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Old 01-27-2012, 08:18 AM   #41
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I thought one of the advantages of buying LTC insurance in one's 50's or even 40's was the expecation that they could not raise the premiums much since one was paying in for some many years. I guess I was wrong. What is the point of buying the insurance if the company raises the premiums so high that one drops the coverage as one approaches the age where one needs it What am I missing?
LTC insurance is a real crapshoot and the track record on premium increases is not encouraging. Some of these threads may provide you with some background information: (FAQ archive): Long-term care (LTC) and LTC insurance
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Old 01-27-2012, 12:27 PM   #42
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<snip>What is the point of buying the insurance if the company raises the premiums so high that one drops the coverage as one approaches the age where one needs it?
Same with health insurance premiums. I don't know about the rest of you; but, our homeowners and auto insurance policies also go up every year.

As I said in the previous post, I would rather have insurance and not need it than need it and not have it.
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Old 01-27-2012, 04:34 PM   #43
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The way I see it. To buy LTC insurance or not either makes you a fool or a genius.

The kicker is no one knows which one yet
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Old 01-27-2012, 06:37 PM   #44
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The way I see it. To buy LTC insurance or not either makes you a fool or a genius.
Why is it that statement is never made about any other type of insurance? I've never filed a claim against my homeowner's policy, yet I would never think of not having insurance (that premium is a lot more than my LTC premium). With the exception of 2009 I've paid out more in health insurance premiums than claims paid, yet I still carry health insurance. Same with auto insurance. I wouldn't think about not having it, yet I haven't had a claim in decades.

I just don't know why LTC garners such adverse attention.
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Old 01-27-2012, 06:50 PM   #45
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Why isn't that said for other insurance? I say probably because of the large premium amounts. For example, say you pay $2K a year for 20 years for LTC but never use it. Well, that's 40K down the drain.

Of course, if you do need it, that the $40K is money well spent.
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Old 01-27-2012, 07:44 PM   #46
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With my luck I will pay for LTC care insurance and then live to the mid 90's as a spry, healthy old codger!! On my 96th birthday my girl friend will shoot me dead when she finds me in bed her her best friend! I will never collect a penny on LTC insurance. What a drag!
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Old 01-27-2012, 07:47 PM   #47
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LTC insurance is a real crapshoot and the track record on premium increases is not encouraging. Some of these threads may provide you with some background information: (FAQ archive): Long-term care (LTC) and LTC insurance
For some reason I thought LTC insurance was like the term life policy I purchased many years ago. The rates went up every 3 years but by a a scheduled amount. The rate increase was locked in, so I could see exactly what I would be paying 10, 20 even 30 years into the future. Of course, the benefit was also locked in.
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Old 01-28-2012, 09:46 AM   #48
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Why isn't that said for other insurance? I say probably because of the large premium amounts. For example, say you pay $2K a year for 20 years for LTC but never use it. Well, that's 40K down the drain.

Of course, if you do need it, that the $40K is money well spent.
I pay $2,000 a year (and rising) for my HO policy. I'm paying a bit less than that for LTC. Haven't had a claim on either policy. I just don't see the difference. Insurance is all about assuming or avoiding risk.
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Old 01-28-2012, 10:58 AM   #49
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I pay $2,000 a year (and rising) for my HO policy. I'm paying a bit less than that for LTC. Haven't had a claim on either policy. I just don't see the difference. Insurance is all about assuming or avoiding risk.
Maybe it's psychological then. Perhaps one thinks the chances of having an insurable incident with a homeowner's policy is more relevant than a LTC policy because events seem more immediate. How it all plays out, whether one will file a claim or not, who knows?
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Old 01-28-2012, 12:49 PM   #50
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Maybe it's psychological then. Perhaps one thinks the chances of having an insurable incident with a homeowner's policy is more relevant than a LTC policy because events seem more immediate. How it all plays out, whether one will file a claim or not, who knows?
Let's consider HO vs LTC insurance relative risks:

HO risk is primarily that of natural disasters or fire or flooding. These could happen anytime starting today. The earlier it happens, the easier it will be to recover from, even if you have to work a little longer.
So the risk is distributed over a lifetime. Yet, HO insurance is considered essential.

LTC risk is mainly an end-of-life disaster. Your ability, or actually your spouse's ability, to recover from this type of disaster is pretty small. And the costs can be stunning.

So, if you don't have any assets anyway, you probably don't need LTC insurance. If you're assets are large, let's say, for sake of argument, over $2MM minimum in investment assets, then you can most likely self insure. But, if you are in between, LTC insurance, though expensive, may be worthwhile.

I've got LTC for DW and me. And hopefully I'm throwing that money down a rathole.

