Self Insuring LTC or Buying LTCI?

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iim7V7IM7
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Self Insuring LTC or Buying LTCI?

Post by iim7V7IM7 »

I have a question for those of you who have been through this process before. We have been thinking about our “number” as we approach our anticipated retirement in 2026. We are both age 61 and will be age 65 then. Categorically, when I think about the buckets of retirement money I think about:

• Essential Expenses (what you normally need to live)
• Emergency/Contingency Expenses (like long term care)
• Discretionary Expenses (travel and leisure)
• Legacy Expenses (what we leave behind when we die)

This is a high-level view on how we see funding our retirement at age 65 when we plan on retiring.

----------GOALS------------------------------------ASSETS------------------------------------------LIABILITIES----------------
---------Longevity---------------------------Reliable Income----------------------------80% of Essential Expenses*
---------Longevity--------------------30% of Diversified Portfolio----------------------20% of Essential Expenses**
---------Lifestyle----------------------70% of Diversified Portfolio------------------100% of Discretionary Expenses***
----------Legacy---------------Remainder of Diversified Portfolio/Real Estate----------Minimal (No Children)
---------Liquidity-----------------------1-2 years Expense Reserves----------------------Emergency/Contingencies----------

* Two pensions are not COLA and comprise ½ of “reliable income”. The other ½ is Social Security which does COLA
** 20% of “essential expenses will increase because ½ of “reliable income” has no COLA so the 30% of Diversified Portfolio will increase.
*** I suspect the 70% of the diversified portfolio income going to discretionary will decrease as we get older adding liquidity > 80 years old

I believe we will have at least $2.8M between 401k, IRAs and Roth IRAs. We only need about $800k to generate the $32k/year of income to supplement our “essential expenses”. The other $2M will fund the $80k/year of income to cover the estimated $60k/year of “discretionary expenses”. When I consider this and about $800k in home equity (reverse mortgage?) I am wondering if we should consider self-insuring for

Since we do not have children, our legacy requirements are modest aside from some charities, friends, and estate matters. I have a good handle on the “essential” and “discretionary” buckets but how to handle “emergency” bucket. On the other hand, the fact that we do not have children also ensures that we need to be self sufficient with respect to this.

I am trying to understand what amount of money would be prudent to have in or the ability to re-purpose it to an “emergency” bucket. Is it a reasonable approach to think of your “discretionary expense” money as convertible or your home equity as being convertible as a self-insurance strategy? Since the discretionary money is dedicated to travel and leisure, I imagine that spend would greatly to totally diminish in a LTC situation for one or both of us.

or

Does it make more sense to purchase LTCI policies for both of us? All I hear about these policies is that they are expensive, have long elimination periods and low max payouts (e.g., $500k).
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JoeRetire
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Re: Self Insuring LTC or Buying LTCI?

Post by JoeRetire »

iim7V7IM7 wrote: Thu Jun 30, 2022 2:52 pm I am trying to understand what amount of money would be prudent to have in or the ability to re-purpose it to an “emergency” bucket. Is it a reasonable approach to think of your “discretionary expense” money as convertible or your home equity as being convertible as a self-insurance strategy? Since the discretionary money is dedicated to travel and leisure, I imagine that spend would greatly to totally diminish in a LTC situation for one or both of us.

or

Does it make more sense to purchase LTCI policies for both of us? All I hear about these policies is that they are expensive, have long elimination periods and low max payouts (e.g., $500k).
Seems like it would make more sense to actually price policies first before making a decision, rather than relying on "all I hear about".

Then, you'll be more able to accurately compare the options you have.
This is gonna be my time. Time to taste the fruits and let the juices drip down my chin. I proclaim this: The Summer of George!
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iim7V7IM7
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Re: Self Insuring LTC or Buying LTCI?

Post by iim7V7IM7 »

I am open to suggestions on which companies to solicit quotations from. We are both age 61right now. We live in NJ but will likely live in another state once retired. I am not sure if that influences LTCI quotes at all?
capjak
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Re: Self Insuring LTC or Buying LTCI?

Post by capjak »

I used an independent broker specializing LTC for quotes. I can give the name if you are interested pm me.

We were happy with the information he provided and was no pressure to the point.
valleyrock
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Re: Self Insuring LTC or Buying LTCI?

Post by valleyrock »

A while back I used first used AM Best to learn the credit worthiness of LTC insurance providers. Then I looked for how to get estimates and buy policies from the highest rated companies. But nowadays there are various hybrid policies to check out.... partly LTC insurance, partly life insurance, so a good agent might be the way to go. I ended up deciding to self insure by allocating funds to CDs. There's a lot to learn about all this. Good luck.
JayB
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Re: Self Insuring LTC or Buying LTCI?

Post by JayB »

I recommend pricing out different levels of LTC costs in your locale and any other place you might move to. A good starting place is the Genworth Cost of Care survey at: https://www.genworth.com/aging-and-you/ ... -care.html
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JoeRetire
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Re: Self Insuring LTC or Buying LTCI?

Post by JoeRetire »

iim7V7IM7 wrote: Thu Jun 30, 2022 4:14 pm I am open to suggestions on which companies to solicit quotations from. We are both age 61right now. We live in NJ but will likely live in another state once retired. I am not sure if that influences LTCI quotes at all?
Check out https://www.accuquote.com/
I thought they were good.
This is gonna be my time. Time to taste the fruits and let the juices drip down my chin. I proclaim this: The Summer of George!
Silk McCue
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Re: Self Insuring LTC or Buying LTCI?

Post by Silk McCue »

I have previously recommended Scott Olson at ltcshop.com. He is truly an industry expert and is not tied to any one company. My wife and I got our policies within the past two years through him just as we retired at ages 59/61. I owned a private duty home health agency taking care of the elderly in their homes and know the benefit of these products.

https://www.ltcshop.com/long-term-care- ... cy-finder/

Cheers
hudson
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Re: Self Insuring LTC or Buying LTCI?

Post by hudson »

iim7V7IM7,
I've been reading the LTC/LTCI discussions for years.
I've never read anything that made me want to get a quote.
It doesn't look like there are any great deals. My un-expert opinion is that LTCI is kind of like dental insurance, pet insurance, or auto maintenance contracts.
I'm 74; my plan is to wing it. I don't feel like pouring money into something that I may never need.
Long term care discussions are most useful.
My parents and my wife's parents (all born in the early 1920s) all had LTCI and used LTC. The insurance was a good deal for them. I believe that those good deals have gone away.
Last edited by hudson on Fri Jul 01, 2022 5:26 am, edited 1 time in total.
JayB
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Re: Self Insuring LTC or Buying LTCI?

