Is Long Term Care Insurance worth it?

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seychellois_lib
Posts: 158
Joined: Tue Mar 25, 2014 12:05 am

Re: Is Long Term Care Insurance worth it?

Post by seychellois_lib » Sun Feb 10, 2019 6:54 pm

[/quote]
Good points.
DW and I are reading this thread with Earnest.

MIL is age 94 with dementia and in home care 24/7. Average 8-9k/month!
Fortunately, FIL (now passed) had a terrific retirement portfolio that covers, barely, the expenses.

I suspect that many have neither a substantial retirement portfolio nor a LTC policy to cover these things.
What are the options otherwise?
How to fund LTC without a substantial portfolio?

j
[/quote]

I applied for LTCi through Mutual of Omaha. I did not like the premium ($4800.00 annually for $200K with 2% inflation adjust covering SO or myself) so I passed. I am segregating the equivalent premium and investing within an account designated for LTC. I'll inflation adjust this contribution as time goes on. In 10 years I have $80K assuming 7%. Maybe enough for a year of LTC. It isn't pretty but the insurance alternative didn't look much prettier.

a couple of thoughts.

1. Premiums will almost certainly increase. IMO insurance companies are very likely to be able to increase rates as necessary to cover risk. I, personally, do not believe LTCi companies have their future risks covered in light of heath care industry inflation. I suspect LTCi companies will seek relief in future despite the best efforts of their actuaries. I suspect the state will grant these requests. The company would, of course, not get approval to increase rates solely to increase profit. I doubt may insurance companies attempt this.

2. Some posters here recommend "shopping" for a policy. This may be OK for younger folks but as a person in his 60s, I can telly you, shopping is a huge hassle. LTCi companies want to perform at least an in home interview with a consultant who will perform cognitive testing among many other health questions and review of personal medical records which I had to release to the insurer. I totally understand why, but going through this rigmarole with multiple vendors offering multiple products could be a major pain. My thought would be to know exactly what product you want before you even start the shopping process. In is in no way as easy as shopping for car insurance or, for that matter, life insurance.

3. When I was interviewed, I was warned having a Mother or Father with diagnosed Alz (dementia) was a solid disqualifier for insurance. Emphasis on "diagnosed". Bear this in mind as you ponder options. Not sure if this would be true for all vendors but apparently is for MOO. BTW, I am pretty sure the interviewer was not supposed to share this factoid with me.

seychellois_lib
Posts: 158
Joined: Tue Mar 25, 2014 12:05 am

Re: Is Long Term Care Insurance worth it?

Post by seychellois_lib » Sun Feb 10, 2019 7:07 pm

willthrill81 wrote:
Wed Feb 06, 2019 9:43 pm
WoW2012 wrote:
Tue Feb 05, 2019 11:37 am
marcopolo wrote:
Tue Feb 05, 2019 7:38 am
WoW2012 wrote:
Tue Feb 05, 2019 12:21 am
marcopolo wrote:
Mon Feb 04, 2019 9:43 am


In my mind this is the crux of the problem. The policies end up being very expensive because they cover close to from day 1. If you look at the statistics, most people who need LTC, only need it for relatively short periods of time. But, what you hear from people pushing the policies is the stories of long drawn out stays. Which is odd, since most policies would not cover those cases anyway. What I would be very interested in is a policy with something like 5 year deductible (i can easily cover that), but protection against the rare long stays. Such a policy should be much more affordable because very few people would use the benefits, like how insurance is supposed to work. Instead what the industry offers us is essentially a pre-paid scheme with limited benefits.

Just out of curiosity, how much do you think it would cost for you to self-fund 5 years of long-term care? And, which assets would you liquidate first?
Probably around $600k. Out of my tIRA, and some of it would tax deductible.

So, you're willing to lose $600K from your IRA to pay for long-term care.
But you're not willing to spend $2,800 per year on a long-term care policy that would have $600,000 of benefits. You could allocate only 46 basis points from that IRA every year to own a good LTCi policy.
If he has the funds and is willing and able to part with them if needed, then mathematically, he's better off to self-insure.
$2800 annually for $600K LTC cover? How old are you assuming the customer is and which insurance company offers $600K LTC for $2800 annually? I might be interested in a deal like that.

WoW2012
Posts: 416
Joined: Sun Dec 23, 2012 11:28 am

Re: Is Long Term Care Insurance worth it?

Post by WoW2012 » Sun Feb 10, 2019 7:16 pm

seychellois_lib wrote:
Sun Feb 10, 2019 6:54 pm


I applied for LTCi through Mutual of Omaha. I did not like the premium ($4800.00 annually for $200K with 2% inflation adjust covering SO or myself) so I passed. I am segregating the equivalent premium and investing within an account designated for LTC. I'll inflation adjust this contribution as time goes on. In 10 years I have $80K assuming 7%. Maybe enough for a year of LTC. It isn't pretty but the insurance alternative didn't look much prettier.

a couple of thoughts.

1. Premiums will almost certainly increase. IMO insurance companies are very likely to be able to increase rates as necessary to cover risk. I, personally, do not believe LTCi companies have their future risks covered in light of heath care industry inflation. I suspect LTCi companies will seek relief in future despite the best efforts of their actuaries. I suspect the state will grant these requests. The company would, of course, not get approval to increase rates solely to increase profit. I doubt may insurance companies attempt this.

2. Some posters here recommend "shopping" for a policy. This may be OK for younger folks but as a person in his 60s, I can telly you, shopping is a huge hassle. LTCi companies want to perform at least an in home interview with a consultant who will perform cognitive testing among many other health questions and review of personal medical records which I had to release to the insurer. I totally understand why, but going through this rigmarole with multiple vendors offering multiple products could be a major pain. My thought would be to know exactly what product you want before you even start the shopping process.

3. When I was interviewed, I was warned having a Mother or Father with diagnosed Alz (dementia) was a solid disqualifier for insurance. Emphasis on "diagnosed". Bear this in mind as you ponder options, not sure if this would be true for all vendors.
Long-term care insurance premiums are NOT tied to the cost of healthcare. Regulations, now in effect in 41 states, require LTC insurers to DECREASE their profits if they seek a rate increase on any policy sold under the Rate Stability Regulation.

"Shopping" for long-term care insurance does NOT mean applying to multiple insurance companies. It means getting quotes from a variety of companies to find which company offers the best value and applying to that particular company only. This way you only have to do one "health interview". (Utilizing the services of a qualified LTC insurance specialist makes the comparison of policies a lot easier than using a "generalist".)

If BOTH parents had Alzheimers/dementia some insurers will deny that application. There is no long-term care insurer that will deny an application because one of your parents had Alzheimers/dementia.

When a couple reaches their late sixties it's probably not a good idea to buy long-term care insurance. The rates are high simply based upon your ages and you probably have health problems that make the rates even higher. Although I generally hate annuities, there's a couple of decent long-term care annuities that, when designed properly, can be a sensible way to protect against LTC expenses.

WoW2012
Posts: 416
Joined: Sun Dec 23, 2012 11:28 am

Re: Is Long Term Care Insurance worth it?

Post by WoW2012 » Sun Feb 10, 2019 7:17 pm

seychellois_lib wrote:
Sun Feb 10, 2019 7:07 pm
willthrill81 wrote:
Wed Feb 06, 2019 9:43 pm
WoW2012 wrote:
Tue Feb 05, 2019 11:37 am
marcopolo wrote:
Tue Feb 05, 2019 7:38 am
WoW2012 wrote:
Tue Feb 05, 2019 12:21 am



Just out of curiosity, how much do you think it would cost for you to self-fund 5 years of long-term care? And, which assets would you liquidate first?
Probably around $600k. Out of my tIRA, and some of it would tax deductible.

So, you're willing to lose $600K from your IRA to pay for long-term care.
But you're not willing to spend $2,800 per year on a long-term care policy that would have $600,000 of benefits. You could allocate only 46 basis points from that IRA every year to own a good LTCi policy.
If he has the funds and is willing and able to part with them if needed, then mathematically, he's better off to self-insure.
$2800 annually for $600K LTC cover? How old are you assuming the customer is and which insurance company offers $600K LTC for $2800 annually? I might be interested in a deal like that.
A policy like that is not available for someone your and your spouse's ages.

WoW2012
Posts: 416
Joined: Sun Dec 23, 2012 11:28 am

Re: Is Long Term Care Insurance worth it?

Post by WoW2012 » Sun Feb 10, 2019 7:18 pm

willthrill81 wrote:
Wed Feb 06, 2019 9:43 pm
WoW2012 wrote:
Tue Feb 05, 2019 11:37 am
marcopolo wrote:
Tue Feb 05, 2019 7:38 am
WoW2012 wrote:
Tue Feb 05, 2019 12:21 am
marcopolo wrote:
Mon Feb 04, 2019 9:43 am


In my mind this is the crux of the problem. The policies end up being very expensive because they cover close to from day 1. If you look at the statistics, most people who need LTC, only need it for relatively short periods of time. But, what you hear from people pushing the policies is the stories of long drawn out stays. Which is odd, since most policies would not cover those cases anyway. What I would be very interested in is a policy with something like 5 year deductible (i can easily cover that), but protection against the rare long stays. Such a policy should be much more affordable because very few people would use the benefits, like how insurance is supposed to work. Instead what the industry offers us is essentially a pre-paid scheme with limited benefits.

Just out of curiosity, how much do you think it would cost for you to self-fund 5 years of long-term care? And, which assets would you liquidate first?
Probably around $600k. Out of my tIRA, and some of it would tax deductible.

So, you're willing to lose $600K from your IRA to pay for long-term care.
But you're not willing to spend $2,800 per year on a long-term care policy that would have $600,000 of benefits. You could allocate only 46 basis points from that IRA every year to own a good LTCi policy.
If he has the funds and is willing and able to part with them if needed, then mathematically, he's better off to self-insure.

Will, can you run through the math you used to conclude that he's better off to self-insure?

seychellois_lib
Posts: 158
Joined: Tue Mar 25, 2014 12:05 am

Re: Is Long Term Care Insurance worth it?

