LTC Poll

[Independent]

I take it you're referring to whole life insurance policies and not term life insurance where there is no surrender value. I view LTCi more analagous to term life insurance, with premium that can reset periodically, which also occurs with term life policies, as the risk of death becomes greater (i.e as we get older).

At some point, deferring the decision effectively means pricing one out of insurance coverage. I'm ok with paying for all the term life insurance I've purchased for over 38 years -- it's sunk in cost I hope never to recoup. It will eventually get too pricely for me and I'll drop the coverage next year -- and I'll "self insure." I might do the same with LTCi, but for now, I'm completely satisfied with this picture now and going forward.

Yes, I was referring to whole life, not term. LTCi has been sold as level premium for life contracts. The right to raise premiums was (and is) supposed to be a last resort for companies that experience unpredictable adverse experience.

I would have bought LTCi years ago if there had been a term option with scheduled premium increases that roughly matched the increasing risk.

And yes, deferring means accepting the insurability risk. In our case, that kind of bit us. Still, I'm not crying a lot about missing out.

 

[Gearhead Jim]

We have LTC insurance with an inflation escalator. After voting, I got out the papers and my pencil. We have had one premium increase in the 10+ years we've had the policies.

Right now, if I take the annual premium and divide by the max amount of the coverage, the annual premium comes to about 1/4 of 1% of the coverage amount.

I understand that some people will never need the coverage, and only a few will need the max. But that is still an interesting number.

 

[Cat-tirement]

From what others have said here, and like many other insurance products, details vary from state to state. DW and I will move to another state after we ER (somewhere between 55-60). It seems to me that we should not consider LTCI until we get to our retirement location, so we don't have to worry about changing rules, etc. Is this a reasonable approach?

 

[pb4uski]

....What do you think is the worst case cost per month if you get really sick and don't have LTC?

My great aunt's private pay nursing home charges were $278/day or $8,340 a month. She had a small pension that covered her insurance and rx co-pays and her SS went to the nursing home but she was still drawing about $7k a month out of savings.

 

[Greg V]

Voted "Other." Still working through the issues to make a final decision. I'm by nature a risk minimizer, but the important factors on which to base a proper analysis keep changing. LTC is definitely a puzzler.

 

[growing_older]

But they only have a 1 in 10 chance of loosing that house to a fire.

Not even close to true, and most of the other numbers cited in building the case for LTC insurance are also bogus. House insuance is a resonable caution to protect a low likelihood high cost risk, and premiums are priced accordingly. LTC is a much higher likelihood occurrence, but the policies are limited to much smaller multiples in comparison to the premiums charged. In almost all policies, the issuer also reserved the unilateral right to change the premiums, so even if you think you have priced a reasonable deal, it may not stay that way after you have sunk serious cost into it.

Insurance companies are not in this business to spread their largesse through small premiums protecting everyone with a policy from high cost high likelihood events. They would obviously go out of business if that were true. But insurance salesmen know what sells, fear and bargains, so they cook the numbers and pump up the fear.

Certainly there are cases where LTC makes sense. But even many of these (one spouse protecting the other from impoverishment) may not play out as promised should a long term care case actually take longer than the policy limits, which are usually at most a few years. They sell on the idea of LONG term - imaging decades of drain on your assets - while selling policies with 3 or 4 year limits to contain their downside. Most policies are a lot less insurance than the salesman implies they are.

 

[Gearhead Jim]

You make it sound like the insurance companies are a bunch of villains, but their business, like any other insurance, is to honor the contract at a price-expense ratio that hopefully produces a profit. Right now, the profits seem to be minimal or negative for most.

Our homeowners insurance has many exclusions that I don't like, some I have been able to cover with riders and others I just keep my fingers crossed. Same with our car insurance. And don't get us started about health insurance.

No insurance policy is perfect. LTC is far from perfect, but until you or the government come up with a better system, it's all we have. Everyone needs to look at their own situation and make an informed decision.

 

[Gatordoc50]

I'll leave the number crunching to others but my experience with nursing homes is that I wouldn't want to go there. Another possibility is that you won't be accepted into a nursing home because you have Alzheimer's, are combative or otherwise disruptive. In my Fathers case, they required my mother to pay for 24 hour additional one to one watch. It added up fast, basically doubling the cost. But the money wasn't the real issue. What do you do when your loved one doesn't understand why he can't go outside, drive a car, be independent. Physically very strong but mentally impaired. It can happen really fast not leaving much time for preparation or proper decision making.

