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Old 10-14-2012, 03:05 PM   #61
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I'll look for some info on the type of annuities you mentioned. I'm curious as to how much the annuity payment suffers as a result of having the built in LTCI. That is, what is the hidden cost of the LTCI built into the annuity? I'm sure they aren't giving it away but, who knows, perhaps it's a great deal.

On the annuity/LTCI policies you have, does the increased annuity payment during LTC go on indefinitely or is it time limited? That is, if you went into LTC for 15 years, would it pay all that time or is it perhaps limited to the first 3 - 5 years?

The risk I want to insure against is that of needing a lengthly LTC stay. A policy that only covers 3 - 5 years wouldn't do it.
I just pulled out my Aviva contract and do not see any language that limits the amount of time you get the income doubler. There is a waiting period that says you must be confined 180 of the last 250 days before it kicks in. My Prudential one (no longer available) has a 120 day waiting period and no limitation on the Lifetime Income Accelerator. The contract says they can have one and it will be in the schedule of benefits. My schedule says "Not Applicable" next to that tag so I should be good. But this plan is no longer available.

To answer your other question. Here is an example of what I found when I was looking. For $100K here is what my comparison matrix says:

Axa Accumulator CP series $15,172. Same payout for single vs. joint life. I did not choose this because it was low and no nursing home care doubler. It was also a variable annuity which are a bit more complicated to slog through so I sort of put it aside.

Aviva Income Preferred Bonus with Income Edge Plus (this same plan came in several different names depending on who was selling it). $19,389 for single, $17,450 for dual. We chose dual for this one because of the income doubler for nursing home confinement.

Prudential X Series w Highest Daily Lifetime Income. This is my only variable annuity. The payout for single is $15,661. It has a doubler for home care, assisted living and nursing home care. This was not available for a joint life, only single. Even though the guarantee is low it locks into the highest daily amount of the investments in the stock market and continues to increase 5% per year above that. Whether it will ever catch up or outstrip the indexed annuities I don't know. Only time will tell. It has since been discontinued as all the contracts kept locking in at higher and higher levels due to QEs.

Guardian Target 300. Discontinued. Had a 300% guarantee after 15 yrs. Might have been a good option but like I said it went away so couldn't buy.

Equitrust MartetTwelve Bonus Index w/income for Life. $21,765 for single $19,588 for dual. Highest payout but no income doubler for nursing home care. I bought this one.

Midland National MNL Capstone 14 with Retire X-Cell Rider. $20,310 for single and $16,248 for dual. I bought this one.

North American Charter Series 14 yr option with Income Pay option 2. $19,295 for single $15,233 for dual. Passed on this one due to the parent company being the same company as Midland. I tried to choose companies that were as independent from each other as possible.

I have 4 more more columns hidden in my spreadsheet that I looked at but determined didn't suit our situation or the payouts were too low so I won't list them here. All the ones in the spreadsheet were seriously evaluated. It took alot of time and I created the spreadsheet to keep track of the various features.

My rates were for someone 45, planning to take income at 65. Everyone said that there are much better rates for older folks (who didn't need as much time to roll up) but since were not older we had to chose from those available that suited our scenario.

So what does this all look like for us? Here is what we have:
At 65 I will have a guaranteed income of $109,871
This increases to $133,363 if assistance is needed at home.
This increases to $156,630 if I am in a nursing home.
I cannot outlive this income. I chose some plans with the doubler and some without to get more whether I'm healthy or not. I also spread the money among 4 plans to diversify the income sources.

(Note to anyone following my posts, since I last posted on this I put a little bit more in so the numbers are different than before.)

I also have a limited LTC policy that I bought before getting into the annuities. No sense in cancelling it as it is a very good rate. My spouse has an 'all the bells and whistles' policy which seems to make sense for us. Don't know if others would get it along with the annuities or not.

We initially started looking at this over a year ago. The plans were better when we first started shopping but due to the complexity and the reputations of annuities I felt I needed to research them thoroughly. Everything we initially looked at went away while I was in research mode and I don't have the heart to model those plans as I think I would cry to see how I had disadvantaged myself by waiting. The insurance companies are getting more conservative, probably due to the QEs. I had to decide whether to buy what was available or wait and I decided to get the best I could find at that point in time (last spring).
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Old 10-14-2012, 03:26 PM   #62
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I'm putting this in a separate post as there is alot of detail above and it could get lost. Let's look at the Equitrust vs Aviva example. Equitrust is the highest payer for me. Aviva has the nursing home care doubler. For dual life the difference is $2138. So if you were looking at these two, $2138 in lost income per year is what you are paying for an extra $17,450 in income for two people if one needs a nursing home. For me the extra insurance wasn't enough to get me to put all my money in Aviva. Aviva got a spot in my plan because there weren't enough plans that were better and independent from each other for me to get the diversity I wanted. In fact Aviva was such a poor payer that I put more in the higher paying annuities. But not alot more as I viewed diversity of income sources as a higher priority than maximizing the income.