Post by JayB »

I recommend first pricing out different levels of LTC costs in your locale and any other place you might move to. It's important to ignore national averages because actual costs can vary dramatically from one location to another. A good starting place for costing things is the Genworth Cost of Care survey at: https://www.genworth.com/aging-and-you/ ... -care.html
For projection purposes, we assume that LTC costs will inflate at 5% per year.

Second, it's helpful to model some assumptions about the need for LTC; these don't have to be absolute worst-case assumptions, but they should probably include full nursing home care for each of you for some period of time. For planning purposes, my spouse and I assume that we will each live to 95 and each spend our final two years in a nursing home.

Third, it's good to assess what kind of financial resources you might have by the time LTC is needed. We assume that if one spouse is in a nursing home, the other can live for about 75% of the cost of two people. We also assume that when the second spouse (i.e., widow) enters nursing home care, our home is sold and the proceeds applied to LTC costs.

Only after you have done the above would I recommend getting LTCI quotes. And then comparing the benefit pool at different ages to what you could accumulate on your own -- after taxes -- if you invested the premium amounts conservatively instead of paying them to the insurer. It's a complex analysis, but important to do so that you can make a more rational evaluation of whether or not to self insure.
Chardo
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Re: Self Insuring LTC or Buying LTCI?

Post by Chardo »

iim7V7IM7 wrote: Thu Jun 30, 2022 4:14 pm I am open to suggestions on which companies to solicit quotations from. We are both age 61right now. We live in NJ but will likely live in another state once retired. I am not sure if that influences LTCI quotes at all?
If you live on NJ, and you're considering traditional LTC, Mutual of Omaha is basically the only game in town. Once you have a policy, benefits are valid in any state. But you can only buy a policy in a state where you reside at that time. You should work with an independent agent experienced with LTC. It is not a DIY endeavor.
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Watty
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Re: Self Insuring LTC or Buying LTCI?

Post by Watty »

JayB wrote: Thu Jun 30, 2022 7:23 pm I recommend pricing out different levels of LTC costs in your locale and any other place you might move to. A good starting place is the Genworth Cost of Care survey at: https://www.genworth.com/aging-and-you/ ... -care.html
A few critical points to focus on when looking at the costs of LTC.

1) If only one of you is surviving when LTC is needed then most of your other expenses will stop. For example(in made up numbers) if your normal retirement budget is $80K a year and your LTC costs $100K then the $20K gap is what you need to figure out how to fund.

If only one of you is surviving and they move into assisted living then their costs could even go down if you have a generous retirement budget and don't live in a real expensive area.

Of course if you are both surviving when LTC is needed then your other expenses will not decline as much.

2) "Long term care" is a horrible and misleading term since it groups together some very different things and costs including;

a) senior facility where you might be able to live in an apartment but have some meals in the dining room or participate in social activities and get occasional assistance when you need it.
b) assisted living- see the link above for the much lower cost for that.
c) Skilled nursing facility - nursing home.
d) Memory care unit for dementia

The problem is that you might hear a story where someone's relative was in "long term care" for five years and that sounds really expensive. If you dig deeper what actually happened might be that they were in the less expensive assisted living for 4.5 years and only spent six months in the much more expensive skilled nursing facility.

The statistics for "long term care" are also potentially misleading since they may refer to assisted living or a skilled nursing facility.

Of course it can happen that someone will need to spend an extended amount of time in a skilled nursing facility(or memory care) but you need to separate that risk from the less expensive "long term care" situations like assisted living.
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celia
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Re: Self Insuring LTC or Buying LTCI?

Post by celia »

If either of your employers offer LTCI and you can continue it on your own after you retire, consider going that route. That’s how I got group rates at a good price. They only have to market to the one employer instead of thousands of employees. My employer paid for a base coverage for all employees, but employees could add on more coverage options. The employer collected the premiums for the extra coverage through payroll withholding. Then when I retired, I had to set-up automatic payments through my checking for the entire premium.

I’m still with MetLife since before I retired.
JayB
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Re: Self Insuring LTC or Buying LTCI?

Post by JayB »

Watty wrote: Thu Jun 30, 2022 10:05 pm
JayB wrote: Thu Jun 30, 2022 7:23 pm I recommend pricing out different levels of LTC costs in your locale and any other place you might move to. A good starting place is the Genworth Cost of Care survey at: https://www.genworth.com/aging-and-you/ ... -care.html
Of course it can happen that someone will need to spend an extended amount of time in a skilled nursing facility(or memory care) but you need to separate that risk from the less expensive "long term care" situations like assisted living.
A lot of excellent points. It is also worth noting that in many if not most LTCI policies, premiums are not charged while claims are being paid out for LTC. And for shared care products like my Genworth LTCI policy that offers a pool of 4 years of LTC that can be split between spouses in any way, premiums are also not charged after the death of the first spouse, although the benefit pool and inflation protection remain unchanged. This is essentially a form of life insurance.

One further point: If you buy a LTCI policy, it's worth exploring one with a "partnership" level of protection if available in your state. With Partnership, if one spouse is in a nursing home, the "community" spouse can avoid impoverishment and retain a substantial level of assets even if/when the one in the nursing home eventually qualifies for Medicaid coverage.
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JoeRetire
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Re: Self Insuring LTC or Buying LTCI?

Post by JoeRetire »

hudson wrote: Thu Jun 30, 2022 7:48 pm I'm 74; my plan is to wing it. I don't feel like pouring money into something that I may never need.

My parents and my wife's parents (all born in the early 1920s) all had LTCI and used LTC.
Do you have money set aside for long term care?
Good luck.
This is gonna be my time. Time to taste the fruits and let the juices drip down my chin. I proclaim this: The Summer of George!
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JoeRetire
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Re: Self Insuring LTC or Buying LTCI?

Post by JoeRetire »

Watty wrote: Thu Jun 30, 2022 10:05 pm The problem is that you might hear a story where someone's relative was in "long term care" for five years and that sounds really expensive. If you dig deeper what actually happened might be that they were in the less expensive assisted living for 4.5 years and only spent six months in the much more expensive skilled nursing facility.
Many would consider assisted living to be really expensive, even if it is less expensive than a skilled nursing facility.
This is gonna be my time. Time to taste the fruits and let the juices drip down my chin. I proclaim this: The Summer of George!
hudson
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Re: Self Insuring LTC or Buying LTCI?

