Should we drop our Long Term Care Insurance?

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brianphill77
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Should we drop our Long Term Care Insurance?

Post by brianphill77 »

Short version: Have had LTC insurance for just less than one year, through employer. Monthly cost for myself (46) and wife (50) combined is increasing from $95/mo to $172/mo. We've paid in around $1,000 so far, but who knows how many more increases will be coming in the years ahead. Are we better off just cutting our losses and dropping it?

More details: Plan is from UNUM, coverage for each of us is 3 year benefit duration with 90 day elimination period, $3,000 max monthly benefit for a lifetime max of $108k, but with 5% inflation protection. So by the time we would need it, should have a substantial monthly benefit and maximum.

Signed up because my father had early onset severe dementia, 6 years in an assisted living facility made me a bit paranoid. But while I knew there was some risk of increases over time, I did not expect this kind of jump this quickly, and who knows how much higher it will go. Makes cost/benefit analysis over the long term difficult, and am now thinking it was a mistake to sign up, and we should cut our losses now before paying in even more.

An alternative is to reduce coverage, but the component that increases the cost the most is the compound inflation - removing that drops the cost down to only $45/mo combined. But then, why bother - a $108k max benefit is not compelling, and we should be able to cover that out of retirement savings if needed. I wouldn't have signed up in the first place if the compound inflation option wasn't available.
RadAudit
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Re: Should we drop our Long Term Care Insurance?

Post by RadAudit »

Usually answers to these types of questions depend on your financial situation. Please use this format to modify your post. viewtopic.php?f=1&t=6212
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tvubpwcisla
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Re: Should we drop our Long Term Care Insurance?

Post by tvubpwcisla »

I would drop it. Just imagine how much money you will have if you put those premiums into a Vanguard fund.
Stay invested my friends.
Chuck107
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Re: Should we drop our Long Term Care Insurance?

Post by Chuck107 »

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Last edited by Chuck107 on Mon Oct 05, 2020 6:56 am, edited 1 time in total.
Alas, I find moderation of this forum too restrictive for my tastes, farewell.
bsteiner
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Re: Should we drop our Long Term Care Insurance?

Post by bsteiner »

It would be better if it covered an unlimited duration, but not the first 3 years.
stan1
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Re: Should we drop our Long Term Care Insurance?

Post by stan1 »

brianphill77 wrote: Sun May 24, 2020 11:01 am Short version: Have had LTC insurance for just less than one year, through employer. Monthly cost for myself (46) and wife (50) combined is increasing from $95/mo to $172/mo.

More details: Plan is from UNUM, coverage for each of us is 3 year benefit duration with 90 day elimination period, $3,000 max monthly benefit for a lifetime max of $108k, but with 5% inflation protection. So by the time we would need it, should have a substantial monthly benefit and maximum.
The problem is none of this is guaranteed. In the future you will likely be offered options to lower your premiums in exchange for dropping the inflation index down to 3%, 2% or 0%. With an insurer offering a 5% inflation adjustment in 2020 I'd expect those future options would NOT be actuarially neutral (as you are seeing already with your premiums almost doubling).

Also, since this coverage is through your employer can you continue it if you leave your job?

The rub with LTCI is this:
The people who can legitimately afford the premiums including future rate increases probably can also self insure.
The people who cannot afford the premiums now or in the future probably can't self insure.
There's not many people in the middle.

One group where LTCI might make sense is people who have income from a pension to pay the premiums in retirement but don't have a lot of assets (for example some school teachers or law enforcement).
chemocean
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Re: Should we drop our Long Term Care Insurance?

Post by chemocean »

My understanding of why the premiums are increasing is: 1) the coverage is being used by greater number of insured for longer periods of time than predicted, and 2) not as many people are dropping coverage as predicted.

IMHO, the first reason suggests that you should keep the coverage because new data suggests that YOU are have a higher probability to need the coverage in the future.
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beyou
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Re: Should we drop our Long Term Care Insurance?

Post by beyou »

Thought this was going to be a covid discussion.
I don’t want to be in a nursing home after what has occurred in them last few months.

My 92yo MIL refused a nursing home or other faciluty, insisted to live in her own place. She has LTCI and we had to talk her into at least using it for at home care. She could have paid out of pocket for at home care, so it was a waste to buy. And she kept renewing through those rate increases/offers to reduce coverage.

I am not buying a policy.
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Stinky
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Re: Should we drop our Long Term Care Insurance?

Post by Stinky »

Chuck107 wrote: Sun May 24, 2020 11:19 am As you say the max it will cover is 108k, and you can fund that amount from retirement savings comfortably, I'd say drop it.

One cravat is if one or both of you are under care beyond 108k, at least they will pay the first 108k. Then the rest is up to you.,

Insurance is for protection. If you don't need it, don't buy it.
+1
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pshonore
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Re: Should we drop our Long Term Care Insurance?

Post by pshonore »

Stinky wrote: Sun May 24, 2020 1:51 pm
Chuck107 wrote: Sun May 24, 2020 11:19 am As you say the max it will cover is 108k, and you can fund that amount from retirement savings comfortably, I'd say drop it.

One cravat is if one or both of you are under care beyond 108k, at least they will pay the first 108k. Then the rest is up to you.,

Insurance is for protection. If you don't need it, don't buy it.
+1
They don't pay the first three months, then they'll pay 3k/month for 36 months. In a place like CT, NY, NJ, etc. you'd be on the hook for approx 10K per month additional worst case + 39K for the first three months
delamer
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Re: Should we drop our Long Term Care Insurance?

Post by delamer »

Unless you live in a very low cost-of-living area, $108K maximum and $3K/month won’t buy you much.

And that big an increase in the premium after such a short time is a bad sign.

I’d drop it.

I am sorry about your father, and I’m sure it’s tough to have his condition hanging over your head.
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Nate79
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Re: Should we drop our Long Term Care Insurance?

Post by Nate79 »

I think you are way to young for LTCi.
delamer
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Re: Should we drop our Long Term Care Insurance?

Post by delamer »

Nate79 wrote: Sun May 24, 2020 4:48 pm I think you are way to young for LTCi.
Not with a father who had early onset dementia.
birnhamwood
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Re: Should we drop our Long Term Care Insurance?

Post by birnhamwood »

" Have had LTC insurance . . . THROUGH EMPLOYER."

Perhaps your employer does not know about UNUM's appalling reputation ??

https://www.consumeraffairs.com/insurance/unum.html
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Nate79
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Re: Should we drop our Long Term Care Insurance?

Post by Nate79 »

delamer wrote: Sun May 24, 2020 4:55 pm
Nate79 wrote: Sun May 24, 2020 4:48 pm I think you are way to young for LTCi.
Not with a father who had early onset dementia.
That doesn't change anything in my book. The likelihood of needing LTC at such a young age is miniscule regardless of the family situation unless they have specific medical information, perhaps a genetic test to say otherwise.
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