Is Long Term Care Insurance worth it?

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willthrill81
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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 »

WoW2012 wrote: Tue Feb 12, 2019 4:01 pm
willthrill81 wrote: Tue Feb 12, 2019 3:35 pm
WoW2012 wrote: Tue Feb 12, 2019 3:28 pm
willthrill81 wrote: Tue Feb 12, 2019 3:12 pm

If there is a 50% probability of one person needing LTC, then there's only a 25% probability (.50^2) that both spouses will need it.

The Vanguard chart referred to above indicates that 15% of retirees will incur more than $250k of LTC expenses. So there's only a 2.25% (.15^2) probability that both spouses would incur more than that.

That's NOT what I said.
If there's a 15% chance of one person needing $250K+ of LTC expenses, if you're married, there's a 30% chance of one spouse needing $250K+ of LTC expenses.

Two bullets.
One revolver.
Pull the trigger once.
Those are the odds.
That's incorrect. If there is a 15% chance of an event occurring (i.e. incurring over $250k of LTC expenses), then there's an 85% chance of it not occurring. Applied to two individuals, there is an 72.25% probability (.85^2) that neither experience the event (i.e. a 27.75% probability that at least one will incur over $250k of LTC expenses). We cannot simply add the probabilities as you have done.
My math is correct.
No, it isn't, and I've just shown the proof that it isn't.
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michaeljc70
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Re: Is Long Term Care Insurance worth it?

Post by michaeljc70 »

smitcat wrote: Tue Feb 12, 2019 2:33 pm
michaeljc70 wrote: Tue Feb 12, 2019 12:54 pm It's really hard to model this when you don't know what the future premiums will be. See post above with a 50% increase.
In our case we have had LTCi for many years and have seen less than a 15% in increase - perhaps if this interests you the solution might be to get some real quotes for your specific needs and situation as opposed to relying on a post from someone on the internet.
We also have home insurance - there is less than 5% chance that anyone will claim, the average claim is like $8.7K last I checked.
Home insurance can go up a great deal in a few years.
There are opportunities to self insure for anything dependent upon their goals.
I'm in my 40s and have zero interest in getting LTC at this point. I saw it with my grandparents. They eventually dropped the policy due to the increases.

I am not relying on one anonymous internet source.

Maybe see this: "Genworth raises long-term-care insurance costs an average 58%." It is from the last 6 months.
https://www.investmentnews.com/article/ ... average-58

Real quotes still won't tell me what the future increases will be, so that doesn't really address the issue I raised.

My HOA and mortgage company both require me to have home insurance, so dropping that isn't an option. Home/Auto involve liability which is not a factor in LTC insurance so they aren't the same.
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Ben Mathew
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Re: Is Long Term Care Insurance worth it?

Post by Ben Mathew »

willthrill81 wrote: Tue Feb 12, 2019 3:04 pm
Ben Mathew wrote: Tue Feb 12, 2019 2:57 pm
willthrill81 wrote: Tue Feb 12, 2019 2:28 pm So unless you're planning on depleting your portfolio (e.g. VPW), there's probably little need to bucket a large quantity of funds specifically for LTC.
Most people probably plan to deplete most of the portfolio--it's the standard operating procedure.
Actually, the data are clear that that's false.

Image
https://www.kitces.com/blog/consumption ... portfolio/
It's hard to interpret the top graph. It's not a straightforward graph showing a cohort's retirement assets evolving over time as they age, with age on the X axis. Instead, it has year on the x-axis and wealth of retirees on the X axis, and it's drawing its conclusions from that. As far as I can tell, we are not looking at a cohort here. Averaging across cohorts would hide a tremendous amount of information, and can lead to misleading conclusions.

Also, it's quite surprising that the balances didn't experience a drop in 2008. What were they holding? No allocation at all to stocks? Or were they able to reduce consumption and replace all losses to their portfolios? Hard to understand what's going on here.

And finally, we have the low balances. The richest quintile has only about $600K in wealth, and the second richest quintile has less than $200K in wealth. The rest have next to nothing. These people are living on SS and pensions. These are not people who can self-insure LTC. The richest quinitile, maybe just barely (if this is wealth per person, not per household)...
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michaeljc70
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Re: Is Long Term Care Insurance worth it?

Post by michaeljc70 »

WoW2012 wrote: Tue Feb 12, 2019 3:13 pm
michaeljc70 wrote: Tue Feb 12, 2019 12:54 pm It's really hard to model this when you don't know what the future premiums will be. See post above with a 50% increase.
Most LTCi policies sold today have regulations requiring no planned premium increases.
"Genworth raises long-term-care insurance costs an average 58%" - Aug 2018. Genworth is the largest LTC insurer.

https://www.investmentnews.com/article/ ... average-58

"Such price increases have become a common fate for LTC policyholders and their financial advisers. Massachusetts Mutual Life Insurance Co., for example, this year requested premium hikes of about 77%, affecting roughly 54,000 — or three-quarters — of its LTC policyholders."

You keep repeating that.....using cute wiggle words like "planned" and "requiring" and "most".
visualguy
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Re: Is Long Term Care Insurance worth it?

Post by visualguy »

willthrill81 wrote: Tue Feb 12, 2019 4:03 pm
WoW2012 wrote: Tue Feb 12, 2019 4:01 pm
willthrill81 wrote: Tue Feb 12, 2019 3:35 pm
WoW2012 wrote: Tue Feb 12, 2019 3:28 pm
willthrill81 wrote: Tue Feb 12, 2019 3:12 pm

If there is a 50% probability of one person needing LTC, then there's only a 25% probability (.50^2) that both spouses will need it.

The Vanguard chart referred to above indicates that 15% of retirees will incur more than $250k of LTC expenses. So there's only a 2.25% (.15^2) probability that both spouses would incur more than that.

That's NOT what I said.
If there's a 15% chance of one person needing $250K+ of LTC expenses, if you're married, there's a 30% chance of one spouse needing $250K+ of LTC expenses.

Two bullets.
One revolver.
Pull the trigger once.
Those are the odds.
That's incorrect. If there is a 15% chance of an event occurring (i.e. incurring over $250k of LTC expenses), then there's an 85% chance of it not occurring. Applied to two individuals, there is an 72.25% probability (.85^2) that neither experience the event (i.e. a 27.75% probability that at least one will incur over $250k of LTC expenses). We cannot simply add the probabilities as you have done.
My math is correct.
No, it isn't, and I've just shown the proof that it isn't.
27.75% is correct (i.e. willthrill81 is correct), but I don't think 27.75% vs 30% makes a difference in the point being made...
tj
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Re: Is Long Term Care Insurance worth it?

Post by tj »

michaeljc70 wrote: Tue Feb 12, 2019 4:41 pm
WoW2012 wrote: Tue Feb 12, 2019 3:13 pm
michaeljc70 wrote: Tue Feb 12, 2019 12:54 pm It's really hard to model this when you don't know what the future premiums will be. See post above with a 50% increase.
Most LTCi policies sold today have regulations requiring no planned premium increases.
"Genworth raises long-term-care insurance costs an average 58%" - Aug 2018. Genworth is the largest LTC insurer.

https://www.investmentnews.com/article/ ... average-58

"Such price increases have become a common fate for LTC policyholders and their financial advisers. Massachusetts Mutual Life Insurance Co., for example, this year requested premium hikes of about 77%, affecting roughly 54,000 — or three-quarters — of its LTC policyholders."

You keep repeating that.....using cute wiggle words like "planned" and "requiring" and "most".

Wasn't Mass Mutual known for NEVER increasing?
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willthrill81
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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 »

visualguy wrote: Tue Feb 12, 2019 4:45 pm
willthrill81 wrote: Tue Feb 12, 2019 4:03 pm
WoW2012 wrote: Tue Feb 12, 2019 4:01 pm
willthrill81 wrote: Tue Feb 12, 2019 3:35 pm
WoW2012 wrote: Tue Feb 12, 2019 3:28 pm


That's NOT what I said.
If there's a 15% chance of one person needing $250K+ of LTC expenses, if you're married, there's a 30% chance of one spouse needing $250K+ of LTC expenses.

Two bullets.
One revolver.
Pull the trigger once.
Those are the odds.
That's incorrect. If there is a 15% chance of an event occurring (i.e. incurring over $250k of LTC expenses), then there's an 85% chance of it not occurring. Applied to two individuals, there is an 72.25% probability (.85^2) that neither experience the event (i.e. a 27.75% probability that at least one will incur over $250k of LTC expenses). We cannot simply add the probabilities as you have done.
My math is correct.
No, it isn't, and I've just shown the proof that it isn't.
27.75% is correct (i.e. willthrill81 is correct), but I don't think 27.75% vs 30% makes a difference in the point being made...
In this specific scenario, it probably doesn't.

But it makes a big difference with smaller probabilities. For instance, if there is only a 5% probability of incurring at least $500k of LTC expenses (I believe the probability is less than that), then the probability for two people both incurring at least $500k of LTC expenses is only .25% (i.e. 1 in 400), not 10%, as WoW2012's analogy would have you think.
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Ben Mathew
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Re: Is Long Term Care Insurance worth it?