Post by seychellois_lib » Sun Feb 10, 2019 7:47 pm

WoW2012 wrote:
Sun Feb 10, 2019 7:16 pm
seychellois_lib wrote:
Sun Feb 10, 2019 6:54 pm


I applied for LTCi through Mutual of Omaha. I did not like the premium ($4800.00 annually for $200K with 2% inflation adjust covering SO or myself) so I passed. I am segregating the equivalent premium and investing within an account designated for LTC. I'll inflation adjust this contribution as time goes on. In 10 years I have $80K assuming 7%. Maybe enough for a year of LTC. It isn't pretty but the insurance alternative didn't look much prettier.

a couple of thoughts.

1. Premiums will almost certainly increase. IMO insurance companies are very likely to be able to increase rates as necessary to cover risk. I, personally, do not believe LTCi companies have their future risks covered in light of heath care industry inflation. I suspect LTCi companies will seek relief in future despite the best efforts of their actuaries. I suspect the state will grant these requests. The company would, of course, not get approval to increase rates solely to increase profit. I doubt may insurance companies attempt this.

2. Some posters here recommend "shopping" for a policy. This may be OK for younger folks but as a person in his 60s, I can telly you, shopping is a huge hassle. LTCi companies want to perform at least an in home interview with a consultant who will perform cognitive testing among many other health questions and review of personal medical records which I had to release to the insurer. I totally understand why, but going through this rigmarole with multiple vendors offering multiple products could be a major pain. My thought would be to know exactly what product you want before you even start the shopping process.

3. When I was interviewed, I was warned having a Mother or Father with diagnosed Alz (dementia) was a solid disqualifier for insurance. Emphasis on "diagnosed". Bear this in mind as you ponder options, not sure if this would be true for all vendors.
Long-term care insurance premiums are NOT tied to the cost of healthcare. Regulations, now in effect in 41 states, require LTC insurers to DECREASE their profits if they seek a rate increase on any policy sold under the Rate Stability Regulation.

No, premiums are not tied to inflation, but reality is, and those premiums will be adjusted to compensate for reality over time. When profit reaches zero and/or loss ensues what happens?

"Shopping" for long-term care insurance does NOT mean applying to multiple insurance companies. It means getting quotes from a variety of companies to find which company offers the best value and applying to that particular company only. This way you only have to do one "health interview". (Utilizing the services of a qualified LTC insurance specialist makes the comparison of policies a lot easier than using a "generalist".)

Fair enough until the med review uncovers an issue which a particular vendor has determined is disqualifying or imposes a significant premium variance. i have not checked but do LTC insurers publish all conditions which would lead to disqualification?

If BOTH parents had Alzheimers/dementia some insurers will deny that application. There is no long-term care insurer that will deny an application because one of your parents had Alzheimers/dementia.

With all due respect, how do you know this?

When a couple reaches their late sixties it's probably not a good idea to buy long-term care insurance. The rates are high simply based upon your ages and you probably have health problems that make the rates even higher. Although I generally hate annuities, there's a couple of decent long-term care annuities that, when designed properly, can be a sensible way to protect against LTC expenses.

seychellois_lib
Posts: 158
Joined: Tue Mar 25, 2014 12:05 am

Re: Is Long Term Care Insurance worth it?

Post by seychellois_lib » Sun Feb 10, 2019 7:49 pm

WoW2012 wrote:
Sun Feb 10, 2019 7:17 pm
seychellois_lib wrote:
Sun Feb 10, 2019 7:07 pm
willthrill81 wrote:
Wed Feb 06, 2019 9:43 pm
WoW2012 wrote:
Tue Feb 05, 2019 11:37 am
marcopolo wrote:
Tue Feb 05, 2019 7:38 am


Probably around $600k. Out of my tIRA, and some of it would tax deductible.

So, you're willing to lose $600K from your IRA to pay for long-term care.
But you're not willing to spend $2,800 per year on a long-term care policy that would have $600,000 of benefits. You could allocate only 46 basis points from that IRA every year to own a good LTCi policy.
If he has the funds and is willing and able to part with them if needed, then mathematically, he's better off to self-insure.
$2800 annually for $600K LTC cover? How old are you assuming the customer is and which insurance company offers $600K LTC for $2800 annually? I might be interested in a deal like that.
A policy like that is not available for someone your and your spouse's ages.
OK, OK, not good for me but i am still interested in the answer. Age of customer, which company? A link to the info would be great if that was easier.

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willthrill81
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Location: USA

Re: Is Long Term Care Insurance worth it?

Post by willthrill81 » Sun Feb 10, 2019 7:52 pm

WoW2012 wrote:
Sun Feb 10, 2019 7:18 pm
willthrill81 wrote:
Wed Feb 06, 2019 9:43 pm
WoW2012 wrote:
Tue Feb 05, 2019 11:37 am
marcopolo wrote:
Tue Feb 05, 2019 7:38 am
WoW2012 wrote:
Tue Feb 05, 2019 12:21 am



Just out of curiosity, how much do you think it would cost for you to self-fund 5 years of long-term care? And, which assets would you liquidate first?
Probably around $600k. Out of my tIRA, and some of it would tax deductible.

So, you're willing to lose $600K from your IRA to pay for long-term care.
But you're not willing to spend $2,800 per year on a long-term care policy that would have $600,000 of benefits. You could allocate only 46 basis points from that IRA every year to own a good LTCi policy.
If he has the funds and is willing and able to part with them if needed, then mathematically, he's better off to self-insure.

Will, can you run through the math you used to conclude that he's better off to self-insure?
The insurance company already has. They must price the policy for more than the insured's expected value of the policy, otherwise they would go out of business.
“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

WoW2012
Posts: 416
Joined: Sun Dec 23, 2012 11:28 am

Re: Is Long Term Care Insurance worth it?

Post by WoW2012 » Sun Feb 10, 2019 7:55 pm

willthrill81 wrote:
Sun Feb 10, 2019 7:52 pm
WoW2012 wrote:
Sun Feb 10, 2019 7:18 pm
willthrill81 wrote:
Wed Feb 06, 2019 9:43 pm
WoW2012 wrote:
Tue Feb 05, 2019 11:37 am
marcopolo wrote:
Tue Feb 05, 2019 7:38 am


Probably around $600k. Out of my tIRA, and some of it would tax deductible.

So, you're willing to lose $600K from your IRA to pay for long-term care.
But you're not willing to spend $2,800 per year on a long-term care policy that would have $600,000 of benefits. You could allocate only 46 basis points from that IRA every year to own a good LTCi policy.
If he has the funds and is willing and able to part with them if needed, then mathematically, he's better off to self-insure.

Will, can you run through the math you used to conclude that he's better off to self-insure?
The insurance company already has. They must price the policy for more than the insured's expected value of the policy, otherwise they would go out of business.
Do you own term life insurance? The insurance company has already done the math on term life insurance and they make money on it. Using your logic, it doesn't make sense to own term life insurance.
Last edited by WoW2012 on Sun Feb 10, 2019 8:09 pm, edited 1 time in total.

visualguy
Posts: 1052
Joined: Thu Jan 30, 2014 1:32 am

Re: Is Long Term Care Insurance worth it?

Post by visualguy » Sun Feb 10, 2019 8:05 pm

WoW2012 wrote:
Sun Feb 10, 2019 5:36 pm
2) Designing a policy that is heavily weighted towards nursing home care, is usually not the best way to design a long-term care policy. It's inefficient, in terms of getting the most benefits for the least amount of premium. Plus, a nursing home is the least likely place for you to receive long-term care. Only 13% of people who need long-term care receive their care in nursing homes. 80% receive their care at home. And most of the people who are in nursing homes are only there because they are relying on Medicaid to pay for their care.
Home-care doesn't work well in most cases without having family there as well. If you don't have it, or they don't want to do it, or you don't want to be a burden on them, this doesn't work, so you need LTCi that's geared toward nursing home coverage.

Also, I don't think you are correct in your last statement above, unless you mean that without Medicaid these people would not be able to afford to be in a nursing home, but that doesn't mean much.

It seems that you're now saying that LTCi isn't financially all that well-suited for LTC in nursing homes, which is discouraging...

WoW2012
Posts: 416
Joined: Sun Dec 23, 2012 11:28 am

Re: Is Long Term Care Insurance worth it?

Post by WoW2012 » Sun Feb 10, 2019 8:19 pm

visualguy wrote:
Sun Feb 10, 2019 8:05 pm
WoW2012 wrote:
Sun Feb 10, 2019 5:36 pm
2) Designing a policy that is heavily weighted towards nursing home care, is usually not the best way to design a long-term care policy. It's inefficient, in terms of getting the most benefits for the least amount of premium. Plus, a nursing home is the least likely place for you to receive long-term care. Only 13% of people who need long-term care receive their care in nursing homes. 80% receive their care at home. And most of the people who are in nursing homes are only there because they are relying on Medicaid to pay for their care.
Home-care doesn't work well in most cases without having family there as well. If you don't have it, or they don't want to do it, or you don't want to be a burden on them, this doesn't work, so you need LTCi that's geared toward nursing home coverage.

Also, I don't think you are correct in your last statement above, unless you mean that without Medicaid these people would not be able to afford to be in a nursing home, but that doesn't mean much.

It seems that you're now saying that LTCi isn't financially all that well-suited for LTC in nursing homes, which is discouraging...

VisualGuy: Home-care doesn't work well in most cases without having family there as well. If you don't have it, or they don't want to do it, or you don't want to be a burden on them, this doesn't work, so you need LTCi that's geared toward nursing home coverage.


Wow: I've told my wife that if I need care, she should just put me in an assisted-living facility. I'd be fine with that. And, in my MIL's case, she is much better off in the ALF rather than at home. So, I agree with you on the surface. However, two out of every three long-term care insurance claims start and/or end at home. The experience of LTCi claimants does not validate your statement.


Visualguy: Also, I don't think you are correct in your last statement above, unless you mean that without Medicaid these people would not be able to afford to be in a nursing home, but that doesn't mean much.