Post by hudson »

JoeRetire wrote: Fri Jul 01, 2022 6:43 am
hudson wrote: Thu Jun 30, 2022 7:48 pm I'm 74; my plan is to wing it. I don't feel like pouring money into something that I may never need.

My parents and my wife's parents (all born in the early 1920s) all had LTCI and used LTC.
Do you have money set aside for long term care?
Good luck.
Yes, chances are that I'll be OK. LTC is definitely a concern and a threat.
I don't think that the insurance industry has any good deals that I can warm up to.
The OP doesn't have family that can help; insurance products might help them...not sure.
As everyone knows, the government has programs for folks that run out of resources.
Is LTC insurance the answer?
It seems like most families just muddle-through as long as possible before using a full time facility. Then, a pension and social security (if available) can take a big bite out of the costs.
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JoeRetire
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Re: Self Insuring LTC or Buying LTCI?

Post by JoeRetire »

hudson wrote: Fri Jul 01, 2022 6:59 am
JoeRetire wrote: Fri Jul 01, 2022 6:43 am
hudson wrote: Thu Jun 30, 2022 7:48 pm I'm 74; my plan is to wing it. I don't feel like pouring money into something that I may never need.

My parents and my wife's parents (all born in the early 1920s) all had LTCI and used LTC.
Do you have money set aside for long term care?
Good luck.
Yes, chances are that I'll be OK. LTC is definitely a concern and a threat.
That's good.
I don't think that the insurance industry has any good deals that I can warm up to.
Despite the lack of good deals, some insurance is important, if not necessary.
I have homeowners insurance, auto insurance, and health insurance. I'm not sure any of them are "good deals".
Is LTC insurance the answer?
It is for some. Not for others.

If you have very little in the way of assets, you don't need LTCi. If you have quite a lot in the way of assets, you probably don't need LTCi.
It's the vast middle that should consider LTCi.
This is gonna be my time. Time to taste the fruits and let the juices drip down my chin. I proclaim this: The Summer of George!
hudson
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Re: Self Insuring LTC or Buying LTCI?

Post by hudson »

JoeRetire wrote: Fri Jul 01, 2022 7:17 am
If you have very little in the way of assets, you don't need LTCi. If you have quite a lot in the way of assets, you probably don't need LTCi.
It's the vast middle that should consider LTCi.
I agree!
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iim7V7IM7
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Re: Self Insuring LTC or Buying LTCI?

Post by iim7V7IM7 »

Thanks to all who have responded to my post (much appreciated)

1) My company used to offer LTCI to employees through CNA Insurance but the policy was no longer offered after 2016
2) I will solicit some quotations using some of the resources offered (thanks)
3) I suspect we are in the "middle" but leaning towards the self insured side vs the medicaid side.
4) As I said, we believe that we only need about $800k of our diversified retirement portfolio to supplement the 20% of unfunded essential expenses
5) That said, we probably should prepare for the contingency of a 30% reduction in Social Security benefits. In this contingency scenario we would tap into another $600k to produce income for essential expenses leaving 50% for discretionary and or contingencies like LTC.

I know my 87 year old mother has a great LTCi policy that is also tax deductible (pre-1997), but she currently pays $5,052/year for it. It has very high coverage amounts with inflation protection.
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iim7V7IM7
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Re: Self Insuring LTC or Buying LTCI?

Post by iim7V7IM7 »

Thank you…I spoke with Scott today.
Silk McCue wrote: Thu Jun 30, 2022 7:38 pm I have previously recommended Scott Olson at ltcshop.com. He is truly an industry expert and is not tied to any one company. My wife and I got our policies within the past two years through him just as we retired at ages 59/61. I owned a private duty home health agency taking care of the elderly in their homes and know the benefit of these products.

https://www.ltcshop.com/long-term-care- ... cy-finder/

Cheers
WoW2012
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Re: Self Insuring LTC or Buying LTCI?

Post by WoW2012 »

hudson wrote: Thu Jun 30, 2022 7:48 pm My un-expert opinion is that LTCI is kind of like dental insurance, pet insurance, or auto maintenance contracts.
My mother-in-law's LTCi policy paid out $275,000 of benefits. We saved a couple hundred thousand in capital gains taxes since we did not have to sell her rental properties until after the basis was stepped up.

One of my clients received over $900,000 of benefits from his LTCi policy. He had early onset alzheimer's. He was able to receive all of his care at home (except for the last few months). His policy protected his and his wife's retirement savings and her lifestyle. She didn't have to give up her horse or their beautiful home.

I'm not sure why someone would think an insurance policy like this is like an "auto maintenance contract" or "pet insurance".
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
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Re: Self Insuring LTC or Buying LTCI?

Post by WoW2012 »

Chardo wrote: Thu Jun 30, 2022 8:33 pm
iim7V7IM7 wrote: Thu Jun 30, 2022 4:14 pm I am open to suggestions on which companies to solicit quotations from. We are both age 61right now. We live in NJ but will likely live in another state once retired. I am not sure if that influences LTCI quotes at all?
If you live on NJ, and you're considering traditional LTC, Mutual of Omaha is basically the only game in town.

If you live in New Jersey the following companies sell long-term care insurance policies (alphabetically):

Bankers Life & Casualty
Federal LTCi Program (for federal employees and retirees)
Knights of Columbs
Mutual of Omaha
National Guardian
New York Life
Northwestern Mutual
Thrivent

There are also some very good hybrids worthy of consideration:

Lincoln National
Nationwide
OneAmerica
Securian
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
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Re: Self Insuring LTC or Buying LTCI?

Post by WoW2012 »

hudson wrote: Thu Jun 30, 2022 7:48 pm
I'm 74; my plan is to wing it. I don't feel like pouring money into something that I may never need.
Long term care discussions are most useful.
Should you need care at some point, you won't be the one responsible for caring for you. Please have those discussions now with those family members who will be responsible for you. Everyone needs a plan for long-term care. Not everyone needs or wants long-term care insurance. But everyone needs a plan for long-term care. Have those discussions with your loved ones. Make that plan now.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
hudson
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Re: Self Insuring LTC or Buying LTCI?

Post by hudson »

WoW2012 wrote: Sun Jul 03, 2022 12:25 pm
hudson wrote: Thu Jun 30, 2022 7:48 pm My un-expert opinion is that LTCI is kind of like dental insurance, pet insurance, or auto maintenance contracts.
My mother-in-law's LTCi policy paid out $275,000 of benefits. We saved a couple hundred thousand in capital gains taxes since we did not have to sell her rental properties until after the basis was stepped up.