Post by Ben Mathew »

michaeljc70 wrote: Tue Feb 12, 2019 4:41 pm
WoW2012 wrote: Tue Feb 12, 2019 3:13 pm
michaeljc70 wrote: Tue Feb 12, 2019 12:54 pm It's really hard to model this when you don't know what the future premiums will be. See post above with a 50% increase.
Most LTCi policies sold today have regulations requiring no planned premium increases.
"Genworth raises long-term-care insurance costs an average 58%" - Aug 2018. Genworth is the largest LTC insurer.

https://www.investmentnews.com/article/ ... average-58

"Such price increases have become a common fate for LTC policyholders and their financial advisers. Massachusetts Mutual Life Insurance Co., for example, this year requested premium hikes of about 77%, affecting roughly 54,000 — or three-quarters — of its LTC policyholders."

You keep repeating that.....using cute wiggle words like "planned" and "requiring" and "most".
That is a scary article. But in the comments section of the article, Scott Olson, an LTC insurance agent held in high regard by Silk McCue, states:
Scott Olson: There are new consumer protections for people who buy LTC insurance today. 41 states have passed strict pricing regulations. The regulations remove the profit incentive from a rate increase. With no profit incentive it dramatically reduces the likelihood of rate increase.

Another Commenter: then why is genworth increasing their premiums? and how?

Scott Olson: The new regulations do not apply to the older policies. The new regulations apply to policies purchased after the regulation became effective in each state.
If Scott Olson is right that these are price increases on older policies, then I think this article should have made that clear.
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visualguy
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Re: Is Long Term Care Insurance worth it?

Post by visualguy »

willthrill81 wrote: Tue Feb 12, 2019 4:50 pm In this specific scenario, it probably doesn't.

But it makes a big difference with smaller probabilities. For instance, if there is only a 5% probability of incurring at least $500k of LTC expenses (I believe the probability is less than that), then the probability for two people both incurring at least $500k of LTC expenses is only .25% (i.e. 1 in 400), not 10%, as WoW2012's analogy would have you think.
I think he's talking about the probability of at least one incurring it, which would be 9.75% for your example.
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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 »

visualguy wrote: Tue Feb 12, 2019 4:57 pm
willthrill81 wrote: Tue Feb 12, 2019 4:50 pm In this specific scenario, it probably doesn't.

But it makes a big difference with smaller probabilities. For instance, if there is only a 5% probability of incurring at least $500k of LTC expenses (I believe the probability is less than that), then the probability for two people both incurring at least $500k of LTC expenses is only .25% (i.e. 1 in 400), not 10%, as WoW2012's analogy would have you think.
I think he's talking about the probability of at least one incurring it, which would be 9.75% for your example.
If that's the case, then he needs to be clearer about it.

The point that I've made repeatedly is that based on the probabilities, a couple with $2 million or more in investable assets who isn't specifically planning on depleting their portfolio has a very high probability of being able to pay for LTC expenses they incur without leaving the surviving spouse in poverty, especially if they take preemptive measures like forming an irrevocable trust and examine the possibility of Medicaid-compliant annuities, should the very small tail risk actually manifest itself.
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willthrill81
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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 »

Ben Mathew wrote: Tue Feb 12, 2019 4:56 pm
michaeljc70 wrote: Tue Feb 12, 2019 4:41 pm
WoW2012 wrote: Tue Feb 12, 2019 3:13 pm
michaeljc70 wrote: Tue Feb 12, 2019 12:54 pm It's really hard to model this when you don't know what the future premiums will be. See post above with a 50% increase.
Most LTCi policies sold today have regulations requiring no planned premium increases.
"Genworth raises long-term-care insurance costs an average 58%" - Aug 2018. Genworth is the largest LTC insurer.

https://www.investmentnews.com/article/ ... average-58

"Such price increases have become a common fate for LTC policyholders and their financial advisers. Massachusetts Mutual Life Insurance Co., for example, this year requested premium hikes of about 77%, affecting roughly 54,000 — or three-quarters — of its LTC policyholders."

You keep repeating that.....using cute wiggle words like "planned" and "requiring" and "most".
That is a scary article. But in the comments section of the article, Scott Olson, an LTC insurance agent held in high regard by Silk McCue, states:
Scott Olson: There are new consumer protections for people who buy LTC insurance today. 41 states have passed strict pricing regulations. The regulations remove the profit incentive from a rate increase. With no profit incentive it dramatically reduces the likelihood of rate increase.

Another Commenter: then why is genworth increasing their premiums? and how?

Scott Olson: The new regulations do not apply to the older policies. The new regulations apply to policies purchased after the regulation became effective in each state.
If Scott Olson is right that these are price increases on older policies, then I think this article should have made that clear.
There was another comment to Scott's last comment as well that might be relevant.
I don't think you are correct. My Genworth policy (written in 2011) just got notice of a 98.1% increase. This is after two other increases since 2011 totaling 25%.

Not sure what regulations you are referring to, but, they don't seem to matter in Florida. BTW, Genworth pulled out of Florida in mid-2018, so maybe that is their way around whatever phantom regulations you are referring to.

My original $3150 premium for $576K benefits for me and my wife, 3% inflation, 8yr benefits, etc, will now stand at $7750/yr, unless I choose to greatly reduce the coverage. We are both mid-50s still and in good health. I will likely walk away from the 27K total paid in premiums thus far.
-quote abbreviated to stay within forum rules

Further, even if Scott's comment that premiums cannot be increased due to "profit incentives" is true, that would not prevent LTCi providers from increasing premiums for actuarially justified reasons, unless the state law disallows or limits these types of premium increases as well.

But even if state law does prevent or limit premium increases, we must ask ourselves how long a LTCi provider can stay in business if they need to go up on their prices due to higher LTC costs but are unable to legally do so.
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visualguy
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Re: Is Long Term Care Insurance worth it?

Post by visualguy »

willthrill81 wrote: Tue Feb 12, 2019 5:03 pm
visualguy wrote: Tue Feb 12, 2019 4:57 pm
willthrill81 wrote: Tue Feb 12, 2019 4:50 pm In this specific scenario, it probably doesn't.

But it makes a big difference with smaller probabilities. For instance, if there is only a 5% probability of incurring at least $500k of LTC expenses (I believe the probability is less than that), then the probability for two people both incurring at least $500k of LTC expenses is only .25% (i.e. 1 in 400), not 10%, as WoW2012's analogy would have you think.
I think he's talking about the probability of at least one incurring it, which would be 9.75% for your example.
If that's the case, then he needs to be clearer about it.

The point that I've made repeatedly is that based on the probabilities, a couple with $2 million or more in investable assets who isn't specifically planning on depleting their portfolio has a very high probability of being able to pay for LTC expenses they incur without leaving the surviving spouse in poverty, especially if they take preemptive measures like forming an irrevocable trust and examine the possibility of Medicaid-compliant annuities, should the very small tail risk actually manifest itself.
I understand your point, but I don't agree that the portfolio won't get depleted unless the couple is "specifically planning on depleting" it. You are just arguing for a reserve without calling it that. Saying that you need a larger portfolio or lower withdrawals to accommodate LTC is nothing but a reserve. Having that cushion means you have a reserve, and you have to maintain it until pretty late in life.
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Re: Is Long Term Care Insurance worth it?

Post by fposte »

WoW2012 wrote: Tue Feb 12, 2019 3:54 pm
fposte wrote: Tue Feb 12, 2019 3:37 pm
WoW2012 wrote: Tue Feb 12, 2019 2:52 pm
fposte wrote: Mon Feb 11, 2019 3:53 pm
WoW2012 wrote: Sun Feb 10, 2019 7:44 pm LTCi helps for those who live in CCRC's also.
Can you expand on how? As a single person without kids, I don't see the advantage to me of having LTCi in a CCRC. It might make the facility happier or bring better luck to my heirs, but that, to be blunt, is not my concern.
Having LTCi before you enter a CCRC lowers your fees.
That hasn't been stated in any of the ones I've visited. Either it's something that you can propose as a deal yourself but isn't a standard part of their admissions there or it doesn't work that way.
Have you asked the admissions personnel about LTCi?
No, but I've gotten the price breakdowns and discussed long-term care and it's never been mentioned. So, as I said, maybe it could be proposed as a deal by the prospective resident, but it's not made available as a standard. It'd therefore be pretty hard to price out the projections in advance to determine advisability.
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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 »

visualguy wrote: Tue Feb 12, 2019 5:16 pm
willthrill81 wrote: Tue Feb 12, 2019 5:03 pm
visualguy wrote: Tue Feb 12, 2019 4:57 pm
willthrill81 wrote: Tue Feb 12, 2019 4:50 pm In this specific scenario, it probably doesn't.

But it makes a big difference with smaller probabilities. For instance, if there is only a 5% probability of incurring at least $500k of LTC expenses (I believe the probability is less than that), then the probability for two people both incurring at least $500k of LTC expenses is only .25% (i.e. 1 in 400), not 10%, as WoW2012's analogy would have you think.
I think he's talking about the probability of at least one incurring it, which would be 9.75% for your example.
If that's the case, then he needs to be clearer about it.