Wow: That's not what I meant. Most Medicaid beneficiaries in nursing homes could be at home if they weren't relying on Medicaid. The majority of Medicaid long-term care dollars go for Medicaid nursing home care. Some states have "waiver programs" where they are allowed to pay for home care with Medicaid dollars. But those programs have much smaller budgets and the waiting lists can be very long.


Visualguy: It seems that you're now saying that LTCi isn't financially all that well-suited for LTC in nursing homes, which is discouraging...


Wow: That's not what I'm saying. I'm saying that most people who need long-term care are able to receive that care either at home or in a top-notch assisted-living facility. In my MIL's ALF she can stay there as long as only one person is needed to transfer her (from bed to chair). She would only have to go to a nursing home if she needed two people to transfer her. ALF's are much nicer than nursing homes AND less expensive.

Also, keep in mind, if someone needs to be in an ALF or a nursing home, whatever funds they were spending on housing, traveling, car, groceries, etc... can be re-allocated towards the cost of care.

For all these reasons, there's no need to buy a long-term care policy that is focused on covering the full cost of nursing home care.

visualguy
Posts: 1052
Joined: Thu Jan 30, 2014 1:32 am

Re: Is Long Term Care Insurance worth it?

Post by visualguy » Sun Feb 10, 2019 8:35 pm

WoW2012 wrote:
Sun Feb 10, 2019 8:19 pm
Wow: I've told my wife that if I need care, she should just put me in an assisted-living facility. I'd be fine with that. And, in my MIL's case, she is much better off in the ALF rather than at home. So, I agree with you on the surface. However, two out of every three long-term care insurance claims start and/or end at home. The experience of LTCi claimants does not validate your statement.
Right, but I don't care about statistics. It's like saying that most people have little more than SS for their retirement, so why do you need so much. I don't know how they make it on that, and that's not the life I want to live, so it's irrelevant.

From the LTC perspective, I only care about my own situation and my wife's situation. We don't want to burden our kids, and living with them in old age is out of the question from our perspective.

Does LTC really help you at an ALF? Under what circumstances? Does it help you if you go into a CCRC? At what stage and in what way?

WoW2012
Posts: 416
Joined: Sun Dec 23, 2012 11:28 am

Re: Is Long Term Care Insurance worth it?

Post by WoW2012 » Sun Feb 10, 2019 8:44 pm

visualguy wrote:
Sun Feb 10, 2019 8:35 pm
WoW2012 wrote:
Sun Feb 10, 2019 8:19 pm
Wow: I've told my wife that if I need care, she should just put me in an assisted-living facility. I'd be fine with that. And, in my MIL's case, she is much better off in the ALF rather than at home. So, I agree with you on the surface. However, two out of every three long-term care insurance claims start and/or end at home. The experience of LTCi claimants does not validate your statement.
Right, but I don't care about statistics. It's like saying that most people have little more than SS for their retirement, so why do you need so much. I don't know how they make it on that, and that's not the life I want to live, so it's irrelevant.

From the LTC perspective, I only care about my own situation and my wife's situation. We don't want to burden our kids, and living with them in old age is out of the question from our perspective.

Does LTC really help you at an ALF? Under what circumstances? Does it help you if you go into a CCRC? At what stage and in what way?

My MIL's long-term care insurance policy is covering 100% of her bill from the ALF every month.
LTCi helps for those who live in CCRC's also.

LTCi policies pay benefits if the policyholder needs assistance with 2 of the 6 ADL's or if if the policyholder needs supervision due to a cognitive impairment. In my MIL's case, she needs help with bathing and dressing. That's enough for her to qualify for benefits.

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willthrill81
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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 » Sun Feb 10, 2019 9:47 pm

WoW2012 wrote:
Sun Feb 10, 2019 7:55 pm
willthrill81 wrote:
Sun Feb 10, 2019 7:52 pm
WoW2012 wrote:
Sun Feb 10, 2019 7:18 pm
willthrill81 wrote:
Wed Feb 06, 2019 9:43 pm
WoW2012 wrote:
Tue Feb 05, 2019 11:37 am



So, you're willing to lose $600K from your IRA to pay for long-term care.
But you're not willing to spend $2,800 per year on a long-term care policy that would have $600,000 of benefits. You could allocate only 46 basis points from that IRA every year to own a good LTCi policy.
If he has the funds and is willing and able to part with them if needed, then mathematically, he's better off to self-insure.

Will, can you run through the math you used to conclude that he's better off to self-insure?
The insurance company already has. They must price the policy for more than the insured's expected value of the policy, otherwise they would go out of business.
Do you own term life insurance? The insurance company has already done the math on term life insurance and they make money on it. Using your logic, it doesn't make sense to own term life insurance.
I currently do to avoid a catastrophic loss. Once we become financially independent, we'll no longer need life insurance. Similarly, if a LTC event would not be a catastrophic loss to someone, then they have no need for LTCi.

Risk management 101 says to self-insure risks that would not be detrimental if they were to manifest themselves. We don't insure most objects we own for that reason.
“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

michaeljc70
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Re: Is Long Term Care Insurance worth it?

Post by michaeljc70 » Mon Feb 11, 2019 12:25 am

When someone posts every 4th post yet refuses to answer certain questions, I have my answer. This type of insurance is different than many types of insurance that can ruin your life early on. So, the comparisons aren't quite the same. This type of insurance won't be used by most people. I bet most people use their auto or home insurance at some point in their life...probably more than once.

How many people 60-65 are perfectly healthy? A lot of these premiums quotes seem unrealistic. I guess it is hard to gauge because they are hoping you die quickly. A heart attack and death in the hospital is way better for the carrier than a fall down the stairs and 5 years in a nursing home.

The idea that in most states they cannot make a profit if they raise rates is not comforting. If you eliminate the profit in the ACA plans, they are still astronomically priced.

Acting like these plans are priced differently than other types of insurance is silly. They are sold to make a profit. And yes, I will say it....you are better off investing the money that would be paid into premium as common sense says you will come out ahead most likely. Of course, with any insurance there are winners and losers. And I'm not saying don't get LTC insurance. I think for some people it makes sense. But it is not all puppy dogs and eggs Benedict.

I actually think the willingness/ability of family to help with care is a big consideration.

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willthrill81
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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 » Mon Feb 11, 2019 1:06 am

michaeljc70 wrote:
Mon Feb 11, 2019 12:25 am
When someone posts every 4th post yet refuses to answer certain questions, I have my answer. This type of insurance is different than many types of insurance that can ruin your life early on. So, the comparisons aren't quite the same. This type of insurance won't be used by most people. I bet most people use their auto or home insurance at some point in their life...probably more than once.

How many people 60-65 are perfectly healthy? A lot of these premiums quotes seem unrealistic. I guess it is hard to gauge because they are hoping you die quickly. A heart attack and death in the hospital is way better for the carrier than a fall down the stairs and 5 years in a nursing home.

The idea that in most states they cannot make a profit if they raise rates is not comforting. If you eliminate the profit in the ACA plans, they are still astronomically priced.

Acting like these plans are priced differently than other types of insurance is silly. They are sold to make a profit. And yes, I will say it....you are better off investing the money that would be paid into premium as common sense says you will come out ahead most likely. Of course, with any insurance there are winners and losers. And I'm not saying don't get LTC insurance. I think for some people it makes sense. But it is not all puppy dogs and eggs Benedict.

I actually think the willingness/ability of family to help with care is a big consideration.
+1
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Re: Is Long Term Care Insurance worth it?

Post by visualguy » Mon Feb 11, 2019 1:10 am

WoW2012 wrote:
Sun Feb 10, 2019 8:44 pm
visualguy wrote:
Sun Feb 10, 2019 8:35 pm
WoW2012 wrote:
Sun Feb 10, 2019 8:19 pm
Wow: I've told my wife that if I need care, she should just put me in an assisted-living facility. I'd be fine with that. And, in my MIL's case, she is much better off in the ALF rather than at home. So, I agree with you on the surface. However, two out of every three long-term care insurance claims start and/or end at home. The experience of LTCi claimants does not validate your statement.
Right, but I don't care about statistics. It's like saying that most people have little more than SS for their retirement, so why do you need so much. I don't know how they make it on that, and that's not the life I want to live, so it's irrelevant.

From the LTC perspective, I only care about my own situation and my wife's situation. We don't want to burden our kids, and living with them in old age is out of the question from our perspective.

Does LTC really help you at an ALF? Under what circumstances? Does it help you if you go into a CCRC? At what stage and in what way?

My MIL's long-term care insurance policy is covering 100% of her bill from the ALF every month.
LTCi helps for those who live in CCRC's also.

LTCi policies pay benefits if the policyholder needs assistance with 2 of the 6 ADL's or if if the policyholder needs supervision due to a cognitive impairment. In my MIL's case, she needs help with bathing and dressing. That's enough for her to qualify for benefits.
Got it - thanks. I think LTCi can make sense under some circumstances.

I don't think I would qualify because doctors put too many nonsense diagnoses on my health record. I think my wife would qualify, though.

Also, the value of this insurance isn't all that significant because the ratio of what it pays relative to what you pay in premiums isn't all that good. If it's many tens of thousands in premiums to get very few hundreds of thousands in benefit, that isn't great.

Basically, the problem is that this insurance doesn't really get you off the hook on LTC. You still need to save a lot of money for it because the benefits of the insurance are very limited. For example, say I need assets worth $2M or $3M to take care of LTC for me and my wife. Maybe it's a CCRC, or years of ALF followed by years of nursing home, maybe separately for me sooner and my wife later. Now, with insurance, maybe that goes down to $1.4M to $2.4M after premiums or some such thing. Does it really make that much of a difference? I guess in some cases because you would need to work longer to go from $1.4M-$2.4M to $2M-$3M. However, if you already have the larger amount of assets, why bother unless you're trying to maximize the size of estate for heirs.

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Artful Dodger
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Re: Is Long Term Care Insurance worth it?

Post by Artful Dodger » Mon Feb 11, 2019 2:22 pm

For what its worth, we've had LTC coverage 10 years. First 9 the premium was $2620 annual. Last year, we got a 51% increase, and paid $3970 renewal. This is a policy with ten years of benefits. Both spouses can share up to a max of ten years. Current monthly benefit of $6354. I'm considering dropping the inflation coverage from the current 5% compound to 3% compound. This would lower the premium to $3281, or 25% higher than what we were paying ten years ago.

