lump sum.

rgs92
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Re: Long term care insurance policy

Post by rgs92 » Sun Jan 13, 2019 1:57 pm

I worry that it's the quality of LTC that will suffer w/o LTC insurance and without at least a million dollars after tax per person dedicated to cover it.
I know relatives who went to Medicaid facilities and said it was awful.

One related question is, if you are taking care of this by yourself (and not in the best of health), how do you get someone to help you out with this if you don't have anyone you know to do so? Do the doctors deal with your LTC insurance company? Does an assisted living facility work with them?

Thanks.

adamthesmythe
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Re: Long term care insurance policy

Post by adamthesmythe » Sun Jan 13, 2019 3:09 pm

RetiredCSProf wrote:
Sun Jan 13, 2019 1:45 pm
What does "self-insure" mean?

"Insurance" implies that I'm pooling money together with a group of people, such that the cost of care is spread across the group. When I had dental insurance, I came out ahead most of time. When I had pet insurance for my dog, the insurance company came out ahead, all but one year.

Does "self-insure" mean keep enough in savings to cover the possibility of LTC? How much would that be? Or does it mean to put savings aside each year toward LTC (in lieu of paying insurance premiums)? Neither of these approaches has anything to do with pooling money and spreading it across a group, so why call it "insurance"?

I think that "self-insure" just means that you have decided to "set aside" money to cover the entire cost of LTC, in case it is needed. And then the discussion can focus on what is a reasonable amount to set aside and whether that should be incremental or in a lump sum.
No. You do not need to "set aside" because you are using your assets, just as you would use your assets if you were living independently. The idea is to have enough to cover reasonable years of long-term care.

Once you have depleted your assets or your insurance, medicaid is the fall-back, after paying for several years of care.

Keep in mind that most (virtually all?) policies people buy have limited coverage. So the choice is between limited coverage using your assets or limited coverage obtained from an insurance policy.

(It seems to me that the strongest argument against LTC policies is the near-certainty of increasing rates. Less strong arguments are concerns about the viability of the insurance company and difficulty of dealing with the insurance company when making claims).

As I suggested above, concerns for those without an LTC policy include (1) income for a spouse and (2) bequests. It seems to me that (1) can be dealt with a number of ways, including medicaid annuities and (really) divorce. There may be a small number of people who absolutely must have a bequest for a disabled dependent.

The quibble about the use of the term "self-insure" is perhaps warranted. BUT I think we all know what is meant when we say that.

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Re: Long term care insurance policy

Post by DrGoogle2017 » Sun Jan 13, 2019 4:18 pm

adamthesmythe wrote:
Sun Jan 13, 2019 3:09 pm
RetiredCSProf wrote:
Sun Jan 13, 2019 1:45 pm
What does "self-insure" mean?

"Insurance" implies that I'm pooling money together with a group of people, such that the cost of care is spread across the group. When I had dental insurance, I came out ahead most of time. When I had pet insurance for my dog, the insurance company came out ahead, all but one year.

Does "self-insure" mean keep enough in savings to cover the possibility of LTC? How much would that be? Or does it mean to put savings aside each year toward LTC (in lieu of paying insurance premiums)? Neither of these approaches has anything to do with pooling money and spreading it across a group, so why call it "insurance"?

I think that "self-insure" just means that you have decided to "set aside" money to cover the entire cost of LTC, in case it is needed. And then the discussion can focus on what is a reasonable amount to set aside and whether that should be incremental or in a lump sum.
No. You do not need to "set aside" because you are using your assets, just as you would use your assets if you were living independently. The idea is to have enough to cover reasonable years of long-term care.

Once you have depleted your assets or your insurance, medicaid is the fall-back, after paying for several years of care.

Keep in mind that most (virtually all?) policies people buy have limited coverage. So the choice is between limited coverage using your assets or limited coverage obtained from an insurance policy.

(It seems to me that the strongest argument against LTC policies is the near-certainty of increasing rates. Less strong arguments are concerns about the viability of the insurance company and difficulty of dealing with the insurance company when making claims).

As I suggested above, concerns for those without an LTC policy include (1) income for a spouse and (2) bequests. It seems to me that (1) can be dealt with a number of ways, including medicaid annuities and (really) divorce. There may be a small number of people who absolutely must have a bequest for a disabled dependent.

The quibble about the use of the term "self-insure" is perhaps warranted. BUT I think we all know what is meant when we say that.
Self insured means you will absorb the risk. Regarding policies with unlimited coverage, I’m sure there are some out there, but the premium would be high, it will be like prepaid LTC in the end.