 

[Mmm Rrr]

I've shopped for LTCI 3 times, once at 50, at 55, and then finally approaching 60 (I'm 61 now).

The last time, I put together several scenarios of what the policy would cost over time and what the likely benefits would be. I then sat down with my adult child and we decided together that the insurance was not a worthwhile use of my money. He realizes that the unlikely worst case scenario would spend down the nest egg that has allowed me to retire early.

When I was considering the insurance, I ran across a website designed for LTCI sales people, giving arguments to be used on people like me who look at the purchase as a financial decision rather than an emotional one. (I can't find the site now). Reading through those arguments helped with the decision to not buy.

 

[MRG]

I'll leave the number crunching to others but my experience with nursing homes is that I wouldn't want to go there. Another possibility is that you won't be accepted into a nursing home because you have Alzheimer's, are combative or otherwise disruptive. In my Fathers case, they required my mother to pay for 24 hour additional one to one watch. It added up fast, basically doubling the cost. But the money wasn't the real issue. What do you do when your loved one doesn't understand why he can't go outside, drive a car, be independent. Physically very strong but mentally impaired. It can happen really fast not leaving much time for preparation or proper decision making.

Yes there are so many what ifs even with all the planning in the world there may be some conditions you can't plan for. My sympathy for your father's situation.

I've just started reading The 36 Hour Day, about caring for loved ones with Dementias.

It's been mentioned but state by state these laws very wildly. While DM needed nursing home care in FL. It was very simple for her to sign off of assets and have medicaid step in(4 years ago). After they moved to PA(closer to caregiver), the laws there are extremely unfriendly to elders, and potentially their children.

MRG

 

[growing_older]

You make it sound like the insurance companies are a bunch of villains

No, I didn't mean to say that insurance companies are villains or that insurance companies shouldn't make profits. I did mean to say that high likelihood events are usually poor choices for insurance because the contracts have to be structured so the companies can stay in business. This usually means limits or exclusions that make the policies right for some people but not all.

On the other hand, I did mean to say that SOME insurance agents are villains who will stretch the truth or artfully give one impression while staying just this side of compliance, at least in their written materials. Every time I have considered LTC insurance I have found the agent made significant misrepresentations of what was in the policy or played fast and loose with numbers, like the "one in ten house burning down" example earlier in the thread. I'm sure there are good agents out there. I just haven't run across one when I was shopping for LTC.

And I also admit, I am still stuck on the value proposition. I pay significant premiums for years, on the chance that I will require so much LTC that the policy with all it's limits will still end up paying more than my cost. This seems like only a small part of the ruinous scenarios I need to protect against, yet I get only limited protection for premiums so large they would be a reasonable part of my portfolio, had I retained and invested them. The odds do not seem to be in my favor.

 

[Katsmeow]

I've shopped for LTCI 3 times, once at 50, at 55, and then finally approaching 60 (I'm 61 now).

What kind of quotes did you get at approaching 60. I'm leaning against LTCI but have thought of getting quotes and am 59. I'm wondering what quotes are like for those that age or even older.

 

[jIMOh]

I think those of us who are considering not buying or self insuring should consider this line of thinking below. I thought it made sense.



People who "self insure" are usually fooling themselves and think that they will never need LTC.

LongTermCare.gov states that 70% of people turning 65 can expect to use some form of LTC in their lifetime.
So the majority WILL need it to some extent.

But insurance is about leveraging your money. And imo it is best to leverage your money for the large risks, not the small risks.
Example:
It is easy & practical to self insure your car and just have liability coverage. Just save up a decent replace/repair amount over the course of a year or two and your good.

It is not easy or practical to self insure a home. Since you would need a very large amount saved. It would take the average person many many years to self insure a house.


So lets look at LTC and its financial risk.
National average for a private room in a nursing home is $80k
National average for community based care is $40k
Length of stay averages 3 years.

So you will need $120k-$240k to pay for LTC.
Basically what a small house costs.

How many people with $240k homes do you think have homeowners insurance? Probably over 90%.

But they only have a 1 in 10 chance of loosing that house to a fire.

They have a 7 in 10 chance of needing that $240k for LTC.

So if you are going to be forced to come up with that $240k, does it not make sense to only pay a fraction of that cost via LTCI?

Would you rather pay $240k over 3 years or $50k over 10-15 years? Which is the better deal

I think this misses the point of LTC.