The point that I've made repeatedly is that based on the probabilities, a couple with $2 million or more in investable assets who isn't specifically planning on depleting their portfolio has a very high probability of being able to pay for LTC expenses they incur without leaving the surviving spouse in poverty, especially if they take preemptive measures like forming an irrevocable trust and examine the possibility of Medicaid-compliant annuities, should the very small tail risk actually manifest itself.
I understand your point, but I don't agree that the portfolio won't get depleted unless the couple is "specifically planning on depleting" it. You are just arguing for a reserve without calling it that. Saying that you need a larger portfolio or lower withdrawals to accommodate LTC is nothing but a reserve. Having that cushion means you have a reserve, and you have to maintain it until pretty late in life.
Once again, I'm not saying that retirees should have a cushion specifically designated for LTC expenses. There are many good reasons for maintaining a sizable portion of one's starting portfolio throughout retirement, potential LTC expenses being only one of them: longevity (the really big one, especially for a couple), increased costs for essential spending, reduction of SS benefits, poor portfolio performance, reduction of coverage of medical expenses by Medicare, etc.

If we were to remove the need to pay for LTC expenses from that list, would it significantly alter the desired size of the cushion? Perhaps, but I doubt it.
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Re: Is Long Term Care Insurance worth it?

Post by marcopolo »

visualguy wrote: Tue Feb 12, 2019 5:16 pm
willthrill81 wrote: Tue Feb 12, 2019 5:03 pm
visualguy wrote: Tue Feb 12, 2019 4:57 pm
willthrill81 wrote: Tue Feb 12, 2019 4:50 pm In this specific scenario, it probably doesn't.

But it makes a big difference with smaller probabilities. For instance, if there is only a 5% probability of incurring at least $500k of LTC expenses (I believe the probability is less than that), then the probability for two people both incurring at least $500k of LTC expenses is only .25% (i.e. 1 in 400), not 10%, as WoW2012's analogy would have you think.
I think he's talking about the probability of at least one incurring it, which would be 9.75% for your example.
If that's the case, then he needs to be clearer about it.

The point that I've made repeatedly is that based on the probabilities, a couple with $2 million or more in investable assets who isn't specifically planning on depleting their portfolio has a very high probability of being able to pay for LTC expenses they incur without leaving the surviving spouse in poverty, especially if they take preemptive measures like forming an irrevocable trust and examine the possibility of Medicaid-compliant annuities, should the very small tail risk actually manifest itself.
I understand your point, but I don't agree that the portfolio won't get depleted unless the couple is "specifically planning on depleting" it. You are just arguing for a reserve without calling it that. Saying that you need a larger portfolio or lower withdrawals to accommodate LTC is nothing but a reserve. Having that cushion means you have a reserve, and you have to maintain it until pretty late in life.
Well, if you are going to be paying LTCi premiums going forward, don't you essentially have to set aside that reserve anyway?

Consider someone retiring at age 60. At that age, you are looking at something like a 3% WR to be safe. If the LTCi policy costs $6k/yr, that means you essentially have to have an additional $200k set aside to fund those premiums. And have a 50% chance of needing to use it. Or, you could just leave the $200k invested, and use that to pay for LTC if/when the time comes. Its not like the premiums just fall out of the sky vs. Self paying.

I can see the argument for either case. But, it is not as clear cut as some would like us to believe.
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Re: Is Long Term Care Insurance worth it?

Post by smitcat »

michaeljc70 wrote: Tue Feb 12, 2019 4:35 pm
smitcat wrote: Tue Feb 12, 2019 2:33 pm
michaeljc70 wrote: Tue Feb 12, 2019 12:54 pm It's really hard to model this when you don't know what the future premiums will be. See post above with a 50% increase.
In our case we have had LTCi for many years and have seen less than a 15% in increase - perhaps if this interests you the solution might be to get some real quotes for your specific needs and situation as opposed to relying on a post from someone on the internet.
We also have home insurance - there is less than 5% chance that anyone will claim, the average claim is like $8.7K last I checked.
Home insurance can go up a great deal in a few years.
There are opportunities to self insure for anything dependent upon their goals.
I'm in my 40s and have zero interest in getting LTC at this point. I saw it with my grandparents. They eventually dropped the policy due to the increases.

I am not relying on one anonymous internet source.

Maybe see this: "Genworth raises long-term-care insurance costs an average 58%." It is from the last 6 months.
https://www.investmentnews.com/article/ ... average-58

Real quotes still won't tell me what the future increases will be, so that doesn't really address the issue I raised.

My HOA and mortgage company both require me to have home insurance, so dropping that isn't an option. Home/Auto involve liability which is not a factor in LTC insurance so they aren't the same.
OK - then I cannot help other then to say that we have LTCi with little change over the years - that was specified when we got the policies in our early 50's. We wanted LTCi at that age as our thoughts were that we would have larger problems if we needed care earlier rather than later - we also had additional disability which we since do not need.
We will likely keep the home insurance but you never know.
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Ben Mathew
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Re: Is Long Term Care Insurance worth it?

Post by Ben Mathew »

willthrill81 wrote: Tue Feb 12, 2019 5:11 pm
Ben Mathew wrote: Tue Feb 12, 2019 4:56 pm
michaeljc70 wrote: Tue Feb 12, 2019 4:41 pm
WoW2012 wrote: Tue Feb 12, 2019 3:13 pm
michaeljc70 wrote: Tue Feb 12, 2019 12:54 pm It's really hard to model this when you don't know what the future premiums will be. See post above with a 50% increase.
Most LTCi policies sold today have regulations requiring no planned premium increases.
"Genworth raises long-term-care insurance costs an average 58%" - Aug 2018. Genworth is the largest LTC insurer.

https://www.investmentnews.com/article/ ... average-58

"Such price increases have become a common fate for LTC policyholders and their financial advisers. Massachusetts Mutual Life Insurance Co., for example, this year requested premium hikes of about 77%, affecting roughly 54,000 — or three-quarters — of its LTC policyholders."

You keep repeating that.....using cute wiggle words like "planned" and "requiring" and "most".
That is a scary article. But in the comments section of the article, Scott Olson, an LTC insurance agent held in high regard by Silk McCue, states:
Scott Olson: There are new consumer protections for people who buy LTC insurance today. 41 states have passed strict pricing regulations. The regulations remove the profit incentive from a rate increase. With no profit incentive it dramatically reduces the likelihood of rate increase.

Another Commenter: then why is genworth increasing their premiums? and how?

Scott Olson: The new regulations do not apply to the older policies. The new regulations apply to policies purchased after the regulation became effective in each state.
If Scott Olson is right that these are price increases on older policies, then I think this article should have made that clear.
There was another comment to Scott's last comment as well that might be relevant.
I don't think you are correct. My Genworth policy (written in 2011) just got notice of a 98.1% increase. This is after two other increases since 2011 totaling 25%.

Not sure what regulations you are referring to, but, they don't seem to matter in Florida. BTW, Genworth pulled out of Florida in mid-2018, so maybe that is their way around whatever phantom regulations you are referring to.

My original $3150 premium for $576K benefits for me and my wife, 3% inflation, 8yr benefits, etc, will now stand at $7750/yr, unless I choose to greatly reduce the coverage. We are both mid-50s still and in good health. I will likely walk away from the 27K total paid in premiums thus far.
-quote abbreviated to stay within forum rules

Further, even if Scott's comment that premiums cannot be increased due to "profit incentives" is true, that would not prevent LTCi providers from increasing premiums for actuarially justified reasons, unless the state law disallows or limits these types of premium increases as well.

But even if state law does prevent or limit premium increases, we must ask ourselves how long a LTCi provider can stay in business if they need to go up on their prices due to higher LTC costs but are unable to legally do so.
Here's what Scott Olson claims on his page about LTC policies in Florida (he has a state specific info for all states):
Florida enacted a long-term care insurance regulation on January 13th, 2003. Florida residents purchasing long-term care insurance after that date are protected by Florida’s Rate Stability Regulation*.

The regulation has helped curb long-term care insurance rate increases in Florida because it forces long-term care insurance companies to lower their profits if they seek a rate increase.

Of the 11 companies selling long-term care insurance in Florida today, 9 of them have NOT had any rate increases on any of the policies they’ve sold in Florida since the effective date of this regulation (1/13/2003).

Approximately 90.5% of the long-term care insurance rate increases in Florida have been on policies purchased before January 13th, 2003. Policies purchased before January 13th, 2003 are NOT protected by Florida’s Rate Stability Regulation.

Of the policies purchased after January 13th, 2003, 2003, which have had rate increases, the average rate increase has been 23.0% (one-time). The median rate increase has been 19.4% (one-time).
Last edited by Ben Mathew on Tue Feb 12, 2019 5:30 pm, edited 1 time in total.
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Silk McCue
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Re: Is Long Term Care Insurance worth it?

Post by Silk McCue »

marcopolo wrote: Tue Feb 12, 2019 5:26 pm
Well, if you are going to be paying LTCi premiums going forward, don't you essentially have to set aside that reserve anyway?

Consider someone retiring at age 60. At that age, you are looking at something like a 3% WR to be safe. If the LTCi policy costs $6k/yr, that means you essentially have to have an additional $200k set aside to fund those premiums. And have a 50% chance of needing to use it. Or, you could just leave the $200k invested, and use that to pay for LTC if/when the time comes. Its not like the premiums just fall out of the sky vs. Self paying.