Incidentally, I pay more for HO than LTC.
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Old 01-28-2012, 02:02 PM   #51
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Good points, tightasadrum. Another point on having LTC is we have a lot more choices for care. It may mean the difference between percent of nurses to patients, the type of care facility, or even the ability to stay in the home as long as possible with the assistance of paid caregivers.

It also removes the burden of care, even the perceived burden of care, from our children. We told every one of them we're not going to leave them anything nor are we going to cost them anything. Texas does not have a filial responsibility law; however, 30 other states mandate children are financially responsible for their parents.

There is a misconception only older people use LTC. Young people also use it. Catastrophic accidents, illnesses, strokes don't just happen to the old folks.
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Old 01-29-2012, 01:36 PM   #52
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I thought one of the advantages of buying LTC insurance in one's 50's or even 40's was the expecation that they could not raise the premiums much since one was paying in for some many years. I guess I was wrong. What is the point of buying the insurance if the company raises the premiums so high that one drops the coverage as one approaches the age where one needs it What am I missing?
The concept of purchasing LTCI at a younger age is that your premiums will be lower but usually will be paid for a longer period of time. If they DO raise premiums, they don't just raise them on the folks who started early. They raise rates for everyone (AFAIK).

I agree that it seems unfair to be able to raise rates until folks drop their coverage, but, keep in mind: Some "governing" authority (such as a State Insurance Commission) or other body must approve such rate increases. Not saying that makes it all okay, I'm just saying that, in theory, the LTCI companies can't be sneaky about it and "lay in wait" for you until you are 60 and then charge you what ever they want to so that you will then drop your policy. I agree that that is one of the big advantages to the LTCI companies of their rate increases. Many folks DO drop their policies when the rates go up and YES, that is good for the LTCI companies. BUT, at least in theory, the companies have to get "permission" to raise rates from a quasi-governmental agency. If anyone has evidence to the contrary, please correct my statement.

So, Chuckanut, the only thing I would suggest you are "missing" is that this is all legal AND sanctioned by some arm of your government(s) - it's not just at the whim of the LTCI company AFAIK. Of course, that doesn't make it any more pleasant when the rates go up. Once again, my only hope is that the LTCI companies have now finally figured out the rates they need and we have seen the last of the huge increases . Naturally, YMMV.
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Old 01-29-2012, 01:50 PM   #53
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I just don't know why LTC garners such adverse attention.
You don't know why?
- Because insurers keep leaving the market and then their current "orphan" policyholders are stranded? You can count on great customer service and attention to your needs from a company that no longer sells that type of insurance--what type of reputation do they need to keep up? Or they sell their whole book to Joe's Insurance and Lawn Ornament Company--"Don't worry, you're still in good hands with Joe! He's got a call center very close to you" (if you live in Bangalore).
- Because policyholders are receiving unexpected increases in their premiums? How would the insurance company react if Mrs Whinklethorp called them to say "Hey, this nursing home is more expensive than I thought it would be when I bought my policy 20 years ago. That $150 day we agreed on just isn't cutting it. Send me $250 a day." They'd laugh and tell the old lady that her failure to anticipate costs wasn't their problem. Well, why should we feel good when ABC Insurecorp convinces regulators that they made a mistake in estimating costs and all policyholders need to pay more--to get the exact same $$ in daily benefit that they originally bought. Or, they can abandon their policy and all that "pay more now for higher future benefits" accrued value. All a big win-win for ABC Insurecorp. Some deal.

No, LTC insurance has earned it's poor reputation.
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Old 01-29-2012, 02:01 PM   #54
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I purchased a LTC policy from Genworth a few years ago, while I was in my mid 40's. So far (knock wood) the premiums have not increased, but I clearly understood that an increase was a possibility as the rates were not guaranteed. I would not be happy if the price increased, but I certainly knew the rules going into this. I can't be terribly sympathetic to the argument that insurance companies are acting in "bad faith" or that people have some how been harmed if/when a prices go up. If you don't want to take that chance (which is perfectly understandable) don't buy a policy.

I would also add that LTC policies can also be utilized well before one becomes elderly. You may buy a policy tomorrow, be in an accident, and need extended long term care when you are 45. Old age does is not the sole cause of needing assistance in day-to-day living.
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Old 01-29-2012, 03:48 PM   #55
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<snip>Some "governing" authority (such as a State Insurance Commission) or other body must approve such rate increases.
Yep. This is why the JH rate increase has been going between TDI (Texas Department of Insurance) and JH for a couple of years. I suspect, when it's all said and done, JH won't get the increase they're asking and what they do get will have staggered implementaion over a few years.
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Old 01-29-2012, 06:11 PM   #56
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I purchased a LTC policy from Genworth a few years ago, while I was in my mid 40's. So far (knock wood) the premiums have not increased, but I clearly understood that an increase was a possibility as the rates were not guaranteed. I would not be happy if the price increased, but I certainly knew the rules going into this. I can't be terribly sympathetic to the argument that insurance companies are acting in "bad faith" or that people have some how been harmed if/when a prices go up. If you don't want to take that chance (which is perfectly understandable) don't buy a policy.