One of my clients received over $900,000 of benefits from his LTCi policy. He had early onset alzheimer's. He was able to receive all of his care at home (except for the last few months). His policy protected his and his wife's retirement savings and her lifestyle. She didn't have to give up her horse or their beautiful home.

I'm not sure why someone would think an insurance policy like this is like an "auto maintenance contract" or "pet insurance".
Thanks WoW2012!

What would I have to pay to get $900K of coverage. What's the deal?
WoW2012
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Re: Self Insuring LTC or Buying LTCI?

Post by WoW2012 »

hudson wrote: Sun Jul 03, 2022 12:37 pm
Thanks WoW2012!

What would I have to pay to get $900K of coverage. What's the deal?

It depends.
What state do you live in?
How is your health?
To be frank, at your age, I'd probably tell you to hope for the best and not buy LTCi.
Even if you were healthy enough to qualify for a policy, the cost-benefit analysis for a 74-year old is not in your favor.
You're about 15 years too late.

You should focus on having that conversation with your loved ones and make a plan for long-term care rather than researching long-term care insurance.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
hudson
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Re: Self Insuring LTC or Buying LTCI?

Post by hudson »

WoW2012 wrote: Sun Jul 03, 2022 1:09 pm
hudson wrote: Sun Jul 03, 2022 12:37 pm
Thanks WoW2012!

What would I have to pay to get $900K of coverage. What's the deal?

It depends.
What state do you live in?
How is your health?
To be frank, at your age, I'd probably tell you to hope for the best and not buy LTCi.
Even if you were healthy enough to qualify for a policy, the cost-benefit analysis for a 74-year old is not in your favor.
You're about 15 years too late.

You should focus on having that conversation with your loved ones and make a plan for long-term care rather than researching long-term care insurance.
Thanks WoW2012!
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iim7V7IM7
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Re: Self Insuring LTC or Buying LTCI?

Post by iim7V7IM7 »

Yes, we are in NJ, both age 61 in average health. Send me a private message with your contact information about your business. I need to educate myself on tradeoffs of differences in elimination period length, max daily, monthly, life time payouts and differences in inflation rates associated with different options. Also the differences in the credit worthiness of the different options.
WoW2012 wrote: Sun Jul 03, 2022 12:28 pm
Chardo wrote: Thu Jun 30, 2022 8:33 pm
iim7V7IM7 wrote: Thu Jun 30, 2022 4:14 pm I am open to suggestions on which companies to solicit quotations from. We are both age 61right now. We live in NJ but will likely live in another state once retired. I am not sure if that influences LTCI quotes at all?
If you live on NJ, and you're considering traditional LTC, Mutual of Omaha is basically the only game in town.

If you live in New Jersey the following companies sell long-term care insurance policies (alphabetically):

Bankers Life & Casualty
Federal LTCi Program (for federal employees and retirees)
Knights of Columbs
Mutual of Omaha
National Guardian
New York Life
Northwestern Mutual
Thrivent

There are also some very good hybrids worthy of consideration:

Lincoln National
Nationwide
OneAmerica
Securian
FBN2014
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Re: Self Insuring LTC or Buying LTCI?

Post by FBN2014 »

I would look at a return of premium hybrid LTCi policy. You deposit the premium with the insurance company and it leverages the benefits available to you based on current interest rates and your age. If you never need it then your heirs will get all the money back that you deposited.
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Re: Self Insuring LTC or Buying LTCI?

Post by willthrill81 »

iim7V7IM7 wrote: Thu Jun 30, 2022 2:52 pm I believe we will have at least $2.8M between 401k, IRAs and Roth IRAs. We only need about $800k to generate the $32k/year of income to supplement our “essential expenses”. The other $2M will fund the $80k/year of income to cover the estimated $60k/year of “discretionary expenses”. When I consider this and about $800k in home equity (reverse mortgage?) I am wondering if we should consider self-insuring
If you'll have $2m above what you need to fund your essential spending, then it's pretty much a slam dunk that you should self-insure. $2m would fund over a decade of the most intensive forms of LTC in even the priciest areas of the country.
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iim7V7IM7
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Re: Self Insuring LTC or Buying LTCI?

Post by iim7V7IM7 »

That is the theoretical debate that I have been wrestling with. But there may be a difference is having the assets to fund LTC and operationalizing a self insured plan depending on which one of us needs the LTC. There may be some balance is buying a LTCi policy with the right balance of elimination period, benefit period, daily benefit and inflation period to add to our contingency fund.

I also did look at which companies still write LTC policies in my state (there are about a dozen that I could see). I then did look at AM Best and S&P company ratings. These 5 companies had the strongest financial ratings as of Feb 2022:

Company————————AM Best——-S&P
New York Life———————A++——-—AA+
Northwestern Mutual———A++——-—AA+
Lincoln Financial—————-A+————-AA-
Mutual of Omaha—————A+————-AA-
Nationwide————————-A+————--A+
willthrill81 wrote: Mon Jul 04, 2022 9:32 am
iim7V7IM7 wrote: Thu Jun 30, 2022 2:52 pm I believe we will have at least $2.8M between 401k, IRAs and Roth IRAs. We only need about $800k to generate the $32k/year of income to supplement our “essential expenses”. The other $2M will fund the $80k/year of income to cover the estimated $60k/year of “discretionary expenses”. When I consider this and about $800k in home equity (reverse mortgage?) I am wondering if we should consider self-insuring
If you'll have $2m above what you need to fund your essential spending, then it's pretty much a slam dunk that you should self-insure. $2m would fund over a decade of the most intensive forms of LTC in even the priciest areas of the country.
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Re: Self Insuring LTC or Buying LTCI?

Post by willthrill81 »

iim7V7IM7 wrote: Mon Jul 04, 2022 10:10 am That is the theoretical debate that I have been wrestling with. But there may be a difference is having the assets to fund LTC and operationalizing a self insured plan depending on which one of us needs the LTC. There may be some balance is buying a LTCi policy with the right balance of elimination period, benefit period, daily benefit and inflation period to add to our contingency fund.