I can see the argument for either case. But, it is not as clear cut as some would like us to believe.
Money is fungible. You can choose to forego other discretionary spending if LTCi is important to you. That is our plan.

Cheers
visualguy
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Re: Is Long Term Care Insurance worth it?

Post by visualguy »

willthrill81 wrote: Tue Feb 12, 2019 5:11 pm Further, even if Scott's comment that premiums cannot be increased due to "profit incentives" is true, that would not prevent LTCi providers from increasing premiums for actuarially justified reasons, unless the state law disallows or limits these types of premium increases as well.

But even if state law does prevent or limit premium increases, we must ask ourselves how long a LTCi provider can stay in business if they need to go up on their prices due to higher LTC costs but are unable to legally do so.
Right, but if LTC prevalence and costs are becoming too onerous for insurance companies to cover at anywhere near reasonable premiums, we should be even more concerned as individuals. Whether LTCi is the answer, or part of it, or none of it is worth discussing, but regardless of the answer to that, people have to plan for it.

I didn't really think about it much in the past and wasn't planning for it. It's very easy to be completely oblivious to it when you're relatively young... Also, you have so many other things to worry about. Then I started thinking about it more after reading some articles. Then I saw what was happening with my parents' LTC needs and remembered what had happened with my grandmother which didn't quite register at the time. Then I started noticing the effects of aging more. Eventually I woke up to reality and realized that my wife and I need a big reserve for it and maybe research LTCi as well, but it was a long process to realize this. A year ago, I didn't even know what a CCRC was, and up to maybe 4 years ago I was giving zero thought to what the last decade or so of life might be like.
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Re: Is Long Term Care Insurance worth it?

Post by marcopolo »

Silk McCue wrote: Tue Feb 12, 2019 5:30 pm
marcopolo wrote: Tue Feb 12, 2019 5:26 pm
Well, if you are going to be paying LTCi premiums going forward, don't you essentially have to set aside that reserve anyway?

Consider someone retiring at age 60. At that age, you are looking at something like a 3% WR to be safe. If the LTCi policy costs $6k/yr, that means you essentially have to have an additional $200k set aside to fund those premiums. And have a 50% chance of needing to use it. Or, you could just leave the $200k invested, and use that to pay for LTC if/when the time comes. Its not like the premiums just fall out of the sky vs. Self paying.

I can see the argument for either case. But, it is not as clear cut as some would like us to believe.
Money is fungible. You can choose to forego other discretionary spending if LTCi is important to you. That is our plan.

Cheers
Ok, but that does not change the analysis at all.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Ben Mathew
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Re: Is Long Term Care Insurance worth it?

Post by Ben Mathew »

marcopolo wrote: Tue Feb 12, 2019 5:43 pm
Silk McCue wrote: Tue Feb 12, 2019 5:30 pm
marcopolo wrote: Tue Feb 12, 2019 5:26 pm
Well, if you are going to be paying LTCi premiums going forward, don't you essentially have to set aside that reserve anyway?

Consider someone retiring at age 60. At that age, you are looking at something like a 3% WR to be safe. If the LTCi policy costs $6k/yr, that means you essentially have to have an additional $200k set aside to fund those premiums. And have a 50% chance of needing to use it. Or, you could just leave the $200k invested, and use that to pay for LTC if/when the time comes. Its not like the premiums just fall out of the sky vs. Self paying.

I can see the argument for either case. But, it is not as clear cut as some would like us to believe.
Money is fungible. You can choose to forego other discretionary spending if LTCi is important to you. That is our plan.

Cheers
Ok, but that does not change the analysis at all.
The reserves you need to set aside for premiums should be less than the reserves you need to set aside for self-insuring. If that isn't the case, then you'd be right that there's no point to insuring. $6,000/year starting at age 60, growing @ 3% real, would become $172K by age 80. Not enough to cover two years of LTC. Doesn't mean it's a good idea to buy this policy. But saving and investing the premiums by itself is not quite enough to self-insure.
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Re: Is Long Term Care Insurance worth it?

Post by Silk McCue »

Ben Mathew wrote: Tue Feb 12, 2019 5:58 pm The reserves you need to set aside for premiums should be less than the reserves you need to set aside for self-insuring. If that isn't the case, then you'd be right that there's no point to insuring. $6,000/year starting at age 60, growing @ 3% real, would become $172K by age 80. Not enough to cover two years of LTC. Doesn't mean it's a good idea to buy this policy. But saving and investing the premiums by itself is not quite enough to self-insure.
The problem, and a real risk, is needing LTC when you are in early retirement, say 63 and you don’t have time for growth of assets. It’s easier to self fund if you know when you will need it, but of course we can’t. If you have LTCi that risk is mitigated

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Re: Is Long Term Care Insurance worth it?

Post by marcopolo »

Ben Mathew wrote: Tue Feb 12, 2019 5:58 pm
marcopolo wrote: Tue Feb 12, 2019 5:43 pm
Silk McCue wrote: Tue Feb 12, 2019 5:30 pm
marcopolo wrote: Tue Feb 12, 2019 5:26 pm
Well, if you are going to be paying LTCi premiums going forward, don't you essentially have to set aside that reserve anyway?

Consider someone retiring at age 60. At that age, you are looking at something like a 3% WR to be safe. If the LTCi policy costs $6k/yr, that means you essentially have to have an additional $200k set aside to fund those premiums. And have a 50% chance of needing to use it. Or, you could just leave the $200k invested, and use that to pay for LTC if/when the time comes. Its not like the premiums just fall out of the sky vs. Self paying.

I can see the argument for either case. But, it is not as clear cut as some would like us to believe.
Money is fungible. You can choose to forego other discretionary spending if LTCi is important to you. That is our plan.

Cheers
Ok, but that does not change the analysis at all.
The reserves you need to set aside for premiums should be less than the reserves you need to set aside for self-insuring. If that isn't the case, then you'd be right that there's no point to insuring. $6,000/year starting at age 60, growing @ 3% real, would become $172K by age 80. Not enough to cover two years of LTC. Doesn't mean it's a good idea to buy this policy. But saving and investing the premiums by itself is not quite enough to self-insure.
I am looking at it as retiree. So, I am not saving the $6k/yr.
I am asking the question, if I have to spend $6k/yr, indefinitely, how much do I need to in my portfolio to support that. I use 3% WR to fund the rest of my spending, so I would use the same rate for this expense. That implies $200k in the portfolio today to fund the premiums. So, how much LTC will that buy if/when (50% chance of needing it) I need it, and how does that compare to what the $6k/yr policy would fund?

It does not seem that either is a slam dunk financial decision.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Re: Is Long Term Care Insurance worth it?

Post by michaeljc70 »

Ben Mathew wrote: Tue Feb 12, 2019 5:29 pm
willthrill81 wrote: Tue Feb 12, 2019 5:11 pm
Ben Mathew wrote: Tue Feb 12, 2019 4:56 pm
michaeljc70 wrote: Tue Feb 12, 2019 4:41 pm
WoW2012 wrote: Tue Feb 12, 2019 3:13 pm

Most LTCi policies sold today have regulations requiring no planned premium increases.
"Genworth raises long-term-care insurance costs an average 58%" - Aug 2018. Genworth is the largest LTC insurer.

https://www.investmentnews.com/article/ ... average-58

"Such price increases have become a common fate for LTC policyholders and their financial advisers. Massachusetts Mutual Life Insurance Co., for example, this year requested premium hikes of about 77%, affecting roughly 54,000 — or three-quarters — of its LTC policyholders."

You keep repeating that.....using cute wiggle words like "planned" and "requiring" and "most".
That is a scary article. But in the comments section of the article, Scott Olson, an LTC insurance agent held in high regard by Silk McCue, states:
Scott Olson: There are new consumer protections for people who buy LTC insurance today. 41 states have passed strict pricing regulations. The regulations remove the profit incentive from a rate increase. With no profit incentive it dramatically reduces the likelihood of rate increase.

Another Commenter: then why is genworth increasing their premiums? and how?

Scott Olson: The new regulations do not apply to the older policies. The new regulations apply to policies purchased after the regulation became effective in each state.
If Scott Olson is right that these are price increases on older policies, then I think this article should have made that clear.
There was another comment to Scott's last comment as well that might be relevant.
I don't think you are correct. My Genworth policy (written in 2011) just got notice of a 98.1% increase. This is after two other increases since 2011 totaling 25%.

Not sure what regulations you are referring to, but, they don't seem to matter in Florida. BTW, Genworth pulled out of Florida in mid-2018, so maybe that is their way around whatever phantom regulations you are referring to.

My original $3150 premium for $576K benefits for me and my wife, 3% inflation, 8yr benefits, etc, will now stand at $7750/yr, unless I choose to greatly reduce the coverage. We are both mid-50s still and in good health. I will likely walk away from the 27K total paid in premiums thus far.
-quote abbreviated to stay within forum rules

Further, even if Scott's comment that premiums cannot be increased due to "profit incentives" is true, that would not prevent LTCi providers from increasing premiums for actuarially justified reasons, unless the state law disallows or limits these types of premium increases as well.

But even if state law does prevent or limit premium increases, we must ask ourselves how long a LTCi provider can stay in business if they need to go up on their prices due to higher LTC costs but are unable to legally do so.
Here's what Scott Olson claims on his page about LTC policies in Florida (he has a state specific info for all states):
Florida enacted a long-term care insurance regulation on January 13th, 2003. Florida residents purchasing long-term care insurance after that date are protected by Florida’s Rate Stability Regulation*.