If you become disabled or meet one or more of the acts of daily living which qualify for LTC, YOU WILL RECEIVE CARE. The question is where, and who provides it.

I do not want my kids to provide my care... I want them to have resources to provide it (nurses or home health aides) and make decisions about it, but not do the care.

I see friends whose wives take care of ailing grandmothers, and that set his family back financially. I have heard stories of spouses which got injured caring for the spouse which needed care. People which don't have the insurance are "forcing" family to take time to provide care.

Most LTC is provided in the home (not a nursing home), and ask yourself who will help you bath or get dressed?

 

[larrytbm]

We took out our LTC policies in '96, premiums on mine are currently $51 monthly for $255K coverage, so about 0.25%. Wife's is under $40 monthly. Policy includes a premium refund at death, 100% at age 65 reducing to 0% at age 75.

On this forum, looking at LTC policies from a financial perspective is logical, but there certainly are other considerations. Individual health and family health history is important, but just as important is the family burden for providing LTC. I believe the statistics about length of stay in a nursing home reflect the LACK of planning on this issue. The family unit is not prepared financially and/or physically to provide good care and everyone suffers until nursing home care becomes mandatory.

Finally, it seems strange to me that people will pay for house or auto insurance for a lifetime and be thankful if they never have to file a total loss claim, yet see little value in an LTC policy. And if you 'self insure', why not auto and home first?

 

[samclem]

Finally, it seems strange to me that people will pay for house or auto insurance for a lifetime and be thankful if they never have to file a total loss claim, yet see little value in an LTC policy. And if you 'self insure', why not auto and home first?

Totally different products. If I buy auto or home insurance I pay now for coverage that I get this year. With LTCI, I pay a lot now in advance for coverage (mostly) 3-4 decades hence. Given the premium increases and turmoil among those offering the product, it's a much different, and worse, proposition.

 

[larrytbm]

Totally different products. If I buy auto or home insurance I pay now for coverage that I get this year. With LTCI, I pay a lot now in advance for coverage (mostly) 3-4 decades hence. Given the premium increases and turmoil among those offering the product, it's a much different, and worse, proposition.

Either could be used today or either could be used 3-4 decades from now. Or both could never be used. An accident could total your car and leave you needing LTC at the same time. So, I don't see how they are very different products. My premium increases have been nonexistent.

 

[samclem]

So, I don't see how they are very different products.

When a person signs up for a LTCI policy at 55 YO and pays, say, $250/mo for a policy, something like $20 of that is buying protection for the coming year, the rest of the premium is "paying ahead" for the inflation to come and the far greater likelihood of a claim in later years. Nobody buys their car insurance or homeowners insurance like that. It's very different.

 

[larrytbm]

When a person signs up for a LTCI policy at 55 YO and pays, say, $250/mo for a policy, something like $20 of that is buying protection for the coming year, the rest of the premium is "paying ahead" for the inflation to come and the far greater likelihood of a claim in later years. Nobody buys their car insurance or homeowners insurance like that. It's very different.

I signed up at age 48, planning to retire at age 55, now I'm 65 and paying $51/mo. NOT $250/mo. If I died today in a car accident, 100% of what I paid over the last 17 years is refundable. So how would I have "paid ahead"? I agree car insurance is different, rate increases occur more frequently even with zero claims than increases to my LTC policy.

 

[akck]

While I'm planning to get LTC policies for both of us, I think I talked a co-worker out of getting it for herself. She and her disabled brother live together, so initially I went over the available options since she wanted to take care of him. Just before she finished filling out the papers, I thought about her situation and it didn't make sense for her to get it. They'll both have assistance available (Medicaid plus welfare for him), should either need it and could use the premiums for other expenses or savings. They talked it over and her brother told her not to worry about him should she need care. I think it was a good decision on their part.

 

[MRG]

I signed up at age 48, planning to retire at age 55, now I'm 65 and paying $51/mo. NOT $250/mo. If I died today in a car accident, 100% of what I paid over the last 17 years is refundable. So how would I have "paid ahead"? I agree car insurance is different, rate increases occur more frequently even with zero claims than increases to my LTC policy.

Well the only difference I see, is your 100% dead.

I have a hard time understanding the value in LTC products, mainly due to future costs. Perhaps there's other reasons I don't think about these products, nobody wants to really think about the 'need' of nursing home care. It's a very harsh reality.

That said I don't think there's any right or wrong, only a difference of how we see things.