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willthrill81
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Re: Long term care insurance policy

Post by willthrill81 » Sun Jan 13, 2019 4:47 pm

DrGoogle2017 wrote:
Sun Jan 13, 2019 4:18 pm
adamthesmythe wrote:
Sun Jan 13, 2019 3:09 pm
RetiredCSProf wrote:
Sun Jan 13, 2019 1:45 pm
What does "self-insure" mean?

"Insurance" implies that I'm pooling money together with a group of people, such that the cost of care is spread across the group. When I had dental insurance, I came out ahead most of time. When I had pet insurance for my dog, the insurance company came out ahead, all but one year.

Does "self-insure" mean keep enough in savings to cover the possibility of LTC? How much would that be? Or does it mean to put savings aside each year toward LTC (in lieu of paying insurance premiums)? Neither of these approaches has anything to do with pooling money and spreading it across a group, so why call it "insurance"?

I think that "self-insure" just means that you have decided to "set aside" money to cover the entire cost of LTC, in case it is needed. And then the discussion can focus on what is a reasonable amount to set aside and whether that should be incremental or in a lump sum.
No. You do not need to "set aside" because you are using your assets, just as you would use your assets if you were living independently. The idea is to have enough to cover reasonable years of long-term care.

Once you have depleted your assets or your insurance, medicaid is the fall-back, after paying for several years of care.

Keep in mind that most (virtually all?) policies people buy have limited coverage. So the choice is between limited coverage using your assets or limited coverage obtained from an insurance policy.

(It seems to me that the strongest argument against LTC policies is the near-certainty of increasing rates. Less strong arguments are concerns about the viability of the insurance company and difficulty of dealing with the insurance company when making claims).

As I suggested above, concerns for those without an LTC policy include (1) income for a spouse and (2) bequests. It seems to me that (1) can be dealt with a number of ways, including medicaid annuities and (really) divorce. There may be a small number of people who absolutely must have a bequest for a disabled dependent.

The quibble about the use of the term "self-insure" is perhaps warranted. BUT I think we all know what is meant when we say that.
Self insured means you will absorb the risk. Regarding policies with unlimited coverage, I’m sure there are some out there, but the premium would be high, it will be like prepaid LTC in the end.
People occasionally question use of the term, but self-insuring something means that you carry the risk yourself rather than paying someone else to take on that risk for you.

In most situations, self-insuring is the mathematically superior route. But this assumes that if the risk manifests itself that it is not financially detrimental to you. When it comes to LTC, a person with north of about $2 million would be fully capable of self-insuring against nearly all plausible events.
Self-insurance describes a situation in which a person does not take out any third party insurance.
https://en.wikipedia.org/wiki/Self-insurance
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Long term care insurance policy

Post by DrGoogle2017 » Sun Jan 13, 2019 5:15 pm

My form of LTC is to check into a luxury cruise ship permanently at age 80, all needs will be taken care off. Just google for an 87 who did exactly that in 2015 after her husband died.

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Re: Long term care insurance policy

Post by Silk McCue » Sun Jan 13, 2019 6:28 pm

DrGoogle2017 wrote:
Sun Jan 13, 2019 5:15 pm
My form of LTC is to check into a luxury cruise ship permanently at age 80, all needs will be taken care off. Just google for an 87 who did exactly that in 2015 after her husband died.

What they did was the equivalent of an Independent Living Facility that also included maid service for the room. Certainly not LTC that provided bathing, dressing, toileting etc.

Cheers

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Re: Long term care insurance policy

Post by WillRetire » Sun Jan 13, 2019 6:30 pm

dave1054:

We made the decision to purchase an LTCi policy many years ago on the recommendation of our then-financial planner who believed it should be part of many people's financial plans.

We are glad we have the policies because we don't want the healthy spouse to suffer financially if the other is sick, or has dementia, or is disabled in a car accident, or experiences any number of sad things that can happen... to anyone. Not just the elderly.

Premiums went up unexpectedly for our policies (which we have not yet used). The premium increases are due to
(a) unexpectedly low interest rates over a prolonged period,
(b) unexpectedly high claims costs,
and (c) unexpectedly low # policy cancellations. I know this because I read the material sent by the insurer when they raised premiums, and also I read their petition to my state's bureau of insurance requesting approval to raise premiums.

Even with the rise in premiums, the policies make sense for us. For example, even if one of us uses the benefits but the other never does, the cash flow works out to be a very worthwhile "investment". If neither of us ever use the benefits, well, so be it. In that case it was a bad "investment" by the numbers, but of course that is unknowable.

Also, by having the policies, it frees us from having to set aside a chunk of money in a safe (i.e. low interest rate) place just-in-case. We like these particular policies because they cover home care as well as assisted living and SNF.