The regulation has helped curb long-term care insurance rate increases in Florida because it forces long-term care insurance companies to lower their profits if they seek a rate increase.

Of the 11 companies selling long-term care insurance in Florida today, 9 of them have NOT had any rate increases on any of the policies they’ve sold in Florida since the effective date of this regulation (1/13/2003).

Approximately 90.5% of the long-term care insurance rate increases in Florida have been on policies purchased before January 13th, 2003. Policies purchased before January 13th, 2003 are NOT protected by Florida’s Rate Stability Regulation.

Of the policies purchased after January 13th, 2003, 2003, which have had rate increases, the average rate increase has been 23.0% (one-time). The median rate increase has been 19.4% (one-time).
Increases limit the profit. Okay. What if they are already losing money? There is no profit. The fact that most carriers have pulled out of issuing new policies should tell you that this isn't super profitable. Basically, their minimum loss ratio is increased if they raise premiums under stabilized policies. I'm sure there is plenty of profit to the agent selling these policies :shock: .

The average increase since 2001 for policies covered by rate stabilization has been 31%. The increases on policies not covered by rate stabilization was 55% in the same time period. So, depending how you look at it 31% could be viewed as small or big. It is smaller than inflation.

I do believe they (the insurance companies) have done a better job at pricing policies upfront in recent years. However, let's not pretend there are no rate increases ever.

Even given the demographic shifts to more older people, LTC sales have been trending down for the last 15+ years.



https://www.sun-sentinel.com/business/f ... story.html

January 30, 2019

Premium increases

Continental General (338 policyholders) — requested 241 percent increase, approved for 87.3 percent hike.

Medico and Ability Insurance companies (1,025 policyholders) — requested 94 percent increase, approved for 81 percent hike.

Constitution Life Insurance Co. (701 policyholders) — requested 120 percent increase, approved for 84.2 percent hike.

Penn Treaty Network America Insurance Co. (5,760 policyholders) — requested 79 percent hike, approved for 48.5 percent.

John Alden Life Insurance Co. (246 policyholders) — requested 95 percent hike, approved for 76.9 percent.

State Farm Mutual Auto Insurance Co. (6,176 policyholders) — requested 34.1 percent increase, approved for 38.5 percent.

Lincoln Benefit Life Insurance Co. (2,120 policyholders) — requested 102 percent hike, approved for 61.2 percent.

Brighthouse Life Insurance Co. (4,699 policyholders) — requested 88.6 percent hike, approved for 56.7 percent.

Continental Casualty Co. (14,435 policyholders) — requested 121.1 percent hike, approved for 80.9 percent.

Allstate Life Insurance Co. (108 policyholders) — requested 90 percent hike, approved for 21.8 percent

Physicians Mutual Insurance Co. (344 policyholders) — requested 69 percent hike, approved for 22.1 percent.

Jackson National Life Insurance Co (750 policyholders) — requested 101.1 percent hike, approved for 77.2 percent.

American General Life Insurance Co. (266 policyholders) — requested 73 percent hike, approved for 52 percent.

Medamerica Life Insurance Co. of Florida (2,314 policyholders) — requested 56.4 percent hike, approved for 43.6 percent.

United of Omaha Life Insurance Co. (6,075 policyholders) — requested 17.9 percent hike, approved for 15.6 percent.

Transamerica Life Insurance Co. (8,376 policyholders) — requested 0 percent hike, approved for 60 percent.

United Teachers Association Insurance Co. (1,645 policyholders) — requested 90.3 percent hike, approved for 55 percent.

Riversource Life Insurance Co. (5,131 policyholders) — requested 42.9 percent hike, approved for 40 percent.

CMFG Life Insurance Co. (2,883 policyholders) — requested 74 percent hike, approved for 38 percent.

Metropolitan Life Insurance Co. (17,764 policyholders) — requested 61 percent hike, approved for 41 percent.
westie
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Re: Is Long Term Care Insurance worth it?

Post by westie »

I'd rather go to Vegas, they don't change the rules during the game.
WoW2012
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Re: Is Long Term Care Insurance worth it?

Post by WoW2012 »

willthrill81 wrote: Tue Feb 12, 2019 4:03 pm
WoW2012 wrote: Tue Feb 12, 2019 4:01 pm
willthrill81 wrote: Tue Feb 12, 2019 3:35 pm
WoW2012 wrote: Tue Feb 12, 2019 3:28 pm
willthrill81 wrote: Tue Feb 12, 2019 3:12 pm

If there is a 50% probability of one person needing LTC, then there's only a 25% probability (.50^2) that both spouses will need it.

The Vanguard chart referred to above indicates that 15% of retirees will incur more than $250k of LTC expenses. So there's only a 2.25% (.15^2) probability that both spouses would incur more than that.

That's NOT what I said.
If there's a 15% chance of one person needing $250K+ of LTC expenses, if you're married, there's a 30% chance of one spouse needing $250K+ of LTC expenses.

Two bullets.
One revolver.
Pull the trigger once.
Those are the odds.
That's incorrect. If there is a 15% chance of an event occurring (i.e. incurring over $250k of LTC expenses), then there's an 85% chance of it not occurring. Applied to two individuals, there is an 72.25% probability (.85^2) that neither experience the event (i.e. a 27.75% probability that at least one will incur over $250k of LTC expenses). We cannot simply add the probabilities as you have done.
My math is correct.
No, it isn't, and I've just shown the proof that it isn't.

You didn't prove anything.
You only did the math for half of the solution.
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willthrill81
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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 »

WoW2012 wrote: Tue Feb 12, 2019 7:52 pm
willthrill81 wrote: Tue Feb 12, 2019 4:03 pm
WoW2012 wrote: Tue Feb 12, 2019 4:01 pm
willthrill81 wrote: Tue Feb 12, 2019 3:35 pm
WoW2012 wrote: Tue Feb 12, 2019 3:28 pm


That's NOT what I said.
If there's a 15% chance of one person needing $250K+ of LTC expenses, if you're married, there's a 30% chance of one spouse needing $250K+ of LTC expenses.

Two bullets.
One revolver.
Pull the trigger once.
Those are the odds.
That's incorrect. If there is a 15% chance of an event occurring (i.e. incurring over $250k of LTC expenses), then there's an 85% chance of it not occurring. Applied to two individuals, there is an 72.25% probability (.85^2) that neither experience the event (i.e. a 27.75% probability that at least one will incur over $250k of LTC expenses). We cannot simply add the probabilities as you have done.
My math is correct.
No, it isn't, and I've just shown the proof that it isn't.

You didn't prove anything.
You only did the math for half of the solution.
If you will not admit that you are incorrect when it can be very easily and mathematically shown that you are, I see no need to continue a discussion with you.

Cheers.
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visualguy
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Re: Is Long Term Care Insurance worth it?

Post by visualguy »

willthrill81 wrote: Tue Feb 12, 2019 5:25 pm Once again, I'm not saying that retirees should have a cushion specifically designated for LTC expenses. There are many good reasons for maintaining a sizable portion of one's starting portfolio throughout retirement, potential LTC expenses being only one of them: longevity (the really big one, especially for a couple), increased costs for essential spending, reduction of SS benefits, poor portfolio performance, reduction of coverage of medical expenses by Medicare, etc.

If we were to remove the need to pay for LTC expenses from that list, would it significantly alter the desired size of the cushion? Perhaps, but I doubt it.
I think we're basically in agreement about needing a reserve. Also in agreement that LTC isn't the only need for a reserve - there are other possible uses for it. The only disagreement is on how significant the impact of LTC is. I think it's more significant than you do, at least in my case where I don't want to burden family.

By the way, this is the reason that I always look at (100/WR)*expenses+reserve as the amount I need for retirement. I have a good handle on the WR and the regular expenses, but not so much the reserve part...
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Ben Mathew
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Re: Is Long Term Care Insurance worth it?

Post by Ben Mathew »

michaeljc70 wrote: Tue Feb 12, 2019 7:28 pm Increases limit the profit. Okay. What if they are already losing money? There is no profit. The fact that most carriers have pulled out of issuing new policies should tell you that this isn't super profitable. Basically, their minimum loss ratio is increased if they raise premiums under stabilized policies. I'm sure there is plenty of profit to the agent selling these policies :shock: .

The average increase since 2001 for policies covered by rate stabilization has been 31%. The increases on policies not covered by rate stabilization was 55% in the same time period. So, depending how you look at it 31% could be viewed as small or big. It is smaller than inflation.

I do believe they (the insurance companies) have done a better job at pricing policies upfront in recent years. However, let's not pretend there are no rate increases ever.