While very unlikely, if one of us went on claim this year, we would have a pool of money equal to $762,480. Based on the 5% inflation the benefit would be $1,418,010 in 10 years (age 74 me / 76 spouse) or $2,123,806 in 20 years (age 84 me / 86 spouse). Based on the 3% inflation the benefit would be $1,055,160 in 10 years or $1,303,800 in 20 years.

Right now we have close to $2M in investments. Assuming a 3-4% withdrawal formula will last 30 years, there is no way to self insure a $1M to $2M hit during the same time frame.

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Re: Is Long Term Care Insurance worth it?

Post by michaeljc70 » Mon Feb 11, 2019 2:48 pm

Artful Dodger wrote:
Mon Feb 11, 2019 2:22 pm
For what its worth, we've had LTC coverage 10 years. First 9 the premium was $2620 annual. Last year, we got a 51% increase, and paid $3970 renewal. This is a policy with ten years of benefits. Both spouses can share up to a max of ten years. Current monthly benefit of $6354. I'm considering dropping the inflation coverage from the current 5% compound to 3% compound. This would lower the premium to $3281, or 25% higher than what we were paying ten years ago.

While very unlikely, if one of us went on claim this year, we would have a pool of money equal to $762,480. Based on the 5% inflation the benefit would be $1,418,010 in 10 years (age 74 me / 76 spouse) or $2,123,806 in 20 years (age 84 me / 86 spouse). Based on the 3% inflation the benefit would be $1,055,160 in 10 years or $1,303,800 in 20 years.

Right now we have close to $2M in investments. Assuming a 3-4% withdrawal formula will last 30 years, there is no way to self insure a $1M to $2M hit during the same time frame.
Aren't you concerned about future increases? If it goes up 50% every 10 years....or you cut benefits every 10 years....

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Re: Is Long Term Care Insurance worth it?

Post by Artful Dodger » Mon Feb 11, 2019 3:26 pm

michaeljc70 wrote:
Mon Feb 11, 2019 2:48 pm
Artful Dodger wrote:
Mon Feb 11, 2019 2:22 pm
For what its worth, we've had LTC coverage 10 years. First 9 the premium was $2620 annual. Last year, we got a 51% increase, and paid $3970 renewal. This is a policy with ten years of benefits. Both spouses can share up to a max of ten years. Current monthly benefit of $6354. I'm considering dropping the inflation coverage from the current 5% compound to 3% compound. This would lower the premium to $3281, or 25% higher than what we were paying ten years ago.

While very unlikely, if one of us went on claim this year, we would have a pool of money equal to $762,480. Based on the 5% inflation the benefit would be $1,418,010 in 10 years (age 74 me / 76 spouse) or $2,123,806 in 20 years (age 84 me / 86 spouse). Based on the 3% inflation the benefit would be $1,055,160 in 10 years or $1,303,800 in 20 years.

Right now we have close to $2M in investments. Assuming a 3-4% withdrawal formula will last 30 years, there is no way to self insure a $1M to $2M hit during the same time frame.
Aren't you concerned about future increases? If it goes up 50% every 10 years....or you cut benefits every 10 years....
I am, but right now I'm OK with the current, and will likely go with the 3% inflation if it goes up again. They offered a number of other options to reduce cost, that I could entertain if there was another increase. The reasons most carriers have increased rates in the past have been mentioned, primarily underestimated claims, assuming higher drop rates, and lower investment returns. It seems like those have been accounted for in the most recent increase, and future increases would be lower. But, I'm used to other increases from insurance. My homeowners has doubled in the last ten years, and health care costs have continued to go up. It's a fact of life. One positive is I dropped my long term disability coverage this year which was a $2500 premium, so that saving more than covers the increased LTC premium.

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Re: Is Long Term Care Insurance worth it?

Post by FBN2014 » Mon Feb 11, 2019 4:07 pm

Artful Dodger wrote:
Mon Feb 11, 2019 2:22 pm
For what its worth, we've had LTC coverage 10 years. First 9 the premium was $2620 annual. Last year, we got a 51% increase, and paid $3970 renewal. This is a policy with ten years of benefits. Both spouses can share up to a max of ten years. Current monthly benefit of $6354. I'm considering dropping the inflation coverage from the current 5% compound to 3% compound. This would lower the premium to $3281, or 25% higher than what we were paying ten years ago.

While very unlikely, if one of us went on claim this year, we would have a pool of money equal to $762,480. Based on the 5% inflation the benefit would be $1,418,010 in 10 years (age 74 me / 76 spouse) or $2,123,806 in 20 years (age 84 me / 86 spouse). Based on the 3% inflation the benefit would be $1,055,160 in 10 years or $1,303,800 in 20 years.

Right now we have close to $2M in investments. Assuming a 3-4% withdrawal formula will last 30 years, there is no way to self insure a $1M to $2M hit during the same time frame.
Can you mention which company your policy is with?
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Re: Is Long Term Care Insurance worth it?

Post by Artful Dodger » Mon Feb 11, 2019 4:13 pm

FBN2014 wrote:
Mon Feb 11, 2019 4:07 pm
Artful Dodger wrote:
Mon Feb 11, 2019 2:22 pm
For what its worth, we've had LTC coverage 10 years. First 9 the premium was $2620 annual. Last year, we got a 51% increase, and paid $3970 renewal. This is a policy with ten years of benefits. Both spouses can share up to a max of ten years. Current monthly benefit of $6354. I'm considering dropping the inflation coverage from the current 5% compound to 3% compound. This would lower the premium to $3281, or 25% higher than what we were paying ten years ago.

While very unlikely, if one of us went on claim this year, we would have a pool of money equal to $762,480. Based on the 5% inflation the benefit would be $1,418,010 in 10 years (age 74 me / 76 spouse) or $2,123,806 in 20 years (age 84 me / 86 spouse). Based on the 3% inflation the benefit would be $1,055,160 in 10 years or $1,303,800 in 20 years.

Right now we have close to $2M in investments. Assuming a 3-4% withdrawal formula will last 30 years, there is no way to self insure a $1M to $2M hit during the same time frame.
Can you mention which company your policy is with?
Genworth

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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 » Mon Feb 11, 2019 4:44 pm

Artful Dodger wrote:
Mon Feb 11, 2019 2:22 pm
For what its worth, we've had LTC coverage 10 years. First 9 the premium was $2620 annual. Last year, we got a 51% increase, and paid $3970 renewal. This is a policy with ten years of benefits. Both spouses can share up to a max of ten years. Current monthly benefit of $6354. I'm considering dropping the inflation coverage from the current 5% compound to 3% compound. This would lower the premium to $3281, or 25% higher than what we were paying ten years ago.

While very unlikely, if one of us went on claim this year, we would have a pool of money equal to $762,480. Based on the 5% inflation the benefit would be $1,418,010 in 10 years (age 74 me / 76 spouse) or $2,123,806 in 20 years (age 84 me / 86 spouse). Based on the 3% inflation the benefit would be $1,055,160 in 10 years or $1,303,800 in 20 years.

Right now we have close to $2M in investments. Assuming a 3-4% withdrawal formula will last 30 years, there is no way to self insure a $1M to $2M hit during the same time frame.
Why do you think that a LTC event would cost $1-$2 million? There might be a very small possibility of a $1 million event, but double that?

Perhaps LTC is extremely expensive where you live. A nursing home in our area runs $100k (full-time in-home care might cost more, but not much), and very few individuals need more than five years of care; most need fewer than three.

IMHO, those with $2 million in their portfolio or more are very unlikely to need LTCi. Even if they take a $500k hit, $1.5 million for the surviving spouse should be ample.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Is Long Term Care Insurance worth it?

Post by fposte » Mon Feb 11, 2019 4:53 pm

WoW2012 wrote:
Sun Feb 10, 2019 8:44 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.

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Re: Is Long Term Care Insurance worth it?

Post by visualguy » Mon Feb 11, 2019 7:13 pm

willthrill81 wrote:
Mon Feb 11, 2019 4:44 pm
Why do you think that a LTC event would cost $1-$2 million? There might be a very small possibility of a $1 million event, but double that?

Perhaps LTC is extremely expensive where you live. A nursing home in our area runs $100k (full-time in-home care might cost more, but not much), and very few individuals need more than five years of care; most need fewer than three.

IMHO, those with $2 million in their portfolio or more are very unlikely to need LTCi. Even if they take a $500k hit, $1.5 million for the surviving spouse should be ample.
Say, 5 years for the first spouse to need it. That's about $850K in my area. Then another $850K for the second spouse, and you're at $1.7M. The portfolio gets depleted over the years - you can't necessarily count on it. One possibility is to reserve around $850K for the first spouse, and then the second spouse relies on selling the home and whatever remains of the porfolio when she/he needs LTC. If you're looking at a CCRC, ALF, etc. then it's even more money when you add it all together.

There's still the risk of an even longer LTC need. My grandmother was at a nursing home for 6 years and that was after a few years of being taken care of by my Mom. Now my Mom is at a nursing home. She suffers from dementia, but has no other medical conditions which would end her life. She is likely to live there like this for years. My dad lives on his own separately, so you can imagine how much the expenses increased. It looks like he will need LTC too in the not-too-distant future.

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Re: Is Long Term Care Insurance worth it?

Post by Artful Dodger » Mon Feb 11, 2019 7:29 pm

willthrill81 wrote:
Mon Feb 11, 2019 4:44 pm
Artful Dodger wrote:
Mon Feb 11, 2019 2:22 pm
For what its worth, we've had LTC coverage 10 years. First 9 the premium was $2620 annual. Last year, we got a 51% increase, and paid $3970 renewal. This is a policy with ten years of benefits. Both spouses can share up to a max of ten years. Current monthly benefit of $6354. I'm considering dropping the inflation coverage from the current 5% compound to 3% compound. This would lower the premium to $3281, or 25% higher than what we were paying ten years ago.

