Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
LTC insurance premium "surprise"
Old 04-22-2010, 03:09 PM   #1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,149
LTC insurance premium "surprise"

I realize I'm probably going to jinx myself by posting this, but...

As discussed in this thread four years ago I've been anticipating a significant increase in our LTC premiums once my 10 year guarantee-of-premium expired. (Note: Until last year I mistakenly thought the 10 years were up in 2009 but discovered we took out the insurance in May of 2000 which makes next month the end of the guarantee period.) My anticipation grew into a cringe whenever threads like this one showed up in the interim.

Not knowing just how big the increase would be, I contemplated at what point we should consider a reduced benefit in lieu of a premium increase, dropping the coverage on one of us, or dropping the coverage entirely.

I got the notice of next year's annual premium today and the increase was...0. Yep, the same amount it has been for the past 10 years.

No idea if this is a head fake, a mistake or what, but I'm not going to ask any questions, just pay up and see what happens next year...
__________________

__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-22-2010, 03:15 PM   #2
Thinks s/he gets paid by the post
MasterBlaster's Avatar
 
Join Date: Jun 2005
Posts: 4,359
Just make sure that the benefit promised keeps up with inflation. If not you may be in for a real surprise should you actually need it.
__________________

__________________
MasterBlaster is offline   Reply With Quote
Old 04-22-2010, 03:15 PM   #3
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,613
Quote:
Originally Posted by REWahoo View Post
I got the notice of next year's annual premium today and the increase was...0. Yep, the same amount it has been for the past 10 years.

No idea if this is a head fake, a mistake or what, but I'm not going to ask any questions, just pay up and see what happens next year...
Wow. Maybe your insurer actually has done a better job of pricing this stuff.

My premium surprise? I'm basically paying the same for my Megacorp health insurance in 2010 as in 2008. It actually went DOWN 5% from '08 to '09 and back up 5% this year. (This is for their HDHP/HSA plan; the other PPOs are up 15-25% in that time frame.)
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 04-22-2010, 03:41 PM   #4
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,149
Quote:
Originally Posted by ziggy29 View Post
My premium surprise? I'm basically paying the same for my Megacorp health insurance in 2010 as in 2008. It actually went DOWN 5% from '08 to '09 and back up 5% this year. (This is for their HDHP/HSA plan; the other PPOs are up 15-25% in that time frame.)
Are you sure you we aren't in the Twilight Zone?
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 04-22-2010, 04:14 PM   #5
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,949
Quote:
Originally Posted by REWahoo View Post
Are you sure you we aren't in the Twilight Zone?
You are. Either you are in the Twilight Zone or you have both "lost it". This is not what most of us are experiencing!
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
Old 04-22-2010, 05:02 PM   #6
Recycles dryer sheets
 
Join Date: Aug 2008
Posts: 152
My LTC premiums have not gone up in the 5 years we've had the policy despite no guarantee-of-premium. Any yes, the coverage does include inflation protection. Company is Unum Provident.

Health insurance premiums are a different less happy story.
__________________
FurBall is offline   Reply With Quote
Old 04-22-2010, 05:24 PM   #7
Full time employment: Posting here.
 
Join Date: Mar 2008
Posts: 704
I'm not retires yet, but I do look annually at what my employer's LTC benefit premium. So far, the rates have not gone up. D-V-A coverage did go up $2/month.
__________________
akck is offline   Reply With Quote
Old 04-22-2010, 06:24 PM   #8
Thinks s/he gets paid by the post
73ss454's Avatar
 
Join Date: Oct 2004
Location: LaLa Land
Posts: 4,378
Is the premium a guarantee for another 10 years at the same #?
__________________
73ss454 is offline   Reply With Quote
Old 04-22-2010, 06:33 PM   #9
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,149
Quote:
Originally Posted by 73ss454 View Post
Is the premium a guarantee for another 10 years at the same #?
<In my best De Niro voice..> Are you talkin' to me?
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 04-22-2010, 06:41 PM   #10
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,146
Quote:
Originally Posted by REWahoo View Post
<In my best De Niro voice..> Are you talkin' to me?
Even if he isn't, I'm interested in your response as if he was...

if ya know what I mean
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is offline   Reply With Quote
Old 04-22-2010, 06:44 PM   #11
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,149
No more premium guarantee....

The policy reads as follows: "In no event will the premium rate increase during the initial 10 years after your Effective Date of Coverage."
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 04-22-2010, 07:00 PM   #12
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,146
Quote:
Originally Posted by REWahoo View Post
No more premium guarantee....

The policy reads as follows: "In no event will the premium rate increase during the initial 10 years after your Effective Date of Coverage."
Thanks. It sounds like you you have done well so far.

In 2003 a good friend took out LTC with UNUUM for himself and his DW with a similar guarantee but 4 years later he showed me the letter from them stating that the State of Louisiana and given them permission to raise the rates by 35%. (we had talked about LTC a lot and I'd decided to self insure but he was a little older and his kids a lot younger plus a family history of Alzeihmers etc so I think he made the right choice. )
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is offline   Reply With Quote
Old 04-22-2011, 03:36 PM   #13
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,149
I'm resurrecting this year old thread to do an update.

