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Baloney or Valid?
Old 03-02-2005, 06:28 AM   #1
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Baloney or Valid?

Yesterday in my senior investment class, the prof (read a salesman from Edward Jones) got to talking about insurance. He put up a chart that purports that you have a 2:1 chance to need Long Term Health Coverage, as opposed to say 1200:1 need for house insurance.

Is this baloney? I do know that, so far, 2 of our 4 (DW's and my parents) have a need for such. If his facts are correct, this would be a major retirement fund drainer. Anybody have contrarian facts? And, if it is true, then how would you pick an insurance company that will keep premium low as you age and more importantly, still be there when you need it?
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I smell artificially preserved meat-like products.
Old 03-02-2005, 08:22 AM   #2
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I smell artificially preserved meat-like products.

Sounds like you're setting up a strawman, Eagle. But everyone knows that those Jones people have their our best commissions interests at heart!

According to his math, eight of your collective four parents will need LTC coverage, correct? Or is he saying that there's a one out of two chance?

I don't know the real numbers because the statistics are even more subject to manipulation than one of TH's marketing studies. (BTW, TH, thanks for training the next generation of researchers...)

One "study" I've read is that 40% of those over 65 will need a form of convalescent care. The details disclose that the convalescence in an inpatient facility is usually only a couple weeks, and one of the studies included outpatient physical therapy as one form of convalescence. (According to that math, my eight weeks of six outpatient physical therapy appointments has contaminated someone's database as "LTC".) Long-term stays continue to be a minority of those in a full-carefacility-- I believe the fraction was 10% but it was small enough to make you want to play the odds with a healthy lifestyle. So I'm not sure that LTC insurance is merited by anyone's scary studies.

If there's only a 1:1200 need for fire insurance, then why the heck do we pay premiums? Because we usually can't afford to recover on our own from that casualty. I think that LTC should be treated the same way-- if you have more than $1M in assets then you can probably self-insure. Less than that, LTC insurance would probably improve nightly sleep. (But my spouse is pretty enthusiastic about buying me a 9mm LTC policy sold by some gonzo named Thompson.)

The federal govt is subsidizing a long-term care insurance program for fed employees (including military) and their extended families. One of the companies is John Hancock. My father has been pretty happy with his own Hancock policy.

But I'd be highly suspicious of anyone's promises of low premiums.

Disclaimer-- although our net worth would probably merit LTC insurance, we're going naked on this one for the benefits of a healthy lifestyle. I watched my grandparents' sedentary (and dietary) habits before they entered full-care facilities, and I'll wager that martial arts students don't end up there.

Now if my spouse would just stop with the backwards-spelling pop quizzes...
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Re: Baloney or Valid?
Old 03-02-2005, 10:21 AM   #3
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Re: Baloney or Valid?

Quote:
Yesterday in my senior investment class, the prof (read a salesman from Edward Jones) got to talking about insurance. *He put up a chart that purports that you have a 2:1 chance to need Long Term Health Coverage, as opposed to say 1200:1 need for house insurance.

Is this baloney? *I do know that, so far, 2 of our 4 (DW's and my parents) *have a need for such. *If his facts are correct, this would be a major retirement fund drainer. *Anybody have contrarian facts? And, if it is true, then how would you pick an insurance company that will keep premium low as you age and more importantly, still be there when you need it?
Here's a good six-part series of articles on LTC insurance by Dave Braze at the Motley Fool.

http://www.fool.com/retirement/care/01.htm

The table in part 4 might answer your question

----------------------------------------------------------

Projected LTC Use for Persons Who Reached Age 65 in 1990

Total Use % of Men % of Women % of Total
Any use 33 52 43
>= 3 mos 22 41 32
>= 1 yr 14 31 24
>= 5 yr 4 13 9
-----------------------------------------------------------------

It looks like there's only a 14% chance a 65-year-old male will spend 1 year in a nursing home and a 4% chance he'll spend 5 years.

I believe Medicare covers up to 100 days in a nursing home, so someone spending only 3 months in a LTC facility won't make a claim on their LTC policy anyway.

intercst








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Re: Baloney or Valid?
Old 03-02-2005, 10:24 AM   #4
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Re: Baloney or Valid?

Thanks, trust me, I am suspicious. This class is composed of seniors, all but me over 65. He's been teaching the entire gamut (CDs, bonds, funds, etc). When he got to mutual funds, a classmate and I jumped on him about index funds. Didn't want to talk too much about those kind of funds, of course. I listen, learn what I can, but I'm naturally cynical.

I can spell backwards, but only 3-letter words. Hope that doesn't mean aitnemed or sremiehzla.
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Re: I smell artificially preserved meat-like produ
Old 03-02-2005, 01:55 PM   #5
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Re: I smell artificially preserved meat-like produ

Quote:
I don't know the real numbers because the statistics are even more subject to manipulation than one of TH's marketing studies. (BTW, TH, thanks for training the next generation of researchers...)
No problem Nords...and you'll be pleased to know that this benefit has been made available to you AT NO ADDITIONAL CHARGE! :)

Some of these statistical things can be determined to be true or false using what I call the "prarie dog" method. Stop looking at reports and stick your head up for a minute and sniff the air.

If LTC was a major demand need, you'd be hearing it as a hot button issue. The papers would be filled with stories of people losing their shirt because they needed long term care and didnt have the money. You'd be getting hammered with stories about how you should be saving for long term care as that appears to be almost as important as retirement savings.

Sniff...Sniff...Sniff...nope, I'm not detecting anything other than transient sales efforts and occasional stories. Intercasts data backs that up.