While very unlikely, if one of us went on claim this year, we would have a pool of money equal to $762,480. Based on the 5% inflation the benefit would be $1,418,010 in 10 years (age 74 me / 76 spouse) or $2,123,806 in 20 years (age 84 me / 86 spouse). Based on the 3% inflation the benefit would be $1,055,160 in 10 years or $1,303,800 in 20 years.

Right now we have close to $2M in investments. Assuming a 3-4% withdrawal formula will last 30 years, there is no way to self insure a $1M to $2M hit during the same time frame.
Why do you think that a LTC event would cost $1-$2 million? There might be a very small possibility of a $1 million event, but double that?

Perhaps LTC is extremely expensive where you live. A nursing home in our area runs $100k (full-time in-home care might cost more, but not much), and very few individuals need more than five years of care; most need fewer than three.

IMHO, those with $2 million in their portfolio or more are very unlikely to need LTCi. Even if they take a $500k hit, $1.5 million for the surviving spouse should be ample.
The $1-$2M claims figure assumes an event 10 to 20 years in the future at inflated dollars. I took a look at my Fidelity retirement calculator. Right now it shows safe sailing for 30 years, and an ending balance (in future inflation adjusted dollars) of $1.3M at my projected age of 94. I'm using Fidelity's significantly lower market return, so probably close to a 100% success rate using Firecalc.

But, what happens if one of us needs LTC in 15 years. My planner shows us having $1.815M at age 79 and $1.719M at 84 years. I'll use your $100k nursing home cost, and I'll assume inflation at 4%. In 15 years, that nursing home will cost $180K the first year. If I pull out 5 years of charges for the NH (increased by 4% annual), you're right close to $1 Million in cost, and I'm also down to $640K in savings versus my planner estimate of $1.719M. End of year 7, I'm essentially broke with $31K left. Even if it is a 4 or 5 year claim, I have substantially reduced the amount of income I can take off of my savings for the rest of my and my spouses's lives. Instead of maybe $90K at 5% of $1.8M, I'm down to $30K income from savings after the 5 years of NH care.

I realize it is highly unlikely. Most people don't ever go to a nursing home. The vast majority who do, go for a few months. But, my mother had alzheimers, and went in at age 82 for 3 and 1/2 years. So, even with $2M now in savings, I don't think self insuring is the way to go, and I'm willing to pay $3300 to $4000 yearly now to protect myself from $1M or more in LTC costs in the future.

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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 » Mon Feb 11, 2019 7:40 pm

Artful Dodger wrote:
Mon Feb 11, 2019 7:29 pm
willthrill81 wrote:
Mon Feb 11, 2019 4:44 pm
Artful Dodger wrote:
Mon Feb 11, 2019 2:22 pm
For what its worth, we've had LTC coverage 10 years. First 9 the premium was $2620 annual. Last year, we got a 51% increase, and paid $3970 renewal. This is a policy with ten years of benefits. Both spouses can share up to a max of ten years. Current monthly benefit of $6354. I'm considering dropping the inflation coverage from the current 5% compound to 3% compound. This would lower the premium to $3281, or 25% higher than what we were paying ten years ago.

While very unlikely, if one of us went on claim this year, we would have a pool of money equal to $762,480. Based on the 5% inflation the benefit would be $1,418,010 in 10 years (age 74 me / 76 spouse) or $2,123,806 in 20 years (age 84 me / 86 spouse). Based on the 3% inflation the benefit would be $1,055,160 in 10 years or $1,303,800 in 20 years.

Right now we have close to $2M in investments. Assuming a 3-4% withdrawal formula will last 30 years, there is no way to self insure a $1M to $2M hit during the same time frame.
Why do you think that a LTC event would cost $1-$2 million? There might be a very small possibility of a $1 million event, but double that?

Perhaps LTC is extremely expensive where you live. A nursing home in our area runs $100k (full-time in-home care might cost more, but not much), and very few individuals need more than five years of care; most need fewer than three.

IMHO, those with $2 million in their portfolio or more are very unlikely to need LTCi. Even if they take a $500k hit, $1.5 million for the surviving spouse should be ample.
The $1-$2M claims figure assumes an event 10 to 20 years in the future at inflated dollars. I took a look at my Fidelity retirement calculator. Right now it shows safe sailing for 30 years, and an ending balance (in future inflation adjusted dollars) of $1.3M at my projected age of 94. I'm using Fidelity's significantly lower market return, so probably close to a 100% success rate using Firecalc.

But, what happens if one of us needs LTC in 15 years. My planner shows us having $1.815M at age 79 and $1.719M at 84 years. I'll use your $100k nursing home cost, and I'll assume inflation at 4%. In 15 years, that nursing home will cost $180K the first year. If I pull out 5 years of charges for the NH (increased by 4% annual), you're right close to $1 Million in cost, and I'm also down to $640K in savings versus my planner estimate of $1.719M. End of year 7, I'm essentially broke with $31K left. Even if it is a 4 or 5 year claim, I have substantially reduced the amount of income I can take off of my savings for the rest of my and my spouses's lives. Instead of maybe $90K at 5% of $1.8M, I'm down to $30K income from savings after the 5 years of NH care.

I realize it is highly unlikely. Most people don't ever go to a nursing home. The vast majority who do, go for a few months. But, my mother had alzheimers, and went in at age 82 for 3 and 1/2 years. So, even with $2M now in savings, I don't think self insuring is the way to go, and I'm willing to pay $3300 to $4000 yearly now to protect myself from $1M or more in LTC costs in the future.
I think that you're adjusting for inflation twice. You state that you're projecting $1.3 million in inflation adjusted dollars, but then you also adjust current nursing home costs for inflation, which nearly doubles the expected cost. In today's dollars, $1.3 million would pay for 13 years of nursing home costs in our area, assuming a 0% real return.

Basically, you would need to (1) experience low returns for decades, and (2) spend down a significant portion of your portfolio in the process, and (3) need LTC for much longer than most of those who actually need it, including your mother. And don't forget that the Medicaid backstop is there too and doesn't necessarily require you to completely deplete your assets/income before using it.

But if owning LTCi gives you peace of mind and you rationally believe that it's worthwhile, then by all means go for it.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 » Mon Feb 11, 2019 7:45 pm

visualguy wrote:
Mon Feb 11, 2019 7:13 pm
willthrill81 wrote:
Mon Feb 11, 2019 4:44 pm
Why do you think that a LTC event would cost $1-$2 million? There might be a very small possibility of a $1 million event, but double that?

Perhaps LTC is extremely expensive where you live. A nursing home in our area runs $100k (full-time in-home care might cost more, but not much), and very few individuals need more than five years of care; most need fewer than three.

IMHO, those with $2 million in their portfolio or more are very unlikely to need LTCi. Even if they take a $500k hit, $1.5 million for the surviving spouse should be ample.
Say, 5 years for the first spouse to need it. That's about $850K in my area. Then another $850K for the second spouse, and you're at $1.7M. The portfolio gets depleted over the years - you can't necessarily count on it. One possibility is to reserve around $850K for the first spouse, and then the second spouse relies on selling the home and whatever remains of the porfolio when she/he needs LTC. If you're looking at a CCRC, ALF, etc. then it's even more money when you add it all together.

There's still the risk of an even longer LTC need. My grandmother was at a nursing home for 6 years and that was after a few years of being taken care of by my Mom. Now my Mom is at a nursing home. She suffers from dementia, but has no other medical conditions which would end her life. She is likely to live there like this for years. My dad lives on his own separately, so you can imagine how much the expenses increased. It looks like he will need LTC too in the not-too-distant future.
It's very unlikely that both spouses would need five years of LTC, considering that around 75% of those who actually need LTC today need it for under three years. Yes, it's possible, although something being possible does not in itself necessitate that we need to specifically hedge against it. As I posted above, Medicaid is a major backstop that should not be ignored and does not destine you for inferior care.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Is Long Term Care Insurance worth it?

Post by ChrisC » Mon Feb 11, 2019 7:48 pm

fposte wrote:
Mon Feb 11, 2019 4:53 pm
WoW2012 wrote:
Sun Feb 10, 2019 8:44 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.
It depends on the type of CCRC. If it's a Type A contract CCRC, in which one essentially is prepaying for long term health care even if you never use it, with a hefty entrance fee that takes care of all your assisted or skill nursing care needs, then LTCi could be redundant and useless protection if the CCRC won't offset the expense of its care against the LTCi coverage and payments. If it's a Type B or C contract CCRC, the LTCi would be dove-tail with the CCRC's charges of LTC. Type B or C contract CCRC have significantly lower entrance fees than Type A CCRCs because the Type B or C CCRCs don't frontload the expense of skilled nursing care into the entrance fee; in other words, you don't prepay for LTC -- you pay for it on a as needed basis, frequently at a discounted rate.

Nonetheless, it always possible in a Type A facility that you might wind up using LTCi; for example, what happens if the Type A facility no longer has enough beds for skilled nursing residents. The really attractive CCRCs typically have 100 percent occupancy levels in all residential stages of the campus -- so, when demand for beds in the skilled nursing wing of the CCRC exceeds supply, folks might be consigned to skilled nursing facilities off campus, with little choice about the quality of care in those facilities offered as a porxy for the care you wanted on campus. Seems to me that LTCi would be helpful in those circumstances as well.

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Re: Is Long Term Care Insurance worth it?

Post by visualguy » Mon Feb 11, 2019 10:41 pm

willthrill81 wrote:
Mon Feb 11, 2019 7:45 pm
It's very unlikely that both spouses would need five years of LTC, considering that around 75% of those who actually need LTC today need it for under three years. Yes, it's possible, although something being possible does not in itself necessitate that we need to specifically hedge against it. As I posted above, Medicaid is a major backstop that should not be ignored and does not destine you for inferior care.
It may be unlikely, but it's not very unlikely. For example, this looks like what my parents are dealing with. One already in LTC, and the other heading there. Neither has an illness that would kill them fast, so likely to be in LTC for years.

I ignore Medicaid because I don't know what it will cover exactly, and where it will be accepted when the time comes down the road. A lot can change over the next few decades, and it's hard to imagine that the changes in these "entitlements" will be anything but for the worse.