We received our LTC annual premium notices today and, once again, the premium is unchanged. As noted above the premiums were guaranteed for the first ten years and that guarantee expired two years ago.

So far, so good...
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 04-22-2011, 05:22 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
That probably means your carrier priced it right in the first place and their experience is as they anticipated so far.


Different insurance companies try to manage their risk exposure (to underpricing the product) in different ways.

Our premium increases every 3 years by design...

Our policy has a benefit increase (compounded % for that period) offered every 3 years... for a premium increase. We can take it or decline the increase and stick with the old benefit level/premium level.

We take the inflation increase... the premium increase has been fairly small in $. But the premium increase for the benefit increase, increases with age. When one gets up in their 80's the premium increase is pretty high on a % of old premium basis (but it is affordable).

We are lucky... our policy is a group policy and the cost is very low relative to buying individual policies.
__________________
chinaco is offline   Reply With Quote
Old 04-22-2011, 06:08 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,616
Quote:
Originally Posted by chinaco View Post
We take the inflation increase... the premium increase has been fairly small in $. But the premium increase for the benefit increase, increases with age. When one gets up in their 80's the premium increase is pretty high on a % of old premium basis (but it is affordable).
When last I looked at it, the increased premiums for those 80+ didn't strike me as "affordable", but of course that is very subjective.
With these types of "pay for more as you go" policies, it's very important to buy the inflation increases every year while you are young and for as long as you can afford it. If you wait, you can never get quite "caught up" and you'll always be paying more for less coverage than if you hadn't skipped the increase earlier.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Old 04-22-2011, 06:33 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
Quote:
Originally Posted by samclem View Post
When last I looked at it, the increased premiums for those 80+ didn't strike me as "affordable", but of course that is very subjective.
.
Not sure what your plan looks like... but I see our schedule when it is released... it has never been outrageous. But it is obviously higher in the 80s than at 60s. You have to look at it in the context of the overall cost over the life of the person. Obviously, there is no free lunch... only the pooling of money to mitigate risk! If it were a level plan... we would just be paying more up front. As the risk increases, the cost increases. If one of us dies younger, we avoid some of the premium cost.

Plus, our premium is very, very low! If I ran those numbers up to our 80s... it would be less than I could purchase an individual policy on the open market. Even then, they might (probably would) increase the premium at some point.

One of the nice things about a group plan (from a huge mega corp)... the company negotiates and is an advocate for employees and retirees in the pool!

So far, so good!
__________________
chinaco is offline   Reply With Quote
Old 04-22-2011, 07:03 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,616
Quote:
Originally Posted by chinaco View Post
Not sure what your plan looks like... but I see our schedule when it is released... it has never been outrageous. But it is obviously higher in the 80s than at 60s.
Here's a link to a previous post on buying-as-you-go ("Future Purchase Option") vs. the level premium option for LTC. In the federal program (a group plan) for a simple example I looked at, monthly premiums go up 1000% between ages 65 and 85: At 65 years old the person paid $140 per month, by age 85 the person would have to pay $1500 per month for this policy ($150/day benefit, 5 years payout). Maybe some people consider this "affordable," it just didn't seem affordable to me. At 5% inflation growth per year, the 65 year old's $140 premium should have gone up to $341 by the time he was 85. The $1160 additional amount beyond that represents the increased cost of buying additional insurance as one becomes older. For comparison, if purchased at age 45, his level premium ("Automatic Inflation Compounding Option") would have stayed at $80 per month. The FPO premium exceeds the level premium staring at age 62 and the level premium option looks like quite a bargain at later years, compared to buy-more-as-you-go" ("Future Purchase Option").

Quote:
Originally Posted by chinaco View Post
One of the nice things about a group plan (from a huge mega corp)... the company negotiates and is an advocate for employees and retirees in the pool!
Yes, that's why a lot of federal employees bought their coverage through the OPM plan. Then in 2009 they got hit with a large group rate increase. I like the idea of being in a huge group, I think that might be useful if I were being unfairly denied benefits, but I'm under no illusions that it would protect me from rate increases. Group coverage is usually more expensive than individual coverage for those who are healthy/have lower risk factors.
Quote:
Originally Posted by chinaco View Post
So far, so good!
I hope it keeps working for you. I was surprised how steeply the rates go up with advancing age. Please be sure you are rock-solid in understanding what your true future rates are going to be. The "future purchase option" you are using can make a lot of sense, but I think for most folks it works best as a complement to a plan to "self insure" for a big part of the LTC cost when it no longer makes sense to keep buying more coverage when the rates skyrocket in old age. Kinda like "buy term and invest the difference" rather than buying whole life insurance.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Old 04-22-2011, 08:31 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Dawg52's Avatar
 
Join Date: Feb 2005
Location: Central MS/Orange Beach, AL
Posts: 7,446
Quote:
Originally Posted by FurBall View Post
My LTC premiums have not gone up in the 5 years we've had the policy despite no guarantee-of-premium. Any yes, the coverage does include inflation protection. Company is Unum Provident.