Even given the demographic shifts to more older people, LTC sales have been trending down for the last 15+ years.
Premium increases are painful for sure. But they are not by themselves a reason to avoid LTCi. If the increases are coming from higher costs of providing LTC or higher probabilities of having to use LTC due to longer lives and medical advances, then it can still make sense to buy them. If they thought only 10% of people will need LTC, but 20% turned out to, yes, they'll have to double their premiums. It doesn't mean insurance is a bad deal now. Sure, we'd like it to be cheaper. But it will still be worth it as long as the primary driver is expected LTC costs, as opposed to administrative costs, sales costs, and so on.
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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 »

visualguy wrote: Tue Feb 12, 2019 8:18 pm
willthrill81 wrote: Tue Feb 12, 2019 5:25 pm Once again, I'm not saying that retirees should have a cushion specifically designated for LTC expenses. There are many good reasons for maintaining a sizable portion of one's starting portfolio throughout retirement, potential LTC expenses being only one of them: longevity (the really big one, especially for a couple), increased costs for essential spending, reduction of SS benefits, poor portfolio performance, reduction of coverage of medical expenses by Medicare, etc.

If we were to remove the need to pay for LTC expenses from that list, would it significantly alter the desired size of the cushion? Perhaps, but I doubt it.
I think we're basically in agreement about needing a reserve. Also in agreement that LTC isn't the only need for a reserve - there are other possible uses for it. The only disagreement is on how significant the impact of LTC is. I think it's more significant than you do, at least in my case where I don't want to burden family.
Given your family history, I agree that your risk is probably more significant than for most.
visualguy wrote: Tue Feb 12, 2019 8:18 pmBy the way, this is the reason that I always look at (100/WR)*expenses+reserve as the amount I need for retirement. I have a good handle on the WR and the regular expenses, but not so much the reserve part...
The size of the needed 'reserves' in your equation is very much dependent on the WR used, the flexibility of your withdrawals, and the absolute size of the portfolio. For instance, if you were using something like a 3% WR, which is arguably very close to if not the perpetual withdrawal rate, then depletion of your portfolio due to regular withdrawals is not a concern and, in fact, we would expect the portfolio to grow in real value over time. As such, a significant portion of your portfolio would effectively serve as 'reserves'.

If you have enough flexibility that you can reduce spending in discretionary areas in order to at least partially offset LTC expenses, that certainly helps the situation. For some reason, some seem to shy away from spending their starting capital for LTC expenses, but that's what the portfolio is there for. As long as the surviving spouse will still have adequate resources, whether in the form of income producing assets or an income stream from other sources, spending down a portion of the portfolio for LTC expenses is perfectly plausible.

And, of course, those with portfolios of a large enough absolute size can simply pay for LTC expenses as they arise from their 'normal' withdrawals without ever running into the risk of needing to dip into their starting capital.
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WoW2012
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Re: Is Long Term Care Insurance worth it?

Post by WoW2012 »

willthrill81 wrote: Tue Feb 12, 2019 7:54 pm
WoW2012 wrote: Tue Feb 12, 2019 7:52 pm
willthrill81 wrote: Tue Feb 12, 2019 4:03 pm
WoW2012 wrote: Tue Feb 12, 2019 4:01 pm
willthrill81 wrote: Tue Feb 12, 2019 3:35 pm

That's incorrect. If there is a 15% chance of an event occurring (i.e. incurring over $250k of LTC expenses), then there's an 85% chance of it not occurring. Applied to two individuals, there is an 72.25% probability (.85^2) that neither experience the event (i.e. a 27.75% probability that at least one will incur over $250k of LTC expenses). We cannot simply add the probabilities as you have done.
My math is correct.
No, it isn't, and I've just shown the proof that it isn't.

You didn't prove anything.
You only did the math for half of the solution.
If you will not admit that you are incorrect when it can be very easily and mathematically shown that you are, I see no need to continue a discussion with you.

Cheers.

You only did half the math.
If there's a 15% chance of one person needing $250K+ of LTC expenses, if you're married, there's a 30% chance of at least one spouse needing $250K+ of LTC expenses.

There's a 27.75% chance that one spouse will need at least $250K of LTC expenses.
There's a 2.25% chance that BOTH spouses will need at least $250K of LTC expenses.

When you add those together, there's a 30% chance that at least one spouse will need $250K+ of LTC expenses.

Even if you don't follow the math, it doesn't matter. 27.75%, 30%, 33.33%.
It boils down to this:

If you're married you've got a revolver with 6 chambers.
There are 2 bullets in the chambers.
Every married couple has to spin it and then pull the trigger one time.
If you pull it and it fires you have to write a check for at least $250K.
It's that simple.

My wife and I won't have to pull the trigger.
If I or my wife or both of us needs care, we've got about $900K in LTCi benefits.
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Re: Is Long Term Care Insurance worth it?

Post by FoolMeOnce »

WoW2012 wrote: Tue Feb 12, 2019 8:49 pm
willthrill81 wrote: Tue Feb 12, 2019 7:54 pm
WoW2012 wrote: Tue Feb 12, 2019 7:52 pm
willthrill81 wrote: Tue Feb 12, 2019 4:03 pm
WoW2012 wrote: Tue Feb 12, 2019 4:01 pm

My math is correct.
No, it isn't, and I've just shown the proof that it isn't.

You didn't prove anything.
You only did the math for half of the solution.
If you will not admit that you are incorrect when it can be very easily and mathematically shown that you are, I see no need to continue a discussion with you.

Cheers.

You only did half the math.
If there's a 15% chance of one person needing $250K+ of LTC expenses, if you're married, there's a 30% chance of at least one spouse needing $250K+ of LTC expenses.

There's a 27.75% chance that one spouse will need at least $250K of LTC expenses.
There's a 2.25% chance that BOTH spouses will need at least $250K of LTC expenses.

When you add those together, there's a 30% chance that at least one spouse will need $250K+ of LTC expenses.

Even if you don't follow the math, it doesn't matter. 27.75%, 30%, 33.33%.
willthrill is right. There's a 25.5% chance of exactly one spouse needing LTC and a 2.25% chance of both. 25.5+2.25= 27.75% chance of at least one needing it.

The rest of your point remains sound.
WoW2012
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Re: Is Long Term Care Insurance worth it?

Post by WoW2012 »

.85 x .85 = 72.25% chance of it not happening to either spouse.

100% - 72.25% = 27.75% chance of it happening to one spouse.

.15 x .15 = 2.25% chance of it happening to both spouses.

27.75% + 2.25% = 30.00% chance of it happening to at least one spouse.

This is basic math, people.
visualguy
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Re: Is Long Term Care Insurance worth it?

Post by visualguy »

WoW2012 wrote: Tue Feb 12, 2019 10:42 pm .85 x .85 = 72.25% chance of it not happening to either spouse.

100% - 72.25% = 27.75% chance of it happening to one spouse.

.15 x .15 = 2.25% chance of it happening to both spouses.

27.75% + 2.25% = 30.00% chance of it happening to at least one spouse.

This is basic math, people.
No. 27.75% is the chance of it happening to at least one spouse, which includes the case of it happening to both spouses.
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Re: Is Long Term Care Insurance worth it?

Post by marcopolo »

WoW2012 wrote: Tue Feb 12, 2019 10:42 pm .85 x .85 = 72.25% chance of it not happening to either spouse.

100% - 72.25% = 27.75% chance of it happening to one spouse.

.15 x .15 = 2.25% chance of it happening to both spouses.

27.75% + 2.25% = 30.00% chance of it happening to at least one spouse.

This is basic math, people.
Your first line is correct. 72.25% chance of it not happening to either spouse.
Your second line 27.75% includes the case where it happens to either spouse (including the case where it happens to both).
No need for the 3rd and 4th line.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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willthrill81
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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 »

I just came across this post from 2013 on the White Coat Investor site. Jim's take on LTCi is very similar to my own. He even agrees with me that $2 million in one's portfolio seems like the point at which self-insuring is likely the best route to take.
Long-term care is expensive, but it isn’t like being sued for a million bucks or having a baby in the NICU for 6 months. According to Genworth’s handy calculator, the average cost of a single room in a nursing home in my state is $72K per year, and ranges from $61K in Texas to $125K in New York. $72K is a lot of money, but it isn’t for someone with a couple of million in assets or an income of $150-200K per year. Home health aides, adult day care, and assisted living are even cheaper. Most doctors who follow the advice on this blog shouldn’t have any trouble amassing a nest egg of $2 Million. (20% of a 200K salary x 30 years at 5% real = $2.8 Million). Even if you’re in the nursing home for 10 years ($720K) that’s not going to deplete the nest egg. With insurance, the cheapest option is always to self-insure, as long as you can handle the consequences.
He goes on to state that married couples with less than $2 million who are dependent on the income from their portfolio are the best candidates to actually need LTCi, but he then goes on to describe many of the problems with LTCi that have been discussed repeatedly in this thread.

And if the right LTCi policy were available from a good company, Jim and I would both be interested.
If I were going to buy a LTC policy, I’d want a policy with an unlimited payout of unlimited duration, but with a significant deductible, perhaps even as high as 2-3 years worth of care, or perhaps a $10-20K deductible per year. I’d want to make sure it covered care at home, assisted living, and a skilled nursing facility. Benefits should be indexed to inflation of LTC expenses (not just CPI-U). The goal would be to insure against the financial catastrophe, and self-insure the rest. Unfortunately, I don’t know of a policy on the market that meets these very limited criteria.
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Re: Is Long Term Care Insurance worth it?