The reality in old age when your health and independence go is horrible-enough even when you have the money to get the best care available. Without that, it's just devastating.

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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 » Mon Feb 11, 2019 11:08 pm

visualguy wrote:
Mon Feb 11, 2019 10:41 pm
willthrill81 wrote:
Mon Feb 11, 2019 7:45 pm
It's very unlikely that both spouses would need five years of LTC, considering that around 75% of those who actually need LTC today need it for under three years. Yes, it's possible, although something being possible does not in itself necessitate that we need to specifically hedge against it. As I posted above, Medicaid is a major backstop that should not be ignored and does not destine you for inferior care.
It may be unlikely, but it's not very unlikely. For example, this looks like what my parents are dealing with. One already in LTC, and the other heading there. Neither has an illness that would kill them fast, so likely to be in LTC for years.

I ignore Medicaid because I don't know what it will cover exactly, and where it will be accepted when the time comes down the road. A lot can change over the next few decades, and it's hard to imagine that the changes in these "entitlements" will be anything but for the worse.

The reality in old age when your health and independence go is horrible-enough even when you have the money to get the best care available. Without that, it's just devastating.
If you have a family history of needing LTC, then it certainly makes more sense to buy LTCi.
“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

fposte
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Re: Is Long Term Care Insurance worth it?

Post by fposte » Mon Feb 11, 2019 11:55 pm

ChrisC wrote:
Mon Feb 11, 2019 7:48 pm
fposte wrote:
Mon Feb 11, 2019 4:53 pm
WoW2012 wrote:
Sun Feb 10, 2019 8:44 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.
It depends on the type of CCRC. If it's a Type A contract CCRC, in which one essentially is prepaying for long term health care even if you never use it, with a hefty entrance fee that takes care of all your assisted or skill nursing care needs, then LTCi could be redundant and useless protection if the CCRC won't offset the expense of its care against the LTCi coverage and payments. If it's a Type B or C contract CCRC, the LTCi would be dove-tail with the CCRC's charges of LTC. Type B or C contract CCRC have significantly lower entrance fees than Type A CCRCs because the Type B or C CCRCs don't frontload the expense of skilled nursing care into the entrance fee; in other words, you don't prepay for LTC -- you pay for it on a as needed basis, frequently at a discounted rate.

Nonetheless, it always possible in a Type A facility that you might wind up using LTCi; for example, what happens if the Type A facility no longer has enough beds for skilled nursing residents. The really attractive CCRCs typically have 100 percent occupancy levels in all residential stages of the campus -- so, when demand for beds in the skilled nursing wing of the CCRC exceeds supply, folks might be consigned to skilled nursing facilities off campus, with little choice about the quality of care in those facilities offered as a porxy for the care you wanted on campus. Seems to me that LTCi would be helpful in those circumstances as well.
That is amazingly helpful—thank you!

visualguy
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Re: Is Long Term Care Insurance worth it?

Post by visualguy » Tue Feb 12, 2019 12:08 am

ChrisC wrote:
Mon Feb 11, 2019 7:48 pm
Nonetheless, it always possible in a Type A facility that you might wind up using LTCi; for example, what happens if the Type A facility no longer has enough beds for skilled nursing residents. The really attractive CCRCs typically have 100 percent occupancy levels in all residential stages of the campus -- so, when demand for beds in the skilled nursing wing of the CCRC exceeds supply, folks might be consigned to skilled nursing facilities off campus, with little choice about the quality of care in those facilities offered as a porxy for the care you wanted on campus. Seems to me that LTCi would be helpful in those circumstances as well.
That makes you wonder about the point of getting into a CCRC if you are not guaranteed a spot in their skilled nursing facility.

I do know how backed up the really good CCRCs are with waiting lists, so I have been wondering about exactly that...

ptk446318
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Re: Is Long Term Care Insurance worth it?

Post by ptk446318 » Tue Feb 12, 2019 2:05 am

I'm currently researching LTCI and wanted to share a link to a recent (2/7/19) Vanguard article regarding retirement healthcare costs. I found the chart toward the end of the article which identifies the percentage of recipients receiving the indicated ranges of paid long-term care to be very informative. Hope this is helpful to others as well.

https://investornews.vanguard/retiremen ... g-it-down/

ChrisC
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Re: Is Long Term Care Insurance worth it?

Post by ChrisC » Tue Feb 12, 2019 7:02 am

visualguy wrote:
Tue Feb 12, 2019 12:08 am
ChrisC wrote:
Mon Feb 11, 2019 7:48 pm
Nonetheless, it always possible in a Type A facility that you might wind up using LTCi; for example, what happens if the Type A facility no longer has enough beds for skilled nursing residents. The really attractive CCRCs typically have 100 percent occupancy levels in all residential stages of the campus -- so, when demand for beds in the skilled nursing wing of the CCRC exceeds supply, folks might be consigned to skilled nursing facilities off campus, with little choice about the quality of care in those facilities offered as a porxy for the care you wanted on campus. Seems to me that LTCi would be helpful in those circumstances as well.
That makes you wonder about the point of getting into a CCRC if you are not guaranteed a spot in their skilled nursing facility.

I do know how backed up the really good CCRCs are with waiting lists, so I have been wondering about exactly that...
Well, it means there are no real iron-clad guarantees that will be met at the point you need it most. The CCRC I've been considering has 450 plus residents with a 60 bed skilled nursing facility; it has been 100 percent fully occuppied for a number of years, with a 4 year wait list. We intend to visit again and probe the extent of it's overflow policies for its skilled nursing facility. It has no expansion plans to build out any additional facilities (it just built out and remodeled exercise and fitness facilities). This CCRC's covernants and conditions for residents says that if there aren't avaialble beds at the campus health center/skilled nursing facility, you will be placed in a comparable off campus skilled nursing facility! I also think they manage some of the overflow and high demand by pushing home care in residential units instead of skilled nursing in the skilled nursing facility. One of the reasons I find a CCRC attractive is because if one spouse goes into the skilled nursing unit, the other spouse would be able to manage visits without that much difficulty. We've had a number of relatives in skilled nursing facilities or assisted living facilities, and visits can be taxing especially for older people driving distances.

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TomatoTomahto
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Re: Is Long Term Care Insurance worth it?

Post by TomatoTomahto » Tue Feb 12, 2019 7:11 am

ptk446318 wrote:
Tue Feb 12, 2019 2:05 am
I'm currently researching LTCI and wanted to share a link to a recent (2/7/19) Vanguard article regarding retirement healthcare costs. I found the chart toward the end of the article which identifies the percentage of recipients receiving the indicated ranges of paid long-term care to be very informative. Hope this is helpful to others as well.

https://investornews.vanguard/retiremen ... g-it-down/
Thank you for that. We decided to self-insure in the past, and the chart was very reassuring that we had made the right choice :sharebeer
Okay, I get it; I won't be political or controversial. The Earth is flat.

michaeljc70
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Re: Is Long Term Care Insurance worth it?

Post by michaeljc70 » Tue Feb 12, 2019 8:44 am

I have a friend where both parents had Alzheimer's. One has since passed, one parent is still living. The family hired someone to live in and take care of them. It costs around 60k or $70k a year and their pension and social security covered it. I suppose if they had Alzheimer's and multiple other serious medical issues, then this kind of arrangement would not be possible.

smitcat
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Re: Is Long Term Care Insurance worth it?

Post by smitcat » Tue Feb 12, 2019 9:37 am

michaeljc70 wrote:
Tue Feb 12, 2019 8:44 am
I have a friend where both parents had Alzheimer's. One has since passed, one parent is still living. The family hired someone to live in and take care of them. It costs around 60k or $70k a year and their pension and social security covered it. I suppose if they had Alzheimer's and multiple other serious medical issues, then this kind of arrangement would not be possible.
Agreed- those expenses and the idea of a person 'living in' with our parents did not work in either of the cases. It does sound good when you think about it but falls way short when you try and execute it - at least in our case times 2.
YMMV

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willthrill81
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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 » Tue Feb 12, 2019 11:32 am

TomatoTomahto wrote:
Tue Feb 12, 2019 7:11 am
ptk446318 wrote:
Tue Feb 12, 2019 2:05 am
I'm currently researching LTCI and wanted to share a link to a recent (2/7/19) Vanguard article regarding retirement healthcare costs. I found the chart toward the end of the article which identifies the percentage of recipients receiving the indicated ranges of paid long-term care to be very informative. Hope this is helpful to others as well.

https://investornews.vanguard/retiremen ... g-it-down/
Thank you for that. We decided to self-insure in the past, and the chart was very reassuring that we had made the right choice :sharebeer
I find the key chart (cannot get it to post here) very informative. It indicates that 48% of retirees pay nothing for LTC, 25% pay between $1-$100k, 11% will pay between $100k-$250k, and only 15% pay more than $250k. If we assume that the likelihood of one spouse needing LTC is independent of the other spouse's likelihood, this means that there is only a 2% chance that both spouses will incur LTC expenses greater than $500k. That seems very self-insurable for most BHs.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Is Long Term Care Insurance worth it?

Post by Ben Mathew » Tue Feb 12, 2019 1:17 pm

willthrill81 wrote:
Tue Feb 12, 2019 11:32 am
TomatoTomahto wrote:
Tue Feb 12, 2019 7:11 am
ptk446318 wrote:
Tue Feb 12, 2019 2:05 am
I'm currently researching LTCI and wanted to share a link to a recent (2/7/19) Vanguard article regarding retirement healthcare costs. I found the chart toward the end of the article which identifies the percentage of recipients receiving the indicated ranges of paid long-term care to be very informative. Hope this is helpful to others as well.

https://investornews.vanguard/retiremen ... g-it-down/
Thank you for that. We decided to self-insure in the past, and the chart was very reassuring that we had made the right choice :sharebeer
I find the key chart (cannot get it to post here) very informative. It indicates that 48% of retirees pay nothing for LTC, 25% pay between $1-$100k, 11% will pay between $100k-$250k, and only 15% pay more than $250k. If we assume that the likelihood of one spouse needing LTC is independent of the other spouse's likelihood, this means that there is only a 2% chance that both spouses will incur LTC expenses greater than $500k. That seems very self-insurable for most BHs.
Low probability + high cost events is precisely where self-insurance becomes hard and the case for purchasing insurance becomes stronger. The probability of a house burning down is very low, but if it happens, the owner would be in a lot of trouble. So the case for purchasing home insurance in strong. If long term care was a high probability event with costs known in advance, it's just something we'd need to save up for, not something we'd need to purchase insurance for.