The prarie dog method works well on a lot of stuff where diving into the weeds gives you too many different stories, many full of special interests.
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Re: Baloney or Valid?
Old 03-02-2005, 04:01 PM   #6
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Re: Baloney or Valid?

http://raddr-pages.com/forums/viewtopic.php?t=1103
Snagged this off of Raddr's pages...seems to fit this topic

Quote:
As Fee Increases Hit Holders
Of Insurance for Long-Term Care,
Is It Safe to Buy?

By TERRI CULLEN
THE WALL STREET JOURNAL ONLINE
March 2, 2005; Page D1

Is it safe to buy long-term-care insurance yet?

After years of a brutal industry consolidation that has driven many players out of the market and led to sharply higher premiums -- in some cases increases of as much as 40% in one year -- the long-term-care insurance market is finally showing signs of stabilizing. Unfortunately for consumers, those who have suffered most through the industry's growing pains are the ones who have held their policies the longest.

Long-term-care insurance covers individuals who suffer from chronic illness or disabilities that prevent them from caring for themselves. A typical policy will cover between three and six years of care, and premiums average about $1,000 a year for a 55-year-old married individual, or $1,800 for singles.
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Re: Baloney or Valid?
Old 03-02-2005, 04:06 PM   #7
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Re: Baloney or Valid?

Quote:
Projected LTC Use for Persons Who Reached Age 65 in 1990

Total Use * * % of Men * * % of Women * * % of Total
Any use * * * * *33 * * * * * *52 * * * * * * 43
>= 3 mos * * * * 22 * * * * * *41 * * * * * * 32
>= 1 yr * * * * *14 * * * * * *31 * * * * * * 24
>= 5 yr * * * * * 4 * * * * * *13 * * * * * * *9
Interesting to compare the %age of men versus women needing LTC. I imagine that it's a combination of women living longer than men and men getting LTC at home from their wife before they go.
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Re: Baloney or Valid?
Old 03-02-2005, 06:38 PM   #8
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Re: Baloney or Valid?

I have concluded that my "instructor" was feeding us baloney. His 2-1 numbers are selling points. Mebbe I should copy the Fool article and check his reaction. I do like TH's assessment that if it was a really big problem, we'd be hearing it everywhere. However, it may turn in a problem as the boomers age.

I knew that somebody would know on this forum, and I thank you all.
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Re: Baloney or Valid?
Old 03-02-2005, 09:03 PM   #9
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Re: Baloney or Valid?

a couple of Consumer Reports articles on LTC:

http://www.consumerreports.org/main/...=1109829875271

http://consumerlawpage.com/article/insure.shtml

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Re: Baloney or Valid?
Old 03-04-2005, 09:48 AM   #10
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Re: Baloney or Valid?

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I believe Medicare covers up to 100 days in a nursing home, so someone spending only 3 months in a LTC facility won't make a claim on their LTC policy anyway.

intercst
My father spent alot of his last spring / summer / fall in a SNF (Skilled Nursing Facility) covered by Medicare & AARP. If you are hospitalized for 3 days or more, then you get 100 days covered by Medicare with your Medigap insurance picking up the difference. [Paid $0 for days 1-20; Days 20 -100 @ 109 which was covered by AARP.] *Provided you are out of the SNF for at least 60 days and are rehospitalized for 3 or more days, that pool of 100 eligible days is replenished which made him eligible for another 100 days. We took him home after 2 weeks the second time around but still had available days following the 3rd hospitalization ---- never used them as he preferred to die at home

[see pages 39-40 of Your Medicare Eligibility Booklink at http:www.Medicare.gov]
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Re: Baloney or Valid?
Old 03-05-2005, 04:38 PM   #11
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Re: Baloney or Valid?

I found this article from The Journal of Financial Planning to be very enlightening. I've printed it out and given it to several of my peers. It is an older article, but as I understand it has be offred recently as one of the best of the Journal in the past 25 years of articles. http://www.fpanet.org/journal/articl...p0904-art8.cfm
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Re: Baloney or Valid?
Old 03-05-2005, 06:08 PM   #12
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Excellent article, which only reconfirms my opinion. I plan to keep my mother, who is neither addicted to drugs or alcohol, at home as well. [She now fits the single category]. Cheaper and more patient-friendly
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Old 03-06-2005, 02:49 AM   #13
 
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Another "non-decision" for us. We can't afford it
(LTC ins.) and neither can my parents. Just rolling the dice...........

JG
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Old 03-06-2005, 06:08 AM   #14
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Re: Baloney or Valid?

Sooo...who ends up paying for personally unfunded medical or nursing care JG?. *Perhaps you should tour the local charity wing of your county medical facility to get an idea of what contingent situation awaits. *My wife is a doctor, trained in eastern europe and the US, but still shocked at what this country serves up at the county level. *You may want to take some spanish lessons so that you can have a conversation with your new best amigos on the ward during your stay. *For the numerous illegals this is but a part of the spoils of Mexico's plunder by state sponsored alien invasion, for the poor this is just part of their survival game, but most ordinary but uninsured Americans *will be shocked with the prevailing charity hospital conditions. *JG, as well as the rest of you all, I hope you never have to find out how broken the charity hospital systems across the US are.
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Old 03-06-2005, 06:11 AM   #15
 
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I've seen it, up close and personal.

JG
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Old 03-06-2005, 06:13 AM   #16
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Re: Baloney or Valid?

Did you bring your own lime green jello?
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Old 03-06-2005, 06:26 AM   #17
 
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Nope, just Preparation H and Metamucil

JG
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Re: Baloney or Valid?
Old 03-06-2005, 06:46 AM   #18
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Re: Baloney or Valid?

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Nope, just Preparation H and Metamucil

JG
Thanks for the setup JG, but I'm going to resist the obvious comeback associating you with the location of your discomfort.

REW
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