I also did look at which companies still write LTC policies in my state (there are about a dozen that I could see). I then did look at AM Best and S&P company ratings. These 5 companies had the strongest financial ratings as of Feb 2022:

Company————————AM Best——-S&P
New York Life———————A++——-—AA+
Northwestern Mutual———A++——-—AA+
Lincoln Financial—————-A+————-AA-
Mutual of Omaha—————A+————-AA-
Nationwide————————-A+————--A+
willthrill81 wrote: Mon Jul 04, 2022 9:32 am
iim7V7IM7 wrote: Thu Jun 30, 2022 2:52 pm I believe we will have at least $2.8M between 401k, IRAs and Roth IRAs. We only need about $800k to generate the $32k/year of income to supplement our “essential expenses”. The other $2M will fund the $80k/year of income to cover the estimated $60k/year of “discretionary expenses”. When I consider this and about $800k in home equity (reverse mortgage?) I am wondering if we should consider self-insuring
If you'll have $2m above what you need to fund your essential spending, then it's pretty much a slam dunk that you should self-insure. $2m would fund over a decade of the most intensive forms of LTC in even the priciest areas of the country.
You have virtually no objective need for LTC insurance because you have enough assets to rather easily pay for almost any LTC expense you could encounter. Of course, this requires you to be willing to take on the risk of potentially paying several hundred thousand dollars for LTC if needed. Some are not willing to do so even if they have sufficient assets.

Traditional LTC policies wouldn't help you much anyway. Most of them cap at something like $300k-$500k of benefits. To reduce your risk significantly, you would need a policy with an unlimited benefit, and I'm don't think those are available everywhere.
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smitcat
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Re: Self Insuring LTC or Buying LTCI?

Post by smitcat »

willthrill81 wrote: Mon Jul 04, 2022 10:12 am
iim7V7IM7 wrote: Mon Jul 04, 2022 10:10 am That is the theoretical debate that I have been wrestling with. But there may be a difference is having the assets to fund LTC and operationalizing a self insured plan depending on which one of us needs the LTC. There may be some balance is buying a LTCi policy with the right balance of elimination period, benefit period, daily benefit and inflation period to add to our contingency fund.

I also did look at which companies still write LTC policies in my state (there are about a dozen that I could see). I then did look at AM Best and S&P company ratings. These 5 companies had the strongest financial ratings as of Feb 2022:

Company————————AM Best——-S&P
New York Life———————A++——-—AA+
Northwestern Mutual———A++——-—AA+
Lincoln Financial—————-A+————-AA-
Mutual of Omaha—————A+————-AA-
Nationwide————————-A+————--A+
willthrill81 wrote: Mon Jul 04, 2022 9:32 am
iim7V7IM7 wrote: Thu Jun 30, 2022 2:52 pm I believe we will have at least $2.8M between 401k, IRAs and Roth IRAs. We only need about $800k to generate the $32k/year of income to supplement our “essential expenses”. The other $2M will fund the $80k/year of income to cover the estimated $60k/year of “discretionary expenses”. When I consider this and about $800k in home equity (reverse mortgage?) I am wondering if we should consider self-insuring
If you'll have $2m above what you need to fund your essential spending, then it's pretty much a slam dunk that you should self-insure. $2m would fund over a decade of the most intensive forms of LTC in even the priciest areas of the country.
You have virtually no objective need for LTC insurance because you have enough assets to rather easily pay for almost any LTC expense you could encounter. Of course, this requires you to be willing to take on the risk of potentially paying several hundred thousand dollars for LTC if needed. Some are not willing to do so even if they have sufficient assets.
How much do you reserve for LTC? Where do you 'store' those LTC funds? What is the potential costs of 'storing' those LTC funds?
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Re: Self Insuring LTC or Buying LTCI?

Post by willthrill81 »

smitcat wrote: Mon Jul 04, 2022 10:14 am
willthrill81 wrote: Mon Jul 04, 2022 10:12 am
iim7V7IM7 wrote: Mon Jul 04, 2022 10:10 am That is the theoretical debate that I have been wrestling with. But there may be a difference is having the assets to fund LTC and operationalizing a self insured plan depending on which one of us needs the LTC. There may be some balance is buying a LTCi policy with the right balance of elimination period, benefit period, daily benefit and inflation period to add to our contingency fund.

I also did look at which companies still write LTC policies in my state (there are about a dozen that I could see). I then did look at AM Best and S&P company ratings. These 5 companies had the strongest financial ratings as of Feb 2022:

Company————————AM Best——-S&P
New York Life———————A++——-—AA+
Northwestern Mutual———A++——-—AA+
Lincoln Financial—————-A+————-AA-
Mutual of Omaha—————A+————-AA-
Nationwide————————-A+————--A+
willthrill81 wrote: Mon Jul 04, 2022 9:32 am
iim7V7IM7 wrote: Thu Jun 30, 2022 2:52 pm I believe we will have at least $2.8M between 401k, IRAs and Roth IRAs. We only need about $800k to generate the $32k/year of income to supplement our “essential expenses”. The other $2M will fund the $80k/year of income to cover the estimated $60k/year of “discretionary expenses”. When I consider this and about $800k in home equity (reverse mortgage?) I am wondering if we should consider self-insuring
If you'll have $2m above what you need to fund your essential spending, then it's pretty much a slam dunk that you should self-insure. $2m would fund over a decade of the most intensive forms of LTC in even the priciest areas of the country.
You have virtually no objective need for LTC insurance because you have enough assets to rather easily pay for almost any LTC expense you could encounter. Of course, this requires you to be willing to take on the risk of potentially paying several hundred thousand dollars for LTC if needed. Some are not willing to do so even if they have sufficient assets.
How much do you reserve for LTC? Where do you 'store' those LTC funds? What is the potential costs of 'storing' those LTC funds?
There's no need to 'reserve' funds for LTC. If LTC expenses begin, most to all the discretionary expenses that the OP is already budgeting $80k/year for will cease and be replaced by LTC expenses.
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smitcat
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Re: Self Insuring LTC or Buying LTCI?

Post by smitcat »

willthrill81 wrote: Mon Jul 04, 2022 10:23 am
smitcat wrote: Mon Jul 04, 2022 10:14 am
willthrill81 wrote: Mon Jul 04, 2022 10:12 am
iim7V7IM7 wrote: Mon Jul 04, 2022 10:10 am That is the theoretical debate that I have been wrestling with. But there may be a difference is having the assets to fund LTC and operationalizing a self insured plan depending on which one of us needs the LTC. There may be some balance is buying a LTCi policy with the right balance of elimination period, benefit period, daily benefit and inflation period to add to our contingency fund.

