Should I keep my Long Term Care Insurance

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finance_learner
Posts: 37
Joined: Mon Aug 14, 2017 12:44 am

Should I keep my Long Term Care Insurance

Post by finance_learner »

Hello,

I'm trying to consider whether I keep my LTC insurance that I currently have. When thinking about that, is it purely a matter of what I need to put into premiums vs what the expected pay out would be?

A few details about my situation:

1. I currently have the Federal government’s FLTCIP with their cheapest plan.
2. My monthly premium is $20.
3. The maximum benefit is capped at 100K.
4. I expect to be ~30 years out from needing LTC
5. I expect to have enough money to fully self-fund LTC when I actually need it, so I don't HAVE to have LTC insurance
6. If I invest the premium for 30 years, projecting annual interest rate of 7%, I would only get 25K.
7. Therefore the max payout to forgone income is 4:1, which seems nice to me.

I know very well that 100K won’t be much, but the decision is whether I keep the existing insurance or get rid of it. So I think I keep it and for the remainder of any LTC I would need, I will likely self-insure rather than get another plan.

Is the decision as simple as that? Is there anything else I need to consider?

Many Thanks!
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cheese_breath
Posts: 12147
Joined: Wed Sep 14, 2011 7:08 pm

Re: Should I keep my Long Term Care Insurance

Post by cheese_breath »

Assuming #4 plays out as you hope, then #s 5, 6, and 7 should be ok. But what if you need LTC next year? Year after that? There are other possibilities than old age that might involve need for LTC. Injuries from accidents, roberies, muggings, etc.? Undetected serious medical issues?

Nobody knows the unknown, but the purpose of insurance is to protect you from the unknown.

So I can't give advice, just something to ponder before making your decision.

edit: Another thot to ponder. If needed, $100k will go a lot further toward paying your expenses today than it will 30 years from now.
The surest way to know the future is when it becomes the past.
Harmanic
Posts: 1893
Joined: Mon Apr 04, 2022 10:19 am

Re: Should I keep my Long Term Care Insurance

Post by Harmanic »

finance_learner wrote: Wed Oct 30, 2024 11:51 pm FLTCIP
Suggest reading this thread. viewtopic.php?t=292856
The question isn't at what age I want to retire, it's at what income. | - George Foreman
Ependytis
Posts: 673
Joined: Mon Oct 17, 2016 11:10 am

Re: Should I keep my Long Term Care Insurance

Post by Ependytis »

Regarding keeping your long-term insurance, I had two questions. First, do you know if the premium is capped? Second, what are the chances of you needing long-term care? If the premium is not capped, your calculation may be off. Also, if you don't use the long-term care, all the money that you spent would be wasted.
WoW2012
Posts: 1504
Joined: Sun Dec 23, 2012 10:28 am

Re: Should I keep my Long Term Care Insurance

Post by WoW2012 »

Ependytis wrote: Thu Oct 31, 2024 6:52 am Regarding keeping your long-term insurance, I had two questions. First, do you know if the premium is capped? Second, what are the chances of you needing long-term care? If the premium is not capped, your calculation may be off. Also, if you don't use the long-term care, all the money that you spent would be wasted.
Why is long-term care insurance the only type of insurance where people make the statement, "if you don't use it, you wasted all that money?" It boggles the mind. Aren't bogleheads independent thinkers who don't just follow the rest of the herd?
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
smitcat
Posts: 14634
Joined: Mon Nov 07, 2016 9:51 am

Re: Should I keep my Long Term Care Insurance

Post by smitcat »

finance_learner wrote: Wed Oct 30, 2024 11:51 pm Hello,

I'm trying to consider whether I keep my LTC insurance that I currently have. When thinking about that, is it purely a matter of what I need to put into premiums vs what the expected pay out would be?

A few details about my situation:

1. I currently have the Federal government’s FLTCIP with their cheapest plan.
2. My monthly premium is $20.
3. The maximum benefit is capped at 100K.
4. I expect to be ~30 years out from needing LTC
5. I expect to have enough money to fully self-fund LTC when I actually need it, so I don't HAVE to have LTC insurance
6. If I invest the premium for 30 years, projecting annual interest rate of 7%, I would only get 25K.
7. Therefore the max payout to forgone income is 4:1, which seems nice to me.

I know very well that 100K won’t be much, but the decision is whether I keep the existing insurance or get rid of it. So I think I keep it and for the remainder of any LTC I would need, I will likely self-insure rather than get another plan.

Is the decision as simple as that? Is there anything else I need to consider?

Many Thanks!
A few thoughts...
- is that $100K max cap adjusted for inflation over time, if yes what amount.
- are your premiums deductible
- are there daily or yearly limits
- do the terms include home care and what do they use for qualifying events
crefwatch
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Joined: Sun Apr 15, 2007 1:07 pm
Location: New Jersey, USA
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Re: Should I keep my Long Term Care Insurance

Post by crefwatch »

Does the plan cover at-home care? 90-day waiting period? "Qualified"/Approved payees only? How many ADL's? Costs in your area? Will they resist a payout? How certain is your self-financing?
mikejuss
Posts: 3250
Joined: Tue Jun 23, 2020 1:36 pm

Re: Should I keep my Long Term Care Insurance

Post by mikejuss »

WoW2012 wrote: Wed Nov 06, 2024 1:26 pm
Ependytis wrote: Thu Oct 31, 2024 6:52 am Regarding keeping your long-term insurance, I had two questions. First, do you know if the premium is capped? Second, what are the chances of you needing long-term care? If the premium is not capped, your calculation may be off. Also, if you don't use the long-term care, all the money that you spent would be wasted.
Why is long-term care insurance the only type of insurance where people make the statement, "if you don't use it, you wasted all that money?" It boggles the mind. Aren't bogleheads independent thinkers who don't just follow the rest of the herd?
Says the "licensed insurance professional" who is "certified as a long-term care insurance specialist"?
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
WoW2012
Posts: 1504
Joined: Sun Dec 23, 2012 10:28 am

Re: Should I keep my Long Term Care Insurance

Post by WoW2012 »

mikejuss wrote: Thu Nov 07, 2024 6:55 am
WoW2012 wrote: Wed Nov 06, 2024 1:26 pm

Why is long-term care insurance the only type of insurance where people make the statement, "if you don't use it, you wasted all that money?" It boggles the mind. Aren't bogleheads independent thinkers who don't just follow the rest of the herd?
Says the "licensed insurance professional" who is "certified as a long-term care insurance specialist"?
Do you have a substantive answer to my question or just ad hominem?
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
j.click
Posts: 222
Joined: Thu Jul 24, 2014 6:11 pm

Re: Should I keep my Long Term Care Insurance

Post by j.click »

We look for certainty in the investing world of ambiguity and probability. Should I purchase LTCi? Should I keep my LTCi? Should I invest in international? How much cash should I hold? How long should I own my car? Answer to all: it depends and what works for one may not be appropriate for another. Charley Ellis had a good discussion about this at one point....
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