I would also add that LTC policies can also be utilized well before one becomes elderly. You may buy a policy tomorrow, be in an accident, and need extended long term care when you are 45. Old age does is not the sole cause of needing assistance in day-to-day living.
Golfer, I don't disagree with what you say. Indeed, the possibility of a raise in rates was pointed out in the policy. However, I was shocked when I got the increase. I could have guessed a few percent or 10 % or even 20%, but not the 50% to 90% I and others experienced. Yes, they "warned" us, but the bottom line for many was the difference between "affordable" at the offering price, but 9 years later, totally unaffordable at the new, nearly double price. What policy purchaser would have ever "guessed" that? What policy purchaser would have signed on if the warning was "Warning - we have no idea how to price these policies, so your rate could suddenly double." Nor was that eventuality ever discussed by the agent.

Yes, there was a possibility that a few would collect early on such a policy, but clearly, that was not anticipated in great numbers. In fact, that was the ONE thing the LTCI companies were able to plan for, probably down to the 2nd decimal place (they know how many auto accidents/strokes, etc. to plan for - actuaries are their bread and butter).

What they missed was the lapse rate. They missed it big time - and now, we either pay or lose the premiums we paid to get us to "old age". We bought in early to keep rates down (front loading) and now we could lose that advantage if we can't keep up with the price increases. Yes, all pointed out, but not in any language a typical policy holder would have ever understood. I would not have signed on for that had I any idea of the "risk" I was taking. IOW, the LTCI company's screw up becomes MY problem. YMMV
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Old 01-29-2012, 07:52 PM   #57
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Insurance definitely has its place and depending on your asset and family situation the amounts will vary. Im sure there are a few oddballs like me. I will never be "house poor" or "insurance poor". I drive a car that is old enough that I can carry liability only. I carry house insurance with a $1 k deductible. I carry HI, but a $5k deductible. For me it pays off year after year. LT care, the premium would suck the life out of my lifestyle. Cant do that! If I am in nursing home for a year, I can pay it. If its longer, Im not coming home, sell the house. Besides Im in a lower cost area, they can confiscate my pension and that will cover yearly nursing home expenses, it as I wont be in any shape to spend it myself anyways.
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Old 03-09-2012, 02:15 PM   #58
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I purchased a Hancock LTC policy when I was 49 (originally a Time/Fotis policy. Now John Hancock). I am now 63, single and have only one sister who lives 600 miles away and is 12 years older. Almost no family. The purpose of buying young was for price, to offset expense of a possible catastrophic accident, illness or whatever and then have it in place for home care, assisted living or nursing home needs. And, to have help available if needed. It was written for $110 per day, 5% compound. 60 day elimination and lifetime benefits. It covers at 100% benefits: home care, assisted living and nursing home. Price was about $300 per quarter ($1200 annual) to start and increased over the years to $361 per quarter ($1444 annual). Not bad at all.
NOW, I just received a notice it was increasing 69.49% or to $612 per quarter ($2448 annual). The options offered are: Keep coverage intact and pay the increased premium, keep the same premium, but lower inflation rider from 5% to 3.2% or “call to discuss lowering the daily benefit, elimination period or benefit period.” Due to the 5% inflation rider, my daily benefit is now $217 or about the cost of nursing homes in my area (middle Tennessee). I really don’t want to reduce the benefit period, but did call JH to get a premium based on 5 years benefits. The price was $1852 annual vs the increased premium of $2400 or the reduced 3.2% inflation offer and keep my current premium intact at $1444 annual.
I assume there will be future increases or trade-off offers. My agent says the lower inflation rider offer is a one-time “landing place” that won’t be offered again. I don’t think 3.2% will keep up with cost of facilities, but sure beats nothing and keeps my premium the same. I could afford to pay the increased premium now, but am apprehensive I might not with future increases/tradoffs and be forced to cut my benefits or even drop it if the premium got too high. Anyone's thoughts are appreciated.
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Old 03-09-2012, 03:02 PM   #59
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FinBiz,
What did the rep say about the impact of increasing the exclusion period, and how much would they allow you to extend it? If this is supposed to be true insurance (to cover a catastrophe you can't cover yourself), and if you could cover a longer exclusion period via some other means, that might be something to consider. We've discussed this idea in other threads, and those familiar with these LTC insurance products indicated that a longer exclusion period might not reduce premiums very much. I'd be interested in what you were told and what you think of this approach.
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Old 03-09-2012, 03:30 PM   #60
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I didn't get info on premium effect of extending the exclusion period, but will. I appreciate your thoughts. My agent commented that she was suprised at how little effect any one varible had on the premium other than reducing the inflation rider.
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