Health insurance premiums are a different less happy story.
I had a 3 year guarantee with Unum. I'm approaching my 9th year with the policy and no increases as of yet. I'm sure I just jinxed my luck.
__________________
Retired 3/31/2007@52
Full time wuss.......
Dawg52 is offline   Reply With Quote
Old 04-23-2011, 04:26 AM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
Quote:
Originally Posted by samclem View Post
Here's a link to a previous post on buying-as-you-go ("Future Purchase Option") vs. the level premium option for LTC. In the federal program (a group plan) for a simple example I looked at, monthly premiums go up 1000% between ages 65 and 85: At 65 years old the person paid $140 per month, by age 85 the person would have to pay $1500 per month for this policy ($150/day benefit, 5 years payout). Maybe some people consider this "affordable," it just didn't seem affordable to me. ...

I understand your point. There is definitely a pay me now pay me later component to it.

I've seen our plan's schedule.... it is not as severe as you depicted in your illustration.

Of course with any of these products, there are not any guarantees on future premium levels. Especially the further out in time (20, 30, or 40 years). The company may have miss priced the product, they may have bad experience, or they may exit the market and your pool may shrink... on and on. Any illustration out that far in time (into the future) is just a guess... a projection based on some assumptions. Just as there is no way to predict longevity or if one even uses the benefit.

All one can do is make decisions based on the information available. How it plays out far into the future is indeterminate (no matter what anyone thinks). This means one should have a plan in place with contingencies. Our overall LTC plan is only partially based on our policies. If we need the benefit, it could only wind up defraying some of the cost (in certain scenarios).

IMO - There are two consideration: care and asset protection.

The care component will be there even if one runs out of money and falls into the safety net (govt). Asset protection for the spouse (estate or whomever) is the other component. This is where one needs to understand their state's rules and build a plan accordingly.

LTC policies (of almost any stripe) may only provide partial protection no matter what. Why? Because one could linger for 10 years in a NH. We had a family member in that type of situation. Severe stroke in their early 80s lingered 10 years. Most people do not have that kind of money that late in life! If one is still financially sound (well off) in their late 80s, it will not matter so much. if their nest egg has diminished, but they have some money, that is where an overall asset protection plan becomes very important. One central planning item: How does the survivor retain adequate assets for their needs? Everyone should have a Plan! Unless one is really rich... part of that analysis should include a realistic look at the worst case scenario. Which is, one spouse winds up on medicaid... how much will the spouse retain and how does it work? Do you have an adequate plan for their future?


I suppose new information could surface, laws could change, situations could change... anything. I am very confident about our plan, given our situation. If a worse case scenario happens... the survivor is protected and will not have a diminished lifestyle (in terms of income to provide for their needs). From here... all we can do is make adjustments based on how the future unfolds.
__________________
chinaco is offline   Reply With Quote
Old 04-23-2011, 05:23 AM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
Quote:
Originally Posted by samclem View Post
Here's a link to a previous post on buying-as-you-go ("Future Purchase Option") vs. the level premium option for LTC. ...

I want to change directions a little on the topic.

Does one have an actual LTC plan or just an LTCi policy?

The last comment was really based on the longer term aspect of LTC, cost of certain types of policies, the future, etc...

Many assume this scenario:

DW and I get much older (80s or 90s) and LTC is needed. These planning assumptions are often based on averages.

Of course, there is a increased probability for large numbers of people as they get older... but for the individual, it might turn out to be 100% reality at any age!

There are other very likely scenarios:

  • Need it in the 50s
  • Need it in the 60s
  • Need it in the 70s


What is LTCi? Financial risk transfer!

Some people who think that LTC insurance will be too expensive when they are in their 80s or 90s (indeterminate) and therefore unacceptable may be to limited in how they are thinking about the problem.


They could use that type of plan (that we discussed) to have coverage in their younger years and deal with the late years in some other manner... as well as the survivor planning aspect.

I don't think those types of plan are bad... as is always the case, what is your situation and how are you intending to make your plan work?

People have options an many ways to create a workable plan. If insurance is part of the plan... you gotta buy it while you are insurable. If one delays and becomes uninsurable or heavily rated... it may no longer be a viable option at all.


IMO - LTCi is a tool. Insurance in general is a tool. If one intends to use those types of tools for health or life... they really need to consider them while they are healthy. Procrastination could result in those products being unavailable to them!

Risk is a complicated topic. One has to assume that there is a realistic chance of the event occurring to see the value of it at some unpredicable time in the future (tomorrow or 25 years from now).
__________________

__________________
chinaco is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Federal LTC Insurance Premium Increases Purron Health and Early Retirement 2 11-11-2009 08:03 AM
LTC Premium just jumped 35% Koolau Health and Early Retirement 19 06-03-2009 06:56 AM
Single Premium LTC Insurance? OhSoClose Health and Early Retirement 3 06-04-2008 09:21 PM
(FAQ archive): Long-term care (LTC) and LTC insurance Nords Early Retirement FAQs 0 10-24-2007 12:02 PM
Keeping group health insurance in FIRE before "full retirement age"? maddythebeagle FIRE and Money 4 11-02-2006 10:09 AM

 

 
All times are GMT -6. The time now is 05:13 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.