I also did look at which companies still write LTC policies in my state (there are about a dozen that I could see). I then did look at AM Best and S&P company ratings. These 5 companies had the strongest financial ratings as of Feb 2022:

Company————————AM Best——-S&P
New York Life———————A++——-—AA+
Northwestern Mutual———A++——-—AA+
Lincoln Financial—————-A+————-AA-
Mutual of Omaha—————A+————-AA-
Nationwide————————-A+————--A+
willthrill81 wrote: Mon Jul 04, 2022 9:32 am

If you'll have $2m above what you need to fund your essential spending, then it's pretty much a slam dunk that you should self-insure. $2m would fund over a decade of the most intensive forms of LTC in even the priciest areas of the country.
You have virtually no objective need for LTC insurance because you have enough assets to rather easily pay for almost any LTC expense you could encounter. Of course, this requires you to be willing to take on the risk of potentially paying several hundred thousand dollars for LTC if needed. Some are not willing to do so even if they have sufficient assets.
How much do you reserve for LTC? Where do you 'store' those LTC funds? What is the potential costs of 'storing' those LTC funds?
There's no need to 'reserve' funds for LTC. If LTC expenses begin, most to all the discretionary expenses that the OP is already budgeting $80k/year for will cease and be replaced by LTC expenses.
Assign no funds to LTC? Make no changes to AA for consideration of potential higher costs?
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Re: Self Insuring LTC or Buying LTCI?

Post by WoW2012 »

willthrill81 wrote: Mon Jul 04, 2022 10:12 am
Traditional LTC policies wouldn't help you much anyway. Most of them cap at something like $300k-$500k of benefits.

How many times do I have to post that most traditional LTCi policies do NOT cap their policies at "like $300k to $500k" of benefits. That's NOT true.
He can buy whatever he wants to buy.

BLC: couples can share $1.3M of benefits (one third reserved for the healthy spouse)
MOO: couples can share 16 years of benefits (1 year reserved for the healthy spouse)
NGL: couples can share 18 years of benefits (one third reserved for the healthy spouse)
NYL: couples can share 21 years of benefits (one third reserved for the healthy spouse)
TF: couples can share 24 years of benefits (one third reserved for the healthy spouse)
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
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willthrill81
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Re: Self Insuring LTC or Buying LTCI?

Post by willthrill81 »

WoW2012 wrote: Mon Jul 04, 2022 11:18 am
willthrill81 wrote: Mon Jul 04, 2022 10:12 am
Traditional LTC policies wouldn't help you much anyway. Most of them cap at something like $300k-$500k of benefits.

How many times do I have to post that most traditional LTCi policies do NOT cap their policies at "like $300k to $500k" of benefits. That's NOT true.
He can buy whatever he wants to buy.

BLC: couples can share $1.3M of benefits (one third reserved for the healthy spouse)
MOO: couples can share 16 years of benefits (1 year reserved for the healthy spouse)
NGL: couples can share 18 years of benefits (one third reserved for the healthy spouse)
NYL: couples can share 21 years of benefits (one third reserved for the healthy spouse)
TF: couples can share 24 years of benefits (one third reserved for the healthy spouse)
The last time I got an online quote from GenWorth, the max benefits were $300k. Maybe they've changed that now, and I don't doubt you that you can get more by dealing directly with an agent.
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Re: Self Insuring LTC or Buying LTCI?

Post by willthrill81 »

smitcat wrote: Mon Jul 04, 2022 10:40 am
willthrill81 wrote: Mon Jul 04, 2022 10:23 am
smitcat wrote: Mon Jul 04, 2022 10:14 am
willthrill81 wrote: Mon Jul 04, 2022 10:12 am
iim7V7IM7 wrote: Mon Jul 04, 2022 10:10 am That is the theoretical debate that I have been wrestling with. But there may be a difference is having the assets to fund LTC and operationalizing a self insured plan depending on which one of us needs the LTC. There may be some balance is buying a LTCi policy with the right balance of elimination period, benefit period, daily benefit and inflation period to add to our contingency fund.

I also did look at which companies still write LTC policies in my state (there are about a dozen that I could see). I then did look at AM Best and S&P company ratings. These 5 companies had the strongest financial ratings as of Feb 2022:

Company————————AM Best——-S&P
New York Life———————A++——-—AA+
Northwestern Mutual———A++——-—AA+
Lincoln Financial—————-A+————-AA-
Mutual of Omaha—————A+————-AA-
Nationwide————————-A+————--A+

You have virtually no objective need for LTC insurance because you have enough assets to rather easily pay for almost any LTC expense you could encounter. Of course, this requires you to be willing to take on the risk of potentially paying several hundred thousand dollars for LTC if needed. Some are not willing to do so even if they have sufficient assets.
How much do you reserve for LTC? Where do you 'store' those LTC funds? What is the potential costs of 'storing' those LTC funds?
There's no need to 'reserve' funds for LTC. If LTC expenses begin, most to all the discretionary expenses that the OP is already budgeting $80k/year for will cease and be replaced by LTC expenses.
Assign no funds to LTC? Make no changes to AA for consideration of potential higher costs?
Why would you make AA changes in consideration of potential LTC expenses? The OP is already planning on withdrawing $80k from the $2m for discretionary purposes, so substituting that for LTC expenses if they occur doesn't seem like a big deal to me, even if the LTC expenses are greater than that.

Remember that exceptionally few people will ever incur more than $500k (today's dollars) of LTC expenses.
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Re: Self Insuring LTC or Buying LTCI?

Post by smitcat »

willthrill81 wrote: Mon Jul 04, 2022 12:00 pm
smitcat wrote: Mon Jul 04, 2022 10:40 am
willthrill81 wrote: Mon Jul 04, 2022 10:23 am
smitcat wrote: Mon Jul 04, 2022 10:14 am
willthrill81 wrote: Mon Jul 04, 2022 10:12 am

You have virtually no objective need for LTC insurance because you have enough assets to rather easily pay for almost any LTC expense you could encounter. Of course, this requires you to be willing to take on the risk of potentially paying several hundred thousand dollars for LTC if needed. Some are not willing to do so even if they have sufficient assets.
How much do you reserve for LTC? Where do you 'store' those LTC funds? What is the potential costs of 'storing' those LTC funds?
There's no need to 'reserve' funds for LTC. If LTC expenses begin, most to all the discretionary expenses that the OP is already budgeting $80k/year for will cease and be replaced by LTC expenses.
Assign no funds to LTC? Make no changes to AA for consideration of potential higher costs?
Why would you make AA changes in consideration of potential LTC expenses? The OP is already planning on withdrawing $80k from the $2m for discretionary purposes, so substituting that for LTC expenses if they occur doesn't seem like a big deal to me, even if the LTC expenses are greater than that.