Post by visualguy »

These low costs aren't what I'm looking at. I wouldn't want to go to an "average" place. A good one in my area is more like $180K/yr for a private room (maybe $130K/yr for shared), and this isn't the most expensive. If we wanted to go into a CCRC, it would be a lot more expensive when taking into account the entry fee. Also, the cost grows faster than normal inflation. It can definitely make a big dent in the nest egg.
mrc
Posts: 1908
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Re: Is Long Term Care Insurance worth it?

Post by mrc »

WoW2012 wrote: Tue Feb 12, 2019 10:42 pm .85 x .85 = 72.25% chance of it not happening to either spouse.

100% - 72.25% = 27.75% chance of it happening to one spouse.

.15 x .15 = 2.25% chance of it happening to both spouses.

27.75% + 2.25% = 30.00% chance of it happening to at least one spouse.

This is basic math, people.
WoW:

Your addition is correct, but your statistics are not. Adding the two probabilities together is incorrect.

A 15% chance of one person making the high cost claim can be represented by a list of 20 outcomes, three of which are Y(es), and 17 of which are (N)o. 3/20=0.15.

Y Y Y N N N N N N N N N N N N N N N N N

Give two such lists of outcomes, one for each spouse, if either or both require care, that is a "hit" represented by an asterisk.

Here's the brute force permutation below. Count up all lines with an asterisk to determine the chance of a hit. There are 111 lines with the asterisk, of the 400 possible permutations. 111/400 is a 27.75% chance of using the care for either or both spouses.

Hanging onto this any further can only diminish.

Code: Select all

1   Y   Y   *
2   Y   Y   *
3   Y   Y   *
4   Y   N   *
5   Y   N   *
6   Y   N   *
7   Y   N   *
8   Y   N   *
9   Y   N   *
10  Y   N   *
11  Y   N   *
12  Y   N   *
13  Y   N   *
14  Y   N   *
15  Y   N   *
16  Y   N   *
17  Y   N   *
18  Y   N   *
19  Y   N   *
20  Y   N   *
21  Y   Y   *
22  Y   Y   *
23  Y   Y   *
24  Y   N   *
25  Y   N   *
26  Y   N   *
27  Y   N   *
28  Y   N   *
29  Y   N   *
30  Y   N   *
31  Y   N   *
32  Y   N   *
33  Y   N   *
34  Y   N   *
35  Y   N   *
36  Y   N   *
37  Y   N   *
38  Y   N   *
39  Y   N   *
40  Y   N   *
41  Y   Y   *
42  Y   Y   *
43  Y   Y   *
44  Y   N   *
45  Y   N   *
46  Y   N   *
47  Y   N   *
48  Y   N   *
49  Y   N   *
50  Y   N   *
51  Y   N   *
52  Y   N   *
53  Y   N   *
54  Y   N   *
55  Y   N   *
56  Y   N   *
57  Y   N   *
58  Y   N   *
59  Y   N   *
60  Y   N   *
61  N   Y   *
62  N   Y   *
63  N   Y   *
64  N   N  
65  N   N  
66  N   N  
67  N   N  
68  N   N  
69  N   N  
70  N   N  
71  N   N  
72  N   N  
73  N   N  
74  N   N  
75  N   N  
76  N   N  
77  N   N  
78  N   N  
79  N   N  
80  N   N  
81  N   Y   *
82  N   Y   *
83  N   Y   *
84  N   N  
85  N   N  
86  N   N  
87  N   N  
88  N   N  
89  N   N  
90  N   N  
91  N   N  
92  N   N  
93  N   N  
94  N   N  
95  N   N  
96  N   N  
97  N   N  
98  N   N  
99  N   N  
100 N   N  
101 N   Y   *
102 N   Y   *
103 N   Y   *
104 N   N  
105 N   N  
106 N   N  
107 N   N  
108 N   N  
109 N   N  
110 N   N  
111 N   N  
112 N   N  
113 N   N  
114 N   N  
115 N   N  
116 N   N  
117 N   N  
118 N   N  
119 N   N  
120 N   N  
121 N   Y   *
122 N   Y   *
123 N   Y   *
124 N   N  
125 N   N  
126 N   N  
127 N   N  
128 N   N  
129 N   N  
130 N   N  
131 N   N  
132 N   N  
133 N   N  
134 N   N  
135 N   N  
136 N   N  
137 N   N  
138 N   N  
139 N   N  
140 N   N  
141 N   Y   *
142 N   Y   *
143 N   Y   *
144 N   N  
145 N   N  
146 N   N  
147 N   N  
148 N   N  
149 N   N  
150 N   N  
151 N   N  
152 N   N  
153 N   N  
154 N   N  
155 N   N  
156 N   N  
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159 N   N  
160 N   N  
161 N   Y   *
162 N   Y   *
163 N   Y   *
164 N   N  
165 N   N  
166 N   N  
167 N   N  
168 N   N  
169 N   N  
170 N   N  
171 N   N  
172 N   N  
173 N   N  
174 N   N  
175 N   N  
176 N   N  
177 N   N  
178 N   N  
179 N   N  
180 N   N  
181 N   Y   *
182 N   Y   *
183 N   Y   *
184 N   N  
185 N   N  
186 N   N  
187 N   N  
188 N   N  
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190 N   N  
191 N   N  
192 N   N  
193 N   N  
194 N   N  
195 N   N  
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200 N   N  
201 N   Y   *
202 N   Y   *
203 N   Y   *
204 N   N  
205 N   N  
206 N   N  
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208 N   N  
209 N   N  
210 N   N  
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216 N   N  
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221 N   Y   *
222 N   Y   *
223 N   Y   *
224 N   N  
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227 N   N  
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241 N   Y   *
242 N   Y   *
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244 N   N  
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261 N   Y   *
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264 N   N  
265 N   N  
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281 N   Y   *
282 N   Y   *
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284 N   N  
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301 N   Y   *
302 N   Y   *
303 N   Y   *
304 N   N  
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321 N   Y   *
322 N   Y   *
323 N   Y   *
324 N   N  
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328 N   N  
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333 N   N  
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339 N   N  
340 N   N  
341 N   Y   *
342 N   Y   *
343 N   Y   *
344 N   N  
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361 N   Y   *
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364 N   N  
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373 N   N  
374 N   N  
375 N   N  
376 N   N  
377 N   N  
378 N   N  
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380 N   N  
381 N   Y   *
382 N   Y   *
383 N   Y   *
384 N   N  
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389 N   N  
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392 N   N  
393 N   N  
394 N   N  
395 N   N  
396 N   N  
397 N   N  
398 N   N  
399 N   N  
400 N   N  
111 * : 400
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FoolMeOnce
Posts: 1397
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Re: Is Long Term Care Insurance worth it?

Post by FoolMeOnce »

WoW2012 wrote: Tue Feb 12, 2019 10:42 pm .85 x .85 = 72.25% chance of it not happening to either spouse.

100% - 72.25% = 27.75% chance of it happening to one spouse.

.15 x .15 = 2.25% chance of it happening to both spouses.

27.75% + 2.25% = 30.00% chance of it happening to at least one spouse.

This is basic math, people.
".85 x .85 = 72.25% chance of it not happening to either spouse."

... Which leaves a 27.75% chance of it happening to one or both spouses.

You've taken some unwarranted attacks in this thread, but if you are going to sell this stuff, you should get the math right.

See the brute force calculation above. Or think about each having a 15 in 100 chance. There are 10,000 total outcomes (100x100).

Just one needing LTC while the other does not happens (15x85)+(15x85)=2,550 times out of 10,000, or 25.5%.

Both needing LTC happens 15x15=225 times, or 2.25%.

Together, that's 27.75%, leaving the 82.25% of times when neither needs it, as you agree (85x85/10,000).
This is basic math, people.
3funder
Posts: 1814
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Re: Is Long Term Care Insurance worth it?

Post by 3funder »

Silk McCue wrote: Tue Feb 12, 2019 2:19 pm
3funder wrote: Tue Feb 12, 2019 2:14 pm I'm going to say no; the number of issuers has dwindled, as they are paying out more than they had originally anticipated. Less competition --> higher premiums.
The sky is clearly falling. Did you take time to read or scan through the thread? These topics have already been covered and dealt with.

Cheers
Nope; just gave my two cents and moved on to the next thing.
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3funder
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Re: Is Long Term Care Insurance worth it?

Post by 3funder »

WoW2012 wrote: Tue Feb 12, 2019 3:17 pm
3funder wrote: Tue Feb 12, 2019 2:14 pm I'm going to say no; the number of issuers has dwindled, as they are paying out more than they had originally anticipated. Less competition --> higher premiums.
Premiums are higher. That's true.
Not because of a lack of competition, but because of regulations requiring them to have no planned premium increases.
You may be right, but I still can't thing of one positive implication related to the fact that issuers are taking their toys and going home.
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WoW2012
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Re: Is Long Term Care Insurance worth it?

Post by WoW2012 »

Thank you, MRC, for the thorough explanation.
That makes sense.
I guess that's why I got a C in probability.

Please forgive me willthrill for my stupidity.
It happens once in awhile... just ask my wife.
TN_Boy
Posts: 4134
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Re: Is Long Term Care Insurance worth it?