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willthrill81
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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 » Tue Feb 12, 2019 1:27 pm

Ben Mathew wrote:
Tue Feb 12, 2019 1:17 pm
willthrill81 wrote:
Tue Feb 12, 2019 11:32 am
TomatoTomahto wrote:
Tue Feb 12, 2019 7:11 am
ptk446318 wrote:
Tue Feb 12, 2019 2:05 am
I'm currently researching LTCI and wanted to share a link to a recent (2/7/19) Vanguard article regarding retirement healthcare costs. I found the chart toward the end of the article which identifies the percentage of recipients receiving the indicated ranges of paid long-term care to be very informative. Hope this is helpful to others as well.

https://investornews.vanguard/retiremen ... g-it-down/
Thank you for that. We decided to self-insure in the past, and the chart was very reassuring that we had made the right choice :sharebeer
I find the key chart (cannot get it to post here) very informative. It indicates that 48% of retirees pay nothing for LTC, 25% pay between $1-$100k, 11% will pay between $100k-$250k, and only 15% pay more than $250k. If we assume that the likelihood of one spouse needing LTC is independent of the other spouse's likelihood, this means that there is only a 2% chance that both spouses will incur LTC expenses greater than $500k. That seems very self-insurable for most BHs.
Low probability + high cost events is precisely where self-insurance becomes hard and the case for purchasing insurance becomes stronger. The probability of a house burning down is very low, but if it happens, the owner would be in a lot of trouble. So the case for purchasing home insurance in strong. If long term care was a high probability event with costs known in advance, it's just something we'd need to save up for, not something we'd need to purchase insurance for.
Unfortunately, long-term care insurance with a long elimination period is not available. The premiums paid on the policies currently available on the market are largely just paying for the first few years of LTC, which could easily be self-insured. It's not possible to only insure the very high cost events (i.e. 5+ years of care).

This is akin to buying homeowners insurance with something like a $50 deductible and the resulting very high premiums. Raising the deductible (i.e. the elimination period of LTCi) would dramatically reduce the premiums, but we don't have that option available to us with LTCi.

I believe that part of the reason that LTCi with long elimination periods is not available is state regulation.
“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

marcopolo
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Re: Is Long Term Care Insurance worth it?

Post by marcopolo » Tue Feb 12, 2019 1:30 pm

Ben Mathew wrote:
Tue Feb 12, 2019 1:17 pm
willthrill81 wrote:
Tue Feb 12, 2019 11:32 am
TomatoTomahto wrote:
Tue Feb 12, 2019 7:11 am
ptk446318 wrote:
Tue Feb 12, 2019 2:05 am
I'm currently researching LTCI and wanted to share a link to a recent (2/7/19) Vanguard article regarding retirement healthcare costs. I found the chart toward the end of the article which identifies the percentage of recipients receiving the indicated ranges of paid long-term care to be very informative. Hope this is helpful to others as well.

https://investornews.vanguard/retiremen ... g-it-down/
Thank you for that. We decided to self-insure in the past, and the chart was very reassuring that we had made the right choice :sharebeer
I find the key chart (cannot get it to post here) very informative. It indicates that 48% of retirees pay nothing for LTC, 25% pay between $1-$100k, 11% will pay between $100k-$250k, and only 15% pay more than $250k. If we assume that the likelihood of one spouse needing LTC is independent of the other spouse's likelihood, this means that there is only a 2% chance that both spouses will incur LTC expenses greater than $500k. That seems very self-insurable for most BHs.
Low probability + high cost events is precisely where self-insurance becomes hard and the case for purchasing insurance becomes stronger. The probability of a house burning down is very low, but if it happens, the owner would be in a lot of trouble. So the case for purchasing home insurance in strong. If long term care was a high probability event with costs known in advance, it's just something we'd need to save up for, not something we'd need to purchase insurance for.
Well, you got the idea of insurance right. But, I am having a hard time seeing how you think LTCi fits that bill.
According to the chart, 25% use between $1 and $250k. That seems like a pretty high probability to me, imagine what your homeowners insurance would be if there were a 25% chance of your house burning down. That is why LTCi is so expensive. Even the 15% that is over $250k is pretty high probability, and insuring it is expensive.

I wish they had broken it down a little more finely beyond that. But, maybe at something like $500k, the probability drops to something like 5%? Now, you are in the realm where the idea of insurance as you describe it (low probability + high cost) makes sense, and the cost of such coverage would be reasonable, precisely because the probability of using the coverage would be low, you know, like how insurance is supposed to work. But, where are the policies that have a $250k or $500k deductible, and then cover the long tail risk? That would be real insurance worth buying. As it is, what is offered by the industry is really just prepaying for a pretty likely event.
Last edited by marcopolo on Tue Feb 12, 2019 1:43 pm, edited 1 time in total.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Ben Mathew
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Re: Is Long Term Care Insurance worth it?

Post by Ben Mathew » Tue Feb 12, 2019 1:38 pm

willthrill81 wrote:
Tue Feb 12, 2019 1:27 pm
Ben Mathew wrote:
Tue Feb 12, 2019 1:17 pm
willthrill81 wrote:
Tue Feb 12, 2019 11:32 am
TomatoTomahto wrote:
Tue Feb 12, 2019 7:11 am
ptk446318 wrote:
Tue Feb 12, 2019 2:05 am
I'm currently researching LTCI and wanted to share a link to a recent (2/7/19) Vanguard article regarding retirement healthcare costs. I found the chart toward the end of the article which identifies the percentage of recipients receiving the indicated ranges of paid long-term care to be very informative. Hope this is helpful to others as well.

https://investornews.vanguard/retiremen ... g-it-down/
Thank you for that. We decided to self-insure in the past, and the chart was very reassuring that we had made the right choice :sharebeer
I find the key chart (cannot get it to post here) very informative. It indicates that 48% of retirees pay nothing for LTC, 25% pay between $1-$100k, 11% will pay between $100k-$250k, and only 15% pay more than $250k. If we assume that the likelihood of one spouse needing LTC is independent of the other spouse's likelihood, this means that there is only a 2% chance that both spouses will incur LTC expenses greater than $500k. That seems very self-insurable for most BHs.
Low probability + high cost events is precisely where self-insurance becomes hard and the case for purchasing insurance becomes stronger. The probability of a house burning down is very low, but if it happens, the owner would be in a lot of trouble. So the case for purchasing home insurance in strong. If long term care was a high probability event with costs known in advance, it's just something we'd need to save up for, not something we'd need to purchase insurance for.
Unfortunately, long-term care insurance with a long elimination period is not available. The premiums paid on the policies currently available on the market are largely just paying for the first few years of LTC, which could easily be self-insured. It's not possible to only insure the very high cost events (i.e. 5+ years of care).

This is akin to buying homeowners insurance with something like a $50 deductible and the resulting very high premiums. Raising the deductible (i.e. the elimination period of LTCi) would dramatically reduce the premiums, but we don't have that option available to us with LTCi.

I believe that part of the reason that LTCi with long elimination periods is not available is state regulation.
Fair enough. Higher deductibles would make it a cheaper and better product. If state regulation is preventing that, that's a problem.

It would be useful if someone can estimate how expensive LTC insurance is relative to expected payouts for the average consumer. i.e. multiply probabilities x costs and compare to premiums. The Vanguard chart, if accurate, should allow for a rough calculation.

michaeljc70
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Re: Is Long Term Care Insurance worth it?

Post by michaeljc70 » Tue Feb 12, 2019 1:41 pm

marcopolo wrote:
Tue Feb 12, 2019 1:30 pm
Ben Mathew wrote:
Tue Feb 12, 2019 1:17 pm
willthrill81 wrote:
Tue Feb 12, 2019 11:32 am
TomatoTomahto wrote:
Tue Feb 12, 2019 7:11 am
ptk446318 wrote:
Tue Feb 12, 2019 2:05 am
I'm currently researching LTCI and wanted to share a link to a recent (2/7/19) Vanguard article regarding retirement healthcare costs. I found the chart toward the end of the article which identifies the percentage of recipients receiving the indicated ranges of paid long-term care to be very informative. Hope this is helpful to others as well.

https://investornews.vanguard/retiremen ... g-it-down/
Thank you for that. We decided to self-insure in the past, and the chart was very reassuring that we had made the right choice :sharebeer
I find the key chart (cannot get it to post here) very informative. It indicates that 48% of retirees pay nothing for LTC, 25% pay between $1-$100k, 11% will pay between $100k-$250k, and only 15% pay more than $250k. If we assume that the likelihood of one spouse needing LTC is independent of the other spouse's likelihood, this means that there is only a 2% chance that both spouses will incur LTC expenses greater than $500k. That seems very self-insurable for most BHs.
Low probability + high cost events is precisely where self-insurance becomes hard and the case for purchasing insurance becomes stronger. The probability of a house burning down is very low, but if it happens, the owner would be in a lot of trouble. So the case for purchasing home insurance in strong. If long term care was a high probability event with costs known in advance, it's just something we'd need to save up for, not something we'd need to purchase insurance for.
Well, you got the idea of insurance right. But, I am having a hard time seeing how you think LTCi fits that bill.
According to the chart, 25% use between 0 and $250k. That seems like a pretty high probability to me, imagine what your homeowners insurance would be if there were a 25% chance of your house burning down. That is why LTCi is so expensive. Even the 15% that is over $250k is pretty high probability, and insuring it is expensive.

I wish they had broken it down a little more finely beyond that. But, maybe at something like $500k, the probability drops to something like 5%? Now, you are in the realm where the idea of insurance as you describe it (low probability + high cost) makes sense, and the cost of such coverage would be reasonable, precisely because the probability of using the coverage would be low, you know, like how insurance is supposed to work. But, where are the policies that have a $250k or $500k deductible, and then cover the long tail risk? That would be real insurance worth buying. As it is, what is offered by the industry is really just prepaying for a pretty likely event.
According to the chart, 25% use between $1-$100k. 48% use none.