What could make us change our minds? If one of us passes, the surviving spouse may not wish to continue their policy if premiums get ridiculous, because there's no longer the primary need: financial protection for the healthy spouse.

The industry has changed since we bought our policies. Some things to consider:
look at fixed income annuities that can be also be drawn upon for LTC expenses;
look at Clark Howard recommendations for LTCi;
consider Lifecare plans at CCRCs once you are both 62 and over, but keep in mind you need to qualify healthwise & capability-wise upon entering into those contracts. To us, this is not a desirable option until *maybe* later in life.

I don't know what the future holds, therefore, I don't know if, when or how long one of us will need care, nor how much it will cost. Very few people expected SNFs to cost as much as they do today. Some # of $millions could be expected to cover a prolonged stay in a SNF. LTC planning can't cover every possible scenario, but planning is prudent.

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Re: Long term care insurance policy

Post by WoW2012 » Sun Jan 13, 2019 7:41 pm

rgs92 wrote:
Sun Jan 13, 2019 1:57 pm
I worry that it's the quality of LTC that will suffer w/o LTC insurance and without at least a million dollars after tax per person dedicated to cover it.
I know relatives who went to Medicaid facilities and said it was awful.

One related question is, if you are taking care of this by yourself (and not in the best of health), how do you get someone to help you out with this if you don't have anyone you know to do so? Do the doctors deal with your LTC insurance company? Does an assisted living facility work with them?

Thanks.

We had the home care agency file the long-term care claim for us.

Everyone needs a trusted family member or friend to be their healthcare surrogate and durable power of attorney.

Proper legal documents don't replace long-term care insurance.
Long-term care insurance doesn't replace the need for proper legal documents.

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Re: Long term care insurance policy

Post by WoW2012 » Sun Jan 13, 2019 7:44 pm

willthrill81 wrote:
Sun Jan 13, 2019 11:40 am
visualguy wrote:
Fri Jan 11, 2019 12:03 pm
Based on previous threads on this topic, it seems like if you have the assets to self-insure then that's a good way to go. If not, LTC insurance makes sense, but you need to do the research to find a good policy. Not that easy to find without a good agent who specializes in this area.
That's my assessment as well.

Until long-term care policies with long elimination periods (e.g. 5 years) are offered, we'll definitely go the self-insure route. For those with more than about $2 million in their investments, it definitely seems to be the superior path.
When you look at your current net worth, willthrill, for how many years could it cover the cost of your (or your spouse's) long-term care in today's dollars? 5 years? 10 years? 20 years?

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willthrill81
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Re: Long term care insurance policy

Post by willthrill81 » Sun Jan 13, 2019 7:46 pm

WoW2012 wrote:
Sun Jan 13, 2019 7:44 pm
willthrill81 wrote:
Sun Jan 13, 2019 11:40 am
visualguy wrote:
Fri Jan 11, 2019 12:03 pm
Based on previous threads on this topic, it seems like if you have the assets to self-insure then that's a good way to go. If not, LTC insurance makes sense, but you need to do the research to find a good policy. Not that easy to find without a good agent who specializes in this area.
That's my assessment as well.

Until long-term care policies with long elimination periods (e.g. 5 years) are offered, we'll definitely go the self-insure route. For those with more than about $2 million in their investments, it definitely seems to be the superior path.
When you look at your current net worth, willthrill, for how many years could it cover the cost of your (or your spouse's) long-term care in today's dollars? 5 years? 10 years? 20 years?
I'm not remotely interested in LTC presently because we're in our 30s. By the time I'm 55, our net worth will likely be around $3 million in today's dollars, producing about $100k of annual income. That's enough to cover the annual cost of a nursing home in our area, and few are present there more than five years, around 75% under three years among those who ever go in. Private care would be less than that.

Casual readers of this thread should know that WoW2012 is an insurance agent selling LTC insurance.
Last edited by willthrill81 on Sun Jan 13, 2019 7:47 pm, edited 1 time in total.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Long term care insurance policy

Post by WoW2012 » Sun Jan 13, 2019 7:47 pm

adamthesmythe wrote:
Sun Jan 13, 2019 3:09 pm
RetiredCSProf wrote:
Sun Jan 13, 2019 1:45 pm
What does "self-insure" mean?

"Insurance" implies that I'm pooling money together with a group of people, such that the cost of care is spread across the group. When I had dental insurance, I came out ahead most of time. When I had pet insurance for my dog, the insurance company came out ahead, all but one year.

