LTCi policy quote: thoughts?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
tenkuky
Posts: 1044
Joined: Sun Dec 14, 2014 4:28 pm

LTCi policy quote: thoughts?

Post by tenkuky » Thu Feb 13, 2020 2:41 pm

I'm merely window shopping now, couple aged 50. Asked for a quote on LTCi.
Likely will really get serious late 50s and around 60 to purchase one.
Question is not about the merits of self-insuring vs. LTCi (read through the threads esp recently), but want the board's opinion on whether these sort of numbers are ballpark.
Understand nothing is certain, incl solvency of insurers, state regs.
What further clarification/info should I provide or get from the agent?
Thanks!

Daily Benefit Amount: Up to $170
Elimination Period : 90 Days
Benefit Period: 3 Years
Benefit Amount (including any Benefit Period Extension rider): $170 x 1,460 (4 Years) = $248,200 each
Premium Summary:
Comprehensive (Facility Care Services plus Home and Community Care Services) $ 1,401.82
1 Year Benefit Period Extension Rider : $ 439.47
3% Compound Inflation Protection Rider $ 1,527.98
Shared Benefit Amount Rider $ 505.40
Waiver of Premium Rider $ 77.49
Total Annual Premium (Lifetime Pay): $ 3,952.16

lessismore22
Posts: 108
Joined: Sun Jul 01, 2018 8:02 pm
Location: USA

Re: LTCi policy quote: thoughts?

Post by lessismore22 » Thu Feb 13, 2020 3:49 pm

tenkuky wrote:
Thu Feb 13, 2020 2:41 pm

Total Annual Premium (Lifetime Pay): $ 3,952.16
Does Lifetime Pay mean the premiums can never change?

hoops777
Posts: 2908
Joined: Sun Apr 10, 2011 12:23 pm

Re: LTCi policy quote: thoughts?

Post by hoops777 » Thu Feb 13, 2020 4:31 pm

I am not an expert,but we took out a Genworth Partnership policy about 5 years ago at 63/65 and it is much better than what you are presenting here.
K.I.S.S........so easy to say so difficult to do.

User avatar
willthrill81
Posts: 17364
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: LTCi policy quote: thoughts?

Post by willthrill81 » Thu Feb 13, 2020 4:36 pm

A maximum annual benefit of ~$62k would not be enough in our area. Nursing homes are $100k or more. And four years of benefits seems too light unless the resulting premium is all you can afford.
“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

User avatar
Artful Dodger
Posts: 897
Joined: Thu Oct 20, 2016 12:56 pm

Re: LTCi policy quote: thoughts?

Post by Artful Dodger » Thu Feb 13, 2020 5:31 pm

So, the one year benefit period extension rider means you are getting a four year benefit? I've never seen that, but maybe their standard is three years, and that's the only way they'll write a four year plan.

The shared care option allows one family member to share the other's benefit, if they go on claim. So, that would mean up to six years, or does it mean eight years with the benefit extension rider?

The daily benefit will not likely cover the full cost of a nursing home. I would check your local area costs right now to see how it would match up. My local area costs were in the $220 daily range, which is about the current daily benefit of my policy. But, there are some parts of the country where costs are closer to $300 per day. Genworth has a benefit calculator which gives you the average costs of nursing home and assisted living care for different states and metro areas. You can check yours out to see how the policy limit compares to current cost estimates. I wouldn't enter into the policy without knowing this information. You can certainly buy a policy that pays a lower amount, then fund the balance of the bills through savings. The 3% inflation rider will continue to increase the benefit over time (though costs will increase as well, possibly more that the 3%).

The life time pay means you will pay for life, or until you go on claim, then premiums will be waived. The standard caveat is the insurance company may increase costs, but can only do so after they have filed documentation with the state's insurance dept which lays out the need for an increase. Ie, claims are running higher than originally projected. The rate increase applies to all policyholders who bought that plan series, and the rate you pay would be the rate they would charge to new entrants who would be the same age as you were when you originally bought your policy. That means you're not singled out, and you're not charged a new rate because you're older.

There is a regular poster who is in the business, and he has mentioned most states have adopted rate stabilization rules which make it harder (though still possible) for companies to raise rates.

Full disclosure. Our policy through Genworth had a 50% increase after nine years. Though, it is still a better policy than what i could buy now, and would cost me much more to buy a new policy at my current age.

lessismore22
Posts: 108
Joined: Sun Jul 01, 2018 8:02 pm
Location: USA

Re: LTCi policy quote: thoughts?

Post by lessismore22 » Thu Feb 13, 2020 5:45 pm

Artful Dodger wrote:
Thu Feb 13, 2020 5:31 pm
Full disclosure. Our policy through Genworth had a 50% increase after nine years. Though, it is still a better policy than what i could buy now, and would cost me much more to buy a new policy at my current age.
This is what makes buying LTCi so difficult these days. When the premium increases come...and they will come...there's no telling how much they'll be. Makes budgeting a real challenge in later years.

Box5phantom
Posts: 18
Joined: Fri Jul 14, 2017 12:32 pm

Re: LTCi policy quote: thoughts?

Post by Box5phantom » Thu Feb 13, 2020 5:49 pm

You want ask the agent whether this a reimbursement, indemnity or disability (cash) plan. You also want to ask whether the plan is none-cancellable or guaranteed renewable ( or simply ask whether rates and benefits are fully guaranteed throughout the life as long as you pay the quoted premiums on schedule). Most likely, this is reimbursement plan with guaranteed renewable (rates/benefits are not fully guaranteed).

Also, ask whether the rates are gender distinct or unisex. It gives you a potential way to arbitrage if you just want to buy a single policy. Female has higher cost than male in general, so unisex rate are good for female. One of the state requires unisex rate.

Ask whether there is an explicit marital discounting for the rate. Some insurers have explicit discounting for that and some do not.

A minor question would be whether there will be retro payment for expenses incurred during the 90 day elimination period.

You have a few years to plan for that, so ask the agent of typical underwriting process to take into your advantage when the time comes. In the meanwhile, know your health, doing some genetic testing. Wait till interest is going up when some insurer would simply assume the new money rates forever to determine the premiums.

Topic Author
tenkuky
Posts: 1044
Joined: Sun Dec 14, 2014 4:28 pm

Re: LTCi policy quote: thoughts?

Post by tenkuky » Thu Feb 13, 2020 6:41 pm

Thank you all!
Fantastic questions and thoughts.
I'll get to work questioning the agent on these, I will look at the calculator and also look at costs in our area.

User avatar
JoeRetire
Posts: 5147
Joined: Tue Jan 16, 2018 2:44 pm

Re: LTCi policy quote: thoughts?

Post by JoeRetire » Thu Feb 13, 2020 6:52 pm

tenkuky wrote:
Thu Feb 13, 2020 2:41 pm
Likely will really get serious late 50s and around 60 to purchase one.
We were advised to purchase ours before we turned 60.
Daily Benefit Amount: Up to $170
Is that enough for your locale? Where I live, that's rather low.
Benefit Amount (including any Benefit Period Extension rider): $170 x 1,460 (4 Years) = $248,200 each
Is it shared? (So that one could use $496,400 if needed)?
Total Annual Premium (Lifetime Pay): $ 3,952.16
That's for two of you? If so, it's reasonable.

Is your state one that has a Partnership Program?
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.

Post Reply