Post by TN_Boy »

visualguy wrote: Wed Feb 13, 2019 1:02 am These low costs aren't what I'm looking at. I wouldn't want to go to an "average" place. A good one in my area is more like $180K/yr for a private room (maybe $130K/yr for shared), and this isn't the most expensive. If we wanted to go into a CCRC, it would be a lot more expensive when taking into account the entry fee. Also, the cost grows faster than normal inflation. It can definitely make a big dent in the nest egg.
You should elaborate a bit on where you live and the type of facility being talked about. In approximate order of increasing cost:

- assisted living
- memory care (often a separate wing of an assisted living facility)
- skilled nursing

In the large medium cost of living area where I live, you can get decent assisted living for 1/3 to 1/2 of what you quote (180k!!). I'm not talking a scary place; I'm talking places I would put a relative, with private quarters. Even moving up to memory care can usually stay under 50% of 180k.

And this obviously matters a lot, since worrying about, for example, five years at 180k, is different than worrying about five years at 75k. Different class of financial problem.
Iorek
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Re: Is Long Term Care Insurance worth it?

Post by Iorek »

I have one relative with LTCI and I know that insurance company was approved for a very substantial rate hike on a 2009 policy, a time when we thought the premium was high but should reflect the realities of the market.

I also looked at the Scott Olson website for MD, where I live, and the date he cites does not seem to match the spreadsheet he posted. That is, maybe I am reading his spreadsheet wrong but it looks to me as though every single company selling LTCI in MD has received a rate increase since the "rate stability regulation" went into effect (with the average looking to be about 20-25%).
marcopolo
Posts: 8445
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Re: Is Long Term Care Insurance worth it?

Post by marcopolo »

Iorek wrote: Fri Feb 15, 2019 10:16 am I have one relative with LTCI and I know that insurance company was approved for a very substantial rate hike on a 2009 policy, a time when we thought the premium was high but should reflect the realities of the market.

I also looked at the Scott Olson website for MD, where I live, and the date he cites does not seem to match the spreadsheet he posted. That is, maybe I am reading his spreadsheet wrong but it looks to me as though every single company selling LTCI in MD has received a rate increase since the "rate stability regulation" went into effect (with the average looking to be about 20-25%).
Despite what some people on this forum seem to be implying about the rate stabilization programs, they have not eliminated the concern about rate increases. Based on this article, they seem to have cut the aggregate increases in about half.

https://www.investmentnews.com/article/ ... e-policies

"The average cumulative rate increase since 2001 on policies covered by the rules is nearly half that for uncovered policies — 31% on policies covered by the rules versus 55% on policies that aren't covered, according to national data aggregated by the LTC Shop, an insurance agency specializing in long-term-care insurance. The median increase has also dropped significantly — to 20% from 46%."
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Re: Is Long Term Care Insurance worth it?

Post by LadyGeek »

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WoW2012
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Re: Is Long Term Care Insurance worth it?

Post by WoW2012 »

Iorek wrote: Fri Feb 15, 2019 10:16 am I have one relative with LTCI and I know that insurance company was approved for a very substantial rate hike on a 2009 policy, a time when we thought the premium was high but should reflect the realities of the market.

I also looked at the Scott Olson website for MD, where I live, and the date he cites does not seem to match the spreadsheet he posted. That is, maybe I am reading his spreadsheet wrong but it looks to me as though every single company selling LTCI in MD has received a rate increase since the "rate stability regulation" went into effect (with the average looking to be about 20-25%).

That website you reference leaves out the most important part of the Rate Stability Regulation. The regulation requires that to get approval to sell a new long-term care insurance policy today, the policy must comply with the following:

It must include ALL prior rate increases in the pricing, and
It must include a pricing “cushion” (about 10%) as extra protection from rate increases.

For example, if the older policy sold by the insurance company cost $1,000 per year for X benefits and that policy had an 80% rate increase, a new policy, purchased today, with X benefits must be priced no less than $1,980. Here’s how that’s calculated:

$1,000 (older policy pricing)
plus 80% (older policy rate increase)
plus 10% (cushion)
= $1,980 (new policy pricing)

The bad news is that policies purchased today are the most expensive policies ever sold.
But, that's the good news, too, for premium stability purposes.
WoW2012
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Re: Is Long Term Care Insurance worth it?

Post by WoW2012 »

marcopolo wrote: Fri Feb 15, 2019 11:18 am
Iorek wrote: Fri Feb 15, 2019 10:16 am I have one relative with LTCI and I know that insurance company was approved for a very substantial rate hike on a 2009 policy, a time when we thought the premium was high but should reflect the realities of the market.

I also looked at the Scott Olson website for MD, where I live, and the date he cites does not seem to match the spreadsheet he posted. That is, maybe I am reading his spreadsheet wrong but it looks to me as though every single company selling LTCI in MD has received a rate increase since the "rate stability regulation" went into effect (with the average looking to be about 20-25%).
Despite what some people on this forum seem to be implying about the rate stabilization programs, they have not eliminated the concern about rate increases. Based on this article, they seem to have cut the aggregate increases in about half.

https://www.investmentnews.com/article/ ... e-policies

"The average cumulative rate increase since 2001 on policies covered by the rules is nearly half that for uncovered policies — 31% on policies covered by the rules versus 55% on policies that aren't covered, according to national data aggregated by the LTC Shop, an insurance agency specializing in long-term-care insurance. The median increase has also dropped significantly — to 20% from 46%."


Are you saying that a one-time, 20% rate increase is too high?
You buy a policy in 2019 for $2,500 per year and in 2034 it goes up to $3,000? And it stays at $3,000 until you die. That sounds pretty stable to me.
michaeljc70
Posts: 10843
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Re: Is Long Term Care Insurance worth it?

Post by michaeljc70 »

WoW2012 wrote: Sun Feb 17, 2019 9:34 am
marcopolo wrote: Fri Feb 15, 2019 11:18 am
Iorek wrote: Fri Feb 15, 2019 10:16 am I have one relative with LTCI and I know that insurance company was approved for a very substantial rate hike on a 2009 policy, a time when we thought the premium was high but should reflect the realities of the market.

I also looked at the Scott Olson website for MD, where I live, and the date he cites does not seem to match the spreadsheet he posted. That is, maybe I am reading his spreadsheet wrong but it looks to me as though every single company selling LTCI in MD has received a rate increase since the "rate stability regulation" went into effect (with the average looking to be about 20-25%).
Despite what some people on this forum seem to be implying about the rate stabilization programs, they have not eliminated the concern about rate increases. Based on this article, they seem to have cut the aggregate increases in about half.

https://www.investmentnews.com/article/ ... e-policies

"The average cumulative rate increase since 2001 on policies covered by the rules is nearly half that for uncovered policies — 31% on policies covered by the rules versus 55% on policies that aren't covered, according to national data aggregated by the LTC Shop, an insurance agency specializing in long-term-care insurance. The median increase has also dropped significantly — to 20% from 46%."


Are you saying that a one-time, 20% rate increase is too high?
You buy a policy in 2019 for $2,500 per year and in 2034 it goes up to $3,000? And it stays at $3,000 until you die. That sounds pretty stable to me.
If you buy in your 50s or early 60s, you might be getting hit with 2 of those. And the average was 31%. The median was 20%. That, as we all know, means half were hit with greater than 20% increases over that period. 20% plus another 20% = 44% increase. So, over around a 34 year period the median could be hit with a 44% increase. The average a 72% increase using current trends.
WoW2012
Posts: 1455
Joined: Sun Dec 23, 2012 10:28 am

Re: Is Long Term Care Insurance worth it?

Post by WoW2012 »

michaeljc70 wrote: Sun Feb 17, 2019 11:40 am
WoW2012 wrote: Sun Feb 17, 2019 9:34 am
marcopolo wrote: Fri Feb 15, 2019 11:18 am
Iorek wrote: Fri Feb 15, 2019 10:16 am I have one relative with LTCI and I know that insurance company was approved for a very substantial rate hike on a 2009 policy, a time when we thought the premium was high but should reflect the realities of the market.

I also looked at the Scott Olson website for MD, where I live, and the date he cites does not seem to match the spreadsheet he posted. That is, maybe I am reading his spreadsheet wrong but it looks to me as though every single company selling LTCI in MD has received a rate increase since the "rate stability regulation" went into effect (with the average looking to be about 20-25%).
Despite what some people on this forum seem to be implying about the rate stabilization programs, they have not eliminated the concern about rate increases. Based on this article, they seem to have cut the aggregate increases in about half.

https://www.investmentnews.com/article/ ... e-policies

"The average cumulative rate increase since 2001 on policies covered by the rules is nearly half that for uncovered policies — 31% on policies covered by the rules versus 55% on policies that aren't covered, according to national data aggregated by the LTC Shop, an insurance agency specializing in long-term-care insurance. The median increase has also dropped significantly — to 20% from 46%."


Are you saying that a one-time, 20% rate increase is too high?
You buy a policy in 2019 for $2,500 per year and in 2034 it goes up to $3,000? And it stays at $3,000 until you die. That sounds pretty stable to me.
If you buy in your 50s or early 60s, you might be getting hit with 2 of those. And the average was 31%. The median was 20%. That, as we all know, means half were hit with greater than 20% increases over that period. 20% plus another 20% = 44% increase. So, over around a 34 year period the median could be hit with a 44% increase. The average a 72% increase using current trends.
That is incorrect. Read the first post I made today.
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