Does "self-insure" mean keep enough in savings to cover the possibility of LTC? How much would that be? Or does it mean to put savings aside each year toward LTC (in lieu of paying insurance premiums)? Neither of these approaches has anything to do with pooling money and spreading it across a group, so why call it "insurance"?

I think that "self-insure" just means that you have decided to "set aside" money to cover the entire cost of LTC, in case it is needed. And then the discussion can focus on what is a reasonable amount to set aside and whether that should be incremental or in a lump sum.
No. You do not need to "set aside" because you are using your assets, just as you would use your assets if you were living independently. The idea is to have enough to cover reasonable years of long-term care.

Once you have depleted your assets or your insurance, medicaid is the fall-back, after paying for several years of care.

Keep in mind that most (virtually all?) policies people buy have limited coverage. So the choice is between limited coverage using your assets or limited coverage obtained from an insurance policy.

(It seems to me that the strongest argument against LTC policies is the near-certainty of increasing rates. Less strong arguments are concerns about the viability of the insurance company and difficulty of dealing with the insurance company when making claims).

As I suggested above, concerns for those without an LTC policy include (1) income for a spouse and (2) bequests. It seems to me that (1) can be dealt with a number of ways, including medicaid annuities and (really) divorce. There may be a small number of people who absolutely must have a bequest for a disabled dependent.

The quibble about the use of the term "self-insure" is perhaps warranted. BUT I think we all know what is meant when we say that.
Well, I really love my wife so I don't want to divorce her just so that she live in a lousy Medicaid nursing home. YMMV.

WoW2012
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Re: Long term care insurance policy

Post by WoW2012 » Sun Jan 13, 2019 7:49 pm

DrGoogle2017 wrote:
Sun Jan 13, 2019 4:18 pm
Regarding policies with unlimited coverage, I’m sure there are some out there, but the premium would be high, it will be like prepaid LTC in the end.
Incorrect. Even with a lifetime/unlimited benefit period, it takes only a short claim to recoup all the premiums you paid.

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Re: Long term care insurance policy

Post by WoW2012 » Sun Jan 13, 2019 7:53 pm

DrGoogle2017 wrote:
Sun Jan 13, 2019 5:15 pm
My form of LTC is to check into a luxury cruise ship permanently at age 80, all needs will be taken care off. Just google for an 87 who did exactly that in 2015 after her husband died.
LTC isn't about needing help with meals and laundry.
LTC means needing help with bathing, dressing, getting on and off the toilet, getting into and out of bed, etc...
How many cruise ships bathe and dress the passengers?

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Re: Long term care insurance policy

Post by WoW2012 » Sun Jan 13, 2019 7:55 pm

willthrill81 wrote:
Sun Jan 13, 2019 7:46 pm
WoW2012 wrote:
Sun Jan 13, 2019 7:44 pm
willthrill81 wrote:
Sun Jan 13, 2019 11:40 am
visualguy wrote:
Fri Jan 11, 2019 12:03 pm
Based on previous threads on this topic, it seems like if you have the assets to self-insure then that's a good way to go. If not, LTC insurance makes sense, but you need to do the research to find a good policy. Not that easy to find without a good agent who specializes in this area.
That's my assessment as well.

Until long-term care policies with long elimination periods (e.g. 5 years) are offered, we'll definitely go the self-insure route. For those with more than about $2 million in their investments, it definitely seems to be the superior path.
When you look at your current net worth, willthrill, for how many years could it cover the cost of your (or your spouse's) long-term care in today's dollars? 5 years? 10 years? 20 years?
I'm not remotely interested in LTC presently because we're in our 30s. By the time I'm 55, our net worth will likely be around $3 million in today's dollars, producing about $100k of annual income. That's enough to cover the annual cost of a nursing home in our area, and few are present there more than five years, around 75% under three years among those who ever go in. Private care would be less than that.

Casual readers of this thread should know that WoW2012 is an insurance agent selling LTC insurance.
If the $100,000 of income is paying for your nursing home care what is your wife going to live on?

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willthrill81
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Re: Long term care insurance policy

Post by willthrill81 » Sun Jan 13, 2019 7:56 pm

WoW2012 wrote:
Sun Jan 13, 2019 7:53 pm
DrGoogle2017 wrote:
Sun Jan 13, 2019 5:15 pm
My form of LTC is to check into a luxury cruise ship permanently at age 80, all needs will be taken care off. Just google for an 87 who did exactly that in 2015 after her husband died.
LTC isn't about needing help with meals and laundry.
LTC means needing help with bathing, dressing, getting on and off the toilet, getting into and out of bed, etc...
How many cruise ships bathe and dress the passengers?
You know full well that there are varying levels of LTC. There are facilities that do pretty much exactly what cruise ships do (i.e. fix meals, make up the bed, do laundry, plan activities). I know this because my great-grandmother lived in one for about six years and never needed more care than that, despite living to 92.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Long term care insurance policy