Remember that exceptionally few people will ever incur more than $500k (today's dollars) of LTC expenses.
Maybe it is different for the OP - when one of our parents required care the costs for the other parent to live besides LTC was not lower at all.
That would require funds to be available for LTC and appropriately reserved.
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Re: Self Insuring LTC or Buying LTCI?

Post by willthrill81 »

smitcat wrote: Mon Jul 04, 2022 12:03 pm
willthrill81 wrote: Mon Jul 04, 2022 12:00 pm
smitcat wrote: Mon Jul 04, 2022 10:40 am
willthrill81 wrote: Mon Jul 04, 2022 10:23 am
smitcat wrote: Mon Jul 04, 2022 10:14 am

How much do you reserve for LTC? Where do you 'store' those LTC funds? What is the potential costs of 'storing' those LTC funds?
There's no need to 'reserve' funds for LTC. If LTC expenses begin, most to all the discretionary expenses that the OP is already budgeting $80k/year for will cease and be replaced by LTC expenses.
Assign no funds to LTC? Make no changes to AA for consideration of potential higher costs?
Why would you make AA changes in consideration of potential LTC expenses? The OP is already planning on withdrawing $80k from the $2m for discretionary purposes, so substituting that for LTC expenses if they occur doesn't seem like a big deal to me, even if the LTC expenses are greater than that.

Remember that exceptionally few people will ever incur more than $500k (today's dollars) of LTC expenses.
Maybe it is different for the OP - when one of our parents required care the costs for the other parent to live besides LTC was not lower at all.
That would require funds to be available for LTC and appropriately reserved.
First, even that wouldn't require that funds be set aside for LTC. At an advanced age, LTC expenses generally occur for no more than 5 years and usually significantly shorter, resulting in the person's death. After that point, they obviously incur no further expenses beyond a funeral. It's an unusual situation where a widow(er) has exactly the same expenses as the couple did before. I imagine that the lion's share of couples who had $2m but were left with $1.5m after a LTC event that resulted in one spouse's death, for instance, would still be in really good financial shape. But this is something that the OP might want to consider.

Second, I don't think that it's typical for a couple's discretionary expenses to remain the same once one spouse is receiving LTC. Speaking for myself, I don't think that I would be globetrotting if my DW was needing LTC, even if someone else was providing the care.
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Re: Self Insuring LTC or Buying LTCI?

Post by WoW2012 »

There are a lot of problems with self-insuring.

1) The person to decide if the OP should self-insure is his wife. Is she comfortable writing that check every month for OP's care.
2) The person to decide if the spouse should self-insure is the OP. Is he comfortable writing that check every month for his wife's care.

The other problem is longevity.
If OP (or spouse) spends *only* 500k on long term care expenses that results in about $35,000 LESS income every year for as long as the spouse lives.
Losses compound just like gains compound. If she lives ten years longer than he does, that means "self insuring" cost them $850K:
$500K of assets plus
$350K of lost income.

Most plans to self-insure end up becoming "spouse care".

Most of the time, the spouse comes to one of these two conclusions:

a) He probably won't need care for more than a few months. I can take care of him.
OR
b) He might need care for many years. I'd better take care of him.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
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willthrill81
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Re: Self Insuring LTC or Buying LTCI?

Post by willthrill81 »

WoW2012 wrote: Mon Jul 04, 2022 12:44 pm There are a lot of problems with self-insuring.

1) The person to decide if the OP should self-insure is his wife. Is she comfortable writing that check every month for OP's care.
2) The person to decide if the spouse should self-insure is the OP. Is he comfortable writing that check every month for his wife's care.

The other problem is longevity.
If OP (or spouse) spends *only* 500k on long term care expenses that results in about $35,000 LESS income every year for as long as the spouse lives.
Losses compound just like gains compound. If she lives ten years longer than he does, that means "self insuring" cost them $850K:
$500K of assets plus
$350K of lost income.

Most plans to self-insure end up becoming "spouse care".

Most of the time, the spouse comes to one of these two conclusions:

a) He probably won't need care for more than a few months. I can take care of him.
OR
b) He might need care for many years. I'd better take care of him.
As I already noted above, few widow(er)s will spend as much as the couple did before, so it's perfectly plausible to deplete some of one's portfolio for LTC.

If the couple is comfortable 'writing a check' for $80k of discretionary expenses every year, I don't see switching much or all of that to LTC expenses as being a huge deal.

The compounding argument is moot since the premiums paid for LTC insurance will not compound in one's favor going forward.

And, of course, there are a lot of problems with LTC insurance.
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Re: Self Insuring LTC or Buying LTCI?

Post by jebmke »

WoW2012 wrote: Mon Jul 04, 2022 12:44 pm There are a lot of problems with self-insuring.

1) The person to decide if the OP should self-insure is his wife. Is she comfortable writing that check every month for OP's care.
2) The person to decide if the spouse should self-insure is the OP. Is he comfortable writing that check every month for his wife's care.

The other problem is longevity.
If OP (or spouse) spends *only* 500k on long term care expenses that results in about $35,000 LESS income every year for as long as the spouse lives.
Losses compound just like gains compound. If she lives ten years longer than he does, that means "self insuring" cost them $850K:
$500K of assets plus
$350K of lost income.

Most plans to self-insure end up becoming "spouse care".

Most of the time, the spouse comes to one of these two conclusions:

a) He probably won't need care for more than a few months. I can take care of him.
OR
b) He might need care for many years. I'd better take care of him.
I have not looked into LTCI; what is the cost of the insurance portion -- that is, on average, how much does the insurance company take to accept the risk and administer the policy vs. the cost of the benefit paid to the provider of LTC?
When you discover that you are riding a dead horse, the best strategy is to dismount.
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Re: Self Insuring LTC or Buying LTCI?

Post by WoW2012 »

willthrill81 wrote: Mon Jul 04, 2022 1:35 pm
WoW2012 wrote: Mon Jul 04, 2022 12:44 pm There are a lot of problems with self-insuring.

1) The person to decide if the OP should self-insure is his wife. Is she comfortable writing that check every month for OP's care.
2) The person to decide if the spouse should self-insure is the OP. Is he comfortable writing that check every month for his wife's care.

The other problem is longevity.
If OP (or spouse) spends *only* 500k on long term care expenses that results in about $35,000 LESS income every year for as long as the spouse lives.
Losses compound just like gains compound. If she lives ten years longer than he does, that means "self insuring" cost them $850K:
$500K of assets plus
$350K of lost income.

Most plans to self-insure end up becoming "spouse care".

