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Old 02-07-2010, 11:25 PM   #141
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Originally Posted by brewer12345 View Post

I have been saying for years that LTC does not do a very good job of offloading the risk to the insurer because of their ability to jack premiums. I imagine this is becoming clear to more and more policyholders...
I guess this helps to crystallize my thinking on the subject. You buy insurance to have some certainty in your life. With the insurance company's ability to raise rates at will, there goes any certainty. It's true that health insurance premiums go up, but very VERY few people are in a position to self insure for health insurance, so you are nearly forced to play the insurance company's game with that. On the other hand, LTC has the "escape clause" of the gummint taking care of you in your declining years. Not a pretty thought, but going naked for health care is a lot scarier to me than for LTC. Who knows, you could get lucky and DIE before you need LTC. Another pretty thought.
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Old 02-07-2010, 11:38 PM   #142
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Personally, I have decided not to purchase LTC given our ability to self-insure.

However, my father did and it has turned out to be one of the best investments he ever made. Already (unfortunately) returned well over 200 % (tax free) relative to premiums and was/is with MetLife who have been nothing but professional.

For many, I can see how it fits as a piece of the retirement package and if you are interested in preserving net worth to pass on it could make sense.

Still, the issues of increased premiums and financial viability of the carrier are serious considerations.
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Old 02-08-2010, 06:48 AM   #143
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Personally, I have decided not to purchase LTC given our ability to self-insure.
I started reading this thread when I noticed it had gone over 130 posts on what appeared to be a fairly straightforward question. But I guess your question finally got answered!
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Old 02-08-2010, 11:38 PM   #144
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Here's the thing....the premiums are right, for now. If you went in a nursing home tomorrow, you'd get the benefits for the premium you paid. Life insurance is a fixed single lump-sum payout, LTC and health insurance are not fixed and the benefits paid out could be all over the map, from $0 to the lifetime max (if there is one), or somewhere in between. It is very difficult to determine the average benefits paid well into the future when the amount varies so greatly from person to person. Once again, according to your logic, health insurance should not be sold because the premiums rise each year since they "can't get it right". Would you prefer the insurance companies to just make health insurance $10k per month guaranteed for life to make sure the premiums never go up? Yeah, lots of people would buy that.

If all of the LTC companies were raising rates every year to the point they became unbearable, nobody would buy the product. There is a fine balance between keeping claims paid in line with premiums taken in, and killing your business altogether. Companies know that agents who sell their policies will be less likely to recommend a product if it just had a rate increase.

On a side note, the acknowledgment that premiums are not guaranteed and may increase is not buried in the fine print of the application and policy There are usually 2-3 pages fully devoted to pointing it out in big, bold print, with a signature required on each page.
Not sure about being snarky, but dgoldenz does state that he is an insurance salesman on his info page. I don't have any problems with that - most of us buy insurance of some type in our lives and deal with agents. What I object to is the repeated defense of what, to me, no matter what is claimed, is bait and switch. I KNOW that my house, car and health insurance will be adjusted every year and that I can make choices as to coverage. Yes, LTC insurance has these disclaimers that rates could go up at sometime in the future, but I'll bet that no agent is going to dwell on that very long or make an issue of it. Any questions would be answered in a very reassuring way. And that's the problem - the repeated comment is "if you can't afford the increases down the line, then you shouldn't buy the insurance."

But we don't know what the future costs are and no one can or will tell us. Using that as a measure, then no one should buy LTC insurance, as they have no idea if they will be able to afford it. Again, yes, you have the coverage while you are younger, but the vast majority of claims are made by people who are over 70. Anyone could get hit by a truck, but the industrie's own stats show that the odds of that happening are far lower than you would bother getting LTC for. Maybe disability insurance, but not LTC.

You continue to defend the inexplicable - which is how can anyone know what their premium will be in 25 years and if they will be able to afford it when they need it. I truly do not believe the average person really has a clue as to what they are buying, just that someone told them they need it. Sorry about this, but I NEVER trust a salesman whose economic well being depends on him selling something to me. It's just too great a conflict of interest. Everything a salesman on commission (of anything) tells you should be taken with a Caveat Emptor attitude - let the buyer beware. It's not that they are scammers or thieves - it's that the sale is the end product for them and making it is the only goal. And, please, don't give me any altruistic crap. You are not in this for the benefit of others - you are doing this to make money for yourself - we all are. Frankly, your arguments are doing a far better job than I am at making people think twice or three times about buying LTC insurance.
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Old 02-09-2010, 01:10 AM   #145
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I've looked into LTCI several times over the past decade (or so). It always seemed clear to me that premiums would likely rise though time at an unknown rate. That was a key factor in my decision not to buy.

I understand that I could suffer a malady and require years of care that would seriously deplete my FIRE portfolio. I'm accepting that risk based on my evaluation of LTCI today and hoping something better comes along before I need it. Otherwise, I'm self-insured.
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Old 02-09-2010, 08:38 AM   #146
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Originally Posted by Koolau View Post
I guess this helps to crystallize my thinking on the subject. You buy insurance to have some certainty in your life. With the insurance company's ability to raise rates at will, there goes any certainty. It's true that health insurance premiums go up, but very VERY few people are in a position to self insure for health insurance, so you are nearly forced to play the insurance company's game with that. On the other hand, LTC has the "escape clause" of the gummint taking care of you in your declining years. Not a pretty thought, but going naked for health care is a lot scarier to me than for LTC. Who knows, you could get lucky and DIE before you need LTC. Another pretty thought.
I thought that the "escape clause" for LTC was the same as the "escape clause" for medical costs. In either case, you end up impoverished on Medicaid.

Yet, I buy health insurance but not LTC insurance. The difference I see is that the premium for my health insurance covers this year's risk, while most of the premium for LTC insurance (based on current designs) covers a risk 20 years from now.
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