Post by willthrill81 » Sun Jan 13, 2019 7:58 pm

WoW2012 wrote:
Sun Jan 13, 2019 7:55 pm
willthrill81 wrote:
Sun Jan 13, 2019 7:46 pm
WoW2012 wrote:
Sun Jan 13, 2019 7:44 pm
willthrill81 wrote:
Sun Jan 13, 2019 11:40 am
visualguy wrote:
Fri Jan 11, 2019 12:03 pm
Based on previous threads on this topic, it seems like if you have the assets to self-insure then that's a good way to go. If not, LTC insurance makes sense, but you need to do the research to find a good policy. Not that easy to find without a good agent who specializes in this area.
That's my assessment as well.

Until long-term care policies with long elimination periods (e.g. 5 years) are offered, we'll definitely go the self-insure route. For those with more than about $2 million in their investments, it definitely seems to be the superior path.
When you look at your current net worth, willthrill, for how many years could it cover the cost of your (or your spouse's) long-term care in today's dollars? 5 years? 10 years? 20 years?
I'm not remotely interested in LTC presently because we're in our 30s. By the time I'm 55, our net worth will likely be around $3 million in today's dollars, producing about $100k of annual income. That's enough to cover the annual cost of a nursing home in our area, and few are present there more than five years, around 75% under three years among those who ever go in. Private care would be less than that.

Casual readers of this thread should know that WoW2012 is an insurance agent selling LTC insurance.
If the $100,000 of income is paying for your nursing home care what is your wife going to live on?
She (or I; money is fungible) would dip in to the principal. Take $500k (or even a million) out of a $3 million net worth, and she would still be very comfortable with the remainder.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Long term care insurance policy

Post by Silk McCue » Sun Jan 13, 2019 8:01 pm

willthrill81 wrote:
Sun Jan 13, 2019 7:46 pm
Casual readers of this thread should know that WoW2012 is an insurance agent selling LTC insurance.
Who cares if they are an insurance agent? I don’t.There is so much bad and out of date information about LTCi spread by well intended people on this site that it’s good to have professional feedback and perspective. As long as they aren’t PM’ing folks trying to sell a policy. Weigh the information available, analyze your own situation and make a decision that you feel is in your best interest. Having owned and operated a private duty home health agency I know that my wife and I will purchase LTCi in the near term.

Cheers

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Re: Long term care insurance policy

Post by WoW2012 » Sun Jan 13, 2019 8:04 pm

willthrill81 wrote:
Sun Jan 13, 2019 7:58 pm
WoW2012 wrote:
Sun Jan 13, 2019 7:55 pm
willthrill81 wrote:
Sun Jan 13, 2019 7:46 pm
WoW2012 wrote:
Sun Jan 13, 2019 7:44 pm
willthrill81 wrote:
Sun Jan 13, 2019 11:40 am


That's my assessment as well.

Until long-term care policies with long elimination periods (e.g. 5 years) are offered, we'll definitely go the self-insure route. For those with more than about $2 million in their investments, it definitely seems to be the superior path.
When you look at your current net worth, willthrill, for how many years could it cover the cost of your (or your spouse's) long-term care in today's dollars? 5 years? 10 years? 20 years?
I'm not remotely interested in LTC presently because we're in our 30s. By the time I'm 55, our net worth will likely be around $3 million in today's dollars, producing about $100k of annual income. That's enough to cover the annual cost of a nursing home in our area, and few are present there more than five years, around 75% under three years among those who ever go in. Private care would be less than that.

Casual readers of this thread should know that WoW2012 is an insurance agent selling LTC insurance.
If the $100,000 of income is paying for your nursing home care what is your wife going to live on?
She (or I; money is fungible) would dip in to the principal. Take $500k (or even a million) out of a $3 million net worth, and she would still be very comfortable with the remainder.
So the $3M would become less than $2.5M.... probably about $2.3M, if you only needed care for 5 years. What if you need care for longer than that? If you needed 10 years, then she'd be left with about $1.5M, maybe even less than that. It's a negative spiral. It's a lot easier, especially at your age, to spend about a hundred bucks a month on a decent policy.

fyi... what ends up happening in most cases, is the wife doesn't want to write a check for $100K each year, so she sacrifices herself, because she loves you and she loves her kids and she doesn't want all that money to be used up. So, she'll try to take care of you on her own and sacrifice her own health in the process. But, at least you'll be able to tell her that you didn't waste any money on long-term care insurance premiums.

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