Most of the time, the spouse comes to one of these two conclusions:

a) He probably won't need care for more than a few months. I can take care of him.
OR
b) He might need care for many years. I'd better take care of him.
As I already noted above, few widow(er)s will spend as much as the couple did before, so it's perfectly plausible to deplete some of one's portfolio for LTC.

If the couple is comfortable 'writing a check' for $80k of discretionary expenses every year, I don't see switching much or all of that to LTC expenses as being a huge deal.

The compounding argument is moot since the premiums paid for LTC insurance will not compound in one's favor going forward.

And, of course, there are a lot of problems with LTC insurance.

You avoided the most important point:

Most plans to self-insure end up becoming "spouse care".
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
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Re: Self Insuring LTC or Buying LTCI?

Post by WoW2012 »

jebmke wrote: Mon Jul 04, 2022 1:42 pm

I have not looked into LTCI; what is the cost of the insurance portion -- that is, on average, how much does the insurance company take to accept the risk and administer the policy vs. the cost of the benefit paid to the provider of LTC?
it varies by age at time of purchase, health history, marital status, choice of benefits, state of residence, etc...
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
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Re: Self Insuring LTC or Buying LTCI?

Post by jebmke »

WoW2012 wrote: Mon Jul 04, 2022 1:45 pm Most plans to self-insure end up becoming "spouse care".
Do you have data to support this assertion? I really have no idea one way or another.
When you discover that you are riding a dead horse, the best strategy is to dismount.
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Re: Self Insuring LTC or Buying LTCI?

Post by Rex66 »

WoW2012 wrote: Mon Jul 04, 2022 12:44 pm There are a lot of problems with self-insuring.

1) The person to decide if the OP should self-insure is his wife. Is she comfortable writing that check every month for OP's care.
2) The person to decide if the spouse should self-insure is the OP. Is he comfortable writing that check every month for his wife's care.

The other problem is longevity.
If OP (or spouse) spends *only* 500k on long term care expenses that results in about $35,000 LESS income every year for as long as the spouse lives.
Losses compound just like gains compound. If she lives ten years longer than he does, that means "self insuring" cost them $850K:
$500K of assets plus
$350K of lost income.

Most plans to self-insure end up becoming "spouse care".

Most of the time, the spouse comes to one of these two conclusions:

a) He probably won't need care for more than a few months. I can take care of him.
OR
b) He might need care for many years. I'd better take care of him.
The comfortable writing the check part so it favors ltci is bogus. People have the same issue paying the premium. At least once a week someone posts should I keep paying.
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Re: Self Insuring LTC or Buying LTCI?

Post by jebmke »

WoW2012 wrote: Mon Jul 04, 2022 1:46 pm
jebmke wrote: Mon Jul 04, 2022 1:42 pm

I have not looked into LTCI; what is the cost of the insurance portion -- that is, on average, how much does the insurance company take to accept the risk and administer the policy vs. the cost of the benefit paid to the provider of LTC?
it varies by age at time of purchase, health history, marital status, choice of benefits, state of residence, etc...
But there must be an industry average for an average policy holder. Note, I wasn't assuming you knew but thought perhaps you did.

Insurance of any kind carries a cost, whether you are buying an annuity (longevity insurance), life insurance (the other case) etc. I don't purchase either of these because I don't need them -- I don't know the cost of those either.
When you discover that you are riding a dead horse, the best strategy is to dismount.
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Re: Self Insuring LTC or Buying LTCI?

Post by willthrill81 »

WoW2012 wrote: Mon Jul 04, 2022 1:45 pm
willthrill81 wrote: Mon Jul 04, 2022 1:35 pm
WoW2012 wrote: Mon Jul 04, 2022 12:44 pm There are a lot of problems with self-insuring.

1) The person to decide if the OP should self-insure is his wife. Is she comfortable writing that check every month for OP's care.
2) The person to decide if the spouse should self-insure is the OP. Is he comfortable writing that check every month for his wife's care.

The other problem is longevity.
If OP (or spouse) spends *only* 500k on long term care expenses that results in about $35,000 LESS income every year for as long as the spouse lives.
Losses compound just like gains compound. If she lives ten years longer than he does, that means "self insuring" cost them $850K:
$500K of assets plus
$350K of lost income.

Most plans to self-insure end up becoming "spouse care".

Most of the time, the spouse comes to one of these two conclusions:

a) He probably won't need care for more than a few months. I can take care of him.
OR
b) He might need care for many years. I'd better take care of him.
As I already noted above, few widow(er)s will spend as much as the couple did before, so it's perfectly plausible to deplete some of one's portfolio for LTC.

If the couple is comfortable 'writing a check' for $80k of discretionary expenses every year, I don't see switching much or all of that to LTC expenses as being a huge deal.

The compounding argument is moot since the premiums paid for LTC insurance will not compound in one's favor going forward.

And, of course, there are a lot of problems with LTC insurance.

You avoided the most important point:

Most plans to self-insure end up becoming "spouse care".
First, I'd like to see data on that, and not just numbers on how much LTC is provided for by a family member but for people who have legitimate plans and means to self-insure and wind up going the 'spousal care' route instead.

Second, those with $2m can afford to pay for LTC; whether they actually choose to do so later is a different issue. Sadly, there have been many stories of folks paying for LTC and receiving very poor care. I imagine that knowing that is a possibility has persuaded many to go the 'spousal care' route.
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willthrill81
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Re: Self Insuring LTC or Buying LTCI?

Post by willthrill81 »

Rex66 wrote: Mon Jul 04, 2022 1:47 pm
WoW2012 wrote: Mon Jul 04, 2022 12:44 pm There are a lot of problems with self-insuring.

1) The person to decide if the OP should self-insure is his wife. Is she comfortable writing that check every month for OP's care.
2) The person to decide if the spouse should self-insure is the OP. Is he comfortable writing that check every month for his wife's care.

The other problem is longevity.
If OP (or spouse) spends *only* 500k on long term care expenses that results in about $35,000 LESS income every year for as long as the spouse lives.
Losses compound just like gains compound. If she lives ten years longer than he does, that means "self insuring" cost them $850K:
$500K of assets plus
$350K of lost income.

Most plans to self-insure end up becoming "spouse care".

Most of the time, the spouse comes to one of these two conclusions:

a) He probably won't need care for more than a few months. I can take care of him.
OR
b) He might need care for many years. I'd better take care of him.
The comfortable writing the check part so it favors ltci is bogus. People have the same issue paying the premium. At least once a week someone posts should I keep paying.
Indeed. Premiums for LTCi with high or unlimited benefits are usually considered by most to be very expensive. Paying those premiums for decades is far from easy for many.
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