MRG

 

[Carlos2]

While I'm planning to get LTC policies for both of us, I think I talked a co-worker out of getting it for herself. She and her disabled brother live together, so initially I went over the available options since she wanted to take care of him. Just before she finished filling out the papers, I thought about her situation and it didn't make sense for her to get it. They'll both have assistance available (Medicaid plus welfare for him), should either need it and could use the premiums for other expenses or savings. They talked it over and her brother told her not to worry about him should she need care. I think it was a good decision on their part.

The brother would not have been eligible to be insured anyway since he was already disabled. If the sister had limited funds or assets, then she would not have reason to buy it because she'd only let the policy lapse. This was a moot point for them.

 

[Carlos2]

LTC is not for all

LTCi is not for everyone. If you have significant assets to protect, then I'd say look into LTC especially if you have a spouse that you don't want to leave destitute.

I would look at your state's partnership LTCi plan. It's not just for nursing homes, but also home care where most people receive their care at first. I think the other thing is the care coordinator services that you get can be a tremendous asset. Imagine your spouse having to figure out all of those details and being under such strain talking with doctors and nurses, having to figure out the specifics of where you can go, or if you stay at home how will she manage, etc. etc. etc. A care coordinator can be there to take care of all of that for her. That would be a big relief for her as she struggles with your illness.

It's about money, but it's more than just money. It's also about peace of mind for you and those who are affected by you.

 

[samclem]

I signed up at age 48, planning to retire at age 55, now I'm 65 and paying $51/mo. NOT $250/mo. If I died today in a car accident, 100% of what I paid over the last 17 years is refundable. So how would I have "paid ahead"?

$250/month is the premium for LTCI for a 55YO buying a 5 year/$200 per day policy on the federal employee LTCI program. And if you >don't< die in a car accident, every month you are paying ahead for LTCI to cover the risk of an 80+ year old person. If you were buying "pure insurance" just one year of coverage for LTC when you started as a 48 year old, you'd have paid much less than $51/mo (probably closer to $10 per month), and the rates would go up each year as your chances of filing a claim increase. You paid ahead to cover your much higher risk of needing LTCI when you are older. There's nothing wrong with that, but this factor, together with rate increases and instability among insurance providers (leaving the market, etc) is a major reason many people are reluctant to buy LTCI: You give a lot of money to an insurer decades ahead of the likely payoff, and many have a less than stellar history of maintaining the promised premium levels.

As for rate increases--I sincerely hope your luck continues, it probably only needs to hold out for a few more decades.

 

[MRG]

LTCi is not for everyone. If you have significant assets to protect, then I'd say look into LTC especially if you have a spouse that you don't want to leave destitute.

I would look at your state's partnership LTCi plan. It's not just for nursing homes, but also home care where most people receive their care at first. I think the other thing is the care coordinator services that you get can be a tremendous asset. Imagine your spouse having to figure out all of those details and being under such strain talking with doctors and nurses, having to figure out the specifics of where you can go, or if you stay at home how will she manage, etc. etc. etc. A care coordinator can be there to take care of all of that for her. That would be a big relief for her as she struggles with your illness.

It's about money, but it's more than just money. It's also about peace of mind for you and those who are affected by you.

Lot of good info, wasn't even aware some states have partnership plans. One of the worst aggravations about long term care is state specific nature of laws.

In FL. (4 years ago), seemed they were friendly about asset protection. When parents moved to PA. , not friendly at all.

Another biggie is the quality and availability of proper care. In FL. OK. Parts of this country lack proper care facilities and specialists.

It's really hard to watch elders suffer, when you know in a different part of the country, care is available.


MRG

 

[Bestwifeever]

I signed up at age 48, planning to retire at age 55, now I'm 65 and paying $51/mo. NOT $250/mo. If I died today in a car accident, 100% of what I paid over the last 17 years is refundable. So how would I have "paid ahead"? I agree car insurance is different, rate increases occur more frequently even with zero claims than increases to my LTC policy.

I don't know much about LTC but might have been interested if it had been offered through work. Your premiums are 100 percent refundable if you died today in a car accident? Is that typical--are they refundable no matter when you die if you have not used the policy? That would make it more attractive.

We would not self-insure home or auto because that insurance is more for the liability.

MIL had LTC but as far as home care, the providers in her small town wanted to be paid directly and did not want to fill out paperwork or get certification, etc., so she never used it for that but paid it out of pocket to the nice ladies who helped out. She was in a nursing home later where she did use up the benefits.