Image
Source: Vanguard
Last edited by michaeljc70 on Tue Feb 12, 2019 1:44 pm, edited 1 time in total.

Ben Mathew
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Re: Is Long Term Care Insurance worth it?

Post by Ben Mathew » Tue Feb 12, 2019 1:43 pm

marcopolo wrote:
Tue Feb 12, 2019 1:30 pm
Ben Mathew wrote:
Tue Feb 12, 2019 1:17 pm
Low probability + high cost events is precisely where self-insurance becomes hard and the case for purchasing insurance becomes stronger. The probability of a house burning down is very low, but if it happens, the owner would be in a lot of trouble. So the case for purchasing home insurance in strong. If long term care was a high probability event with costs known in advance, it's just something we'd need to save up for, not something we'd need to purchase insurance for.
Well, you got the idea of insurance right. But, I am having a hard time seeing how you think LTCi fits that bill.
According to the chart, 25% use between 0 and $250k. That seems like a pretty high probability to me, imagine what your homeowners insurance would be if there were a 25% chance of your house burning down. That is why LTCi is so expensive. Even the 15% that is over $250k is pretty high probability, and insuring it is expensive.

I wish they had broken it down a little more finely beyond that. But, maybe at something like $500k, the probability drops to something like 5%? Now, you are in the realm where the idea of insurance as you describe it (low probability + high cost) makes sense, and the cost of such coverage would be reasonable, precisely because the probability of using the coverage would be low, you know, like how insurance is supposed to work. But, where are the policies that have a $250k or $500k deductible, and then cover the long tail risk? That would be real insurance worth buying. As it is, what is offered by the industry is really just prepaying for a pretty likely event.
25% is unlikely enough that insurance would be very useful at actuarially fair rates. Suppose there's a one in four chance that your $400K house will be destroyed. Would you save $400K so you have funds to replace it if it's destroyed, or pay a $100K premium to insure it?
Last edited by Ben Mathew on Tue Feb 12, 2019 1:44 pm, edited 1 time in total.

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willthrill81
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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 » Tue Feb 12, 2019 1:44 pm

marcopolo wrote:
Tue Feb 12, 2019 1:30 pm
Ben Mathew wrote:
Tue Feb 12, 2019 1:17 pm
willthrill81 wrote:
Tue Feb 12, 2019 11:32 am
TomatoTomahto wrote:
Tue Feb 12, 2019 7:11 am
ptk446318 wrote:
Tue Feb 12, 2019 2:05 am
I'm currently researching LTCI and wanted to share a link to a recent (2/7/19) Vanguard article regarding retirement healthcare costs. I found the chart toward the end of the article which identifies the percentage of recipients receiving the indicated ranges of paid long-term care to be very informative. Hope this is helpful to others as well.

https://investornews.vanguard/retiremen ... g-it-down/
Thank you for that. We decided to self-insure in the past, and the chart was very reassuring that we had made the right choice :sharebeer
I find the key chart (cannot get it to post here) very informative. It indicates that 48% of retirees pay nothing for LTC, 25% pay between $1-$100k, 11% will pay between $100k-$250k, and only 15% pay more than $250k. If we assume that the likelihood of one spouse needing LTC is independent of the other spouse's likelihood, this means that there is only a 2% chance that both spouses will incur LTC expenses greater than $500k. That seems very self-insurable for most BHs.
Low probability + high cost events is precisely where self-insurance becomes hard and the case for purchasing insurance becomes stronger. The probability of a house burning down is very low, but if it happens, the owner would be in a lot of trouble. So the case for purchasing home insurance in strong. If long term care was a high probability event with costs known in advance, it's just something we'd need to save up for, not something we'd need to purchase insurance for.
Well, you got the idea of insurance right. But, I am having a hard time seeing how you think LTCi fits that bill.
According to the chart, 25% use between 0 and $250k. That seems like a pretty high probability to me, imagine what your homeowners insurance would be if there were a 25% chance of your house burning down. That is why LTCi is so expensive. Even the 15% that is over $250k is pretty high probability, and insuring it is expensive.

I wish they had broken it down a little more finely beyond that. But, maybe at something like $500k, the probability drops to something like 5%? Now, you are in the realm where the idea of insurance as you describe it (low probability + high cost) makes sense, and the cost of such coverage would be reasonable, precisely because the probability of using the coverage would be low, you know, like how insurance is supposed to work. But, where are the policies that have a $250k or $500k deductible, and then cover the long tail risk? That would be real insurance worth buying. As it is, what is offered by the industry is really just prepaying for a pretty likely event.
Precisely.

I would personally be far more attracted to a LTCi policy with something like a $500k deductible.
“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

marcopolo
Posts: 1612
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Re: Is Long Term Care Insurance worth it?

Post by marcopolo » Tue Feb 12, 2019 1:44 pm

michaeljc70 wrote:
Tue Feb 12, 2019 1:41 pm
marcopolo wrote:
Tue Feb 12, 2019 1:30 pm
Ben Mathew wrote:
Tue Feb 12, 2019 1:17 pm
willthrill81 wrote:
Tue Feb 12, 2019 11:32 am
TomatoTomahto wrote:
Tue Feb 12, 2019 7:11 am


Thank you for that. We decided to self-insure in the past, and the chart was very reassuring that we had made the right choice :sharebeer
I find the key chart (cannot get it to post here) very informative. It indicates that 48% of retirees pay nothing for LTC, 25% pay between $1-$100k, 11% will pay between $100k-$250k, and only 15% pay more than $250k. If we assume that the likelihood of one spouse needing LTC is independent of the other spouse's likelihood, this means that there is only a 2% chance that both spouses will incur LTC expenses greater than $500k. That seems very self-insurable for most BHs.
Low probability + high cost events is precisely where self-insurance becomes hard and the case for purchasing insurance becomes stronger. The probability of a house burning down is very low, but if it happens, the owner would be in a lot of trouble. So the case for purchasing home insurance in strong. If long term care was a high probability event with costs known in advance, it's just something we'd need to save up for, not something we'd need to purchase insurance for.
Well, you got the idea of insurance right. But, I am having a hard time seeing how you think LTCi fits that bill.
According to the chart, 25% use between 0 and $250k. That seems like a pretty high probability to me, imagine what your homeowners insurance would be if there were a 25% chance of your house burning down. That is why LTCi is so expensive. Even the 15% that is over $250k is pretty high probability, and insuring it is expensive.

I wish they had broken it down a little more finely beyond that. But, maybe at something like $500k, the probability drops to something like 5%? Now, you are in the realm where the idea of insurance as you describe it (low probability + high cost) makes sense, and the cost of such coverage would be reasonable, precisely because the probability of using the coverage would be low, you know, like how insurance is supposed to work. But, where are the policies that have a $250k or $500k deductible, and then cover the long tail risk? That would be real insurance worth buying. As it is, what is offered by the industry is really just prepaying for a pretty likely event.
According to the chart, 25% use between $1-$100k. 48% use none.
Thanks, I corrected my previous post. I think my point still stands.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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TomatoTomahto
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Re: Is Long Term Care Insurance worth it?

Post by TomatoTomahto » Tue Feb 12, 2019 1:45 pm

marcopolo wrote:I wish they had broken it down a little more finely beyond that. But, maybe at something like $500k, the probability drops to something like 5%? Now, you are in the realm where the idea of insurance as you describe it (low probability + high cost) makes sense, and the cost of such coverage would be reasonable, precisely because the probability of using the coverage would be low, you know, like how insurance is supposed to work. But, where are the policies that have a $250k or $500k deductible, and then cover the long tail risk? That would be real insurance worth buying. As it is, what is offered by the industry is really just prepaying for a pretty likely event.
I agree. I’d be right in line to buy a policy that pays for anything after $500k.

One of our design criteria in our home renovation is that it be suitable for aging in place, on one floor, with a comfortable apartment for caregivers. That’s, IMO, a better use of our money than premiums on a LTCi. And, if one or both of us is home bound, think of how much we will be saving on travel, restaurants, automobiles, etc.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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willthrill81
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Re: Is Long Term Care Insurance worth it?

Post by willthrill81 » Tue Feb 12, 2019 1:46 pm

Ben Mathew wrote:
Tue Feb 12, 2019 1:43 pm
25% is still low enough that insurance would be very useful at actuarially fair rates. Suppose there's a one in four chance that your $400K house will be destroyed. Would you save $400K so you have funds to replace it if it's destroyed, or pay a $100K premium to insure it?
The key to your statement is "actuarially fair rates." You couldn't buy a policy in that instance for $100k; the insurance company also has administrative costs and profit needs. So the policy might cost something like $125k.

Events with a fairly high probability of occurrence should be self-insured if possible. I'm not sure if 25% would be quite high enough to clear that threshhold, but it probably would.
“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

JoeRetire
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Re: Is Long Term Care Insurance worth it?

Post by JoeRetire » Tue Feb 12, 2019 1:47 pm

Ben Mathew wrote:
Tue Feb 12, 2019 1:17 pm
willthrill81 wrote:
Tue Feb 12, 2019 11:32 am
If we assume that the likelihood of one spouse needing LTC is independent of the other spouse's likelihood, this means that there is only a 2% chance that both spouses will incur LTC expenses greater than $500k. That seems very self-insurable for most BHs.
Low probability + high cost events is precisely where self-insurance becomes hard and the case for purchasing insurance becomes stronger. The probability of a house burning down is very low, but if it happens, the owner would be in a lot of trouble. So the case for purchasing home insurance in strong. If long term care was a high probability event with costs known in advance, it's just something we'd need to save up for, not something we'd need to purchase insurance for.
But if you accept the premise that most BHs can set aside an unneeded $500k to self-insure, then I guess purchasing home insurance doesn't make sense either. Of course you'd need $500k+$500k to self-insure both for Long Term Care and your Home.

Do most people here actually have $500k+ set aside for this purpose? Seems unlikely to me.

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