For someone older, with a pension, their model will look quite a bit different than mine because they can defer income and allow their payout to continue to grow. Then they could turn it on if LTC were needed. I haven't modeled this so don't know if it makes sense vs. other options but it might work out and you would get the income for the rest of your life.
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Old 10-14-2012, 04:03 PM   #63
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I wonder if their research indicates that people who survive a three-year exclusion period will live for over a decade. That might make the premiums even more expensive than the 100-day-exclusion policies.

Even so... 6-12 months seems like a reasonable exclusion period in exchange for lower premiums.
You have to believe you are on to something there. Insurance companies aren't stupid. They know the average stay is less than 2 years. I bet there must be some statistic that if you last longer than 2 years, you probably have a high percentage of making it 7-10 years in the home alive. They probably don't want to expose themselves to a smaller premium that may entail and indefinite long term cost. Especially those sound body, mentally impaired seniors that wind up in nursing home care.
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Old 10-14-2012, 07:05 PM   #64
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After much consideration and reading a few threads on this topic both here and at Bogleheads, I have decided to make the jump and buy long term care insurance. Looking at Genworth, Prudential, and John Hancock. Only time will tell if this move was wise...
We bought a LTC policy through CALPERS in our late 40's about 15 years ago. The premiums were very low then (about $800 a year for the two of us) with a 5% annual inflation bump up and no limit on duration of benefits.

Fast forward to 2012. The plan has been closed to new members for a few years now. As the membership is shrinking, the premiums have about tripled. I suppose as the years go by and the pool of insured members continues to shrink the premiums will increase to the point where we will no longer be able to afford it, probably in our eighties, just when in all probability we'll need the coverage...
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Old 10-14-2012, 07:15 PM   #65
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+1

Fraud comes in all shapes, sizes, ages and medical conditions...

+1

What do people think about people who hide their income now to get food stamps or other low income programs. They are looked at with contempt by the general public. However, hiding income in order to have the taxpayers pay for your nursing care needs is the same thing, IMO. We are paying for our LTC policies and hoping that we will not need them.
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Old 10-14-2012, 08:47 PM   #66
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+1

What do people think about people who hide their income now to get food stamps or other low income programs. They are looked at with contempt by the general public. However, hiding income in order to have the taxpayers pay for your nursing care needs is the same thing, IMO. We are paying for our LTC policies and hoping that we will not need them.
...and just a few weeks ago, there was a thread on this site with dozens of posters chiming in on how to take advantage of Obamacare's $10K annual subsidy by keeping their reported income artificially below $60K.

"...I"m sorry, you're looking for 'gaming the system', that's two doors down, this is 'righteous indignation'...." (apologies to Monty Python)
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Old 10-14-2012, 09:29 PM   #67
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...and just a few weeks ago, there was a thread on this site with dozens of posters chiming in on how to take advantage of Obamacare's $10K annual subsidy by keeping their reported income artificially below $60K.
"there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible" - Justice Learned Hand, 1947

Nor is there anything sinister with (legally) arranging one's affairs so as to maximize the entire panoply of subsidies and benefits that the government sees fit to bestow.

If we don't like people getting the subsidies, then change the rules for eligibility. Anyone who stays within the rules and gets the subsidies has won the little game.
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Old 10-15-2012, 06:34 AM   #68
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"there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible" - Justice Learned Hand, 1947

Nor is there anything sinister with (legally) arranging one's affairs so as to maximize the entire panoply of subsidies and benefits that the government sees fit to bestow.

If we don't like people getting the subsidies, then change the rules for eligibility. Anyone who stays within the rules and gets the subsidies has won the little game.
+1, Sam!
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Old 10-15-2012, 05:27 PM   #69
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We bought a LTC policy through CALPERS in our late 40's about 15 years ago. The premiums were very low then (about $800 a year for the two of us) with a 5% annual inflation bump up and no limit on duration of benefits.

Fast forward to 2012. The plan has been closed to new members for a few years now. As the membership is shrinking, the premiums have about tripled. I suppose as the years go by and the pool of insured members continues to shrink the premiums will increase to the point where we will no longer be able to afford it, probably in our eighties, just when in all probability we'll need the coverage...
So your premium has tripled ? I don't understand LTC, but what is the benefit of "buying early" ?

Is your current premium substantially different than person of same age that bought last year ?
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Old 10-15-2012, 06:38 PM   #70
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So your premium has tripled ? I don't understand LTC, but what is the benefit of "buying early" ?

Is your current premium substantially different than person of same age that bought last year ?
The policy has been closed to new members for a year or two so a direct comparison with CALPERS is not possible. Last year I did look for quotes from a couple of other companies and in fact they were about double what I pay so there may be some carryover advantage to having bought early.
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Old 10-16-2012, 07:47 AM   #71
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We have auto and homeowners insurance, not because we can't afford to replace either, but because of what we might be liable for in an accident. Also because these are pre-requisites for umbrella insurance - more protection against wiping out assets. We have health insurance because a devestating or long illness could wipe out assets. Long term care we can budget/save for, so we don't carry that insurance.
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Old 10-16-2012, 09:36 AM   #72
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We have auto and homeowners insurance, not because we can't afford to replace either, but because of what we might be liable for in an accident. Also because these are pre-requisites for umbrella insurance - more protection against wiping out assets. We have health insurance because a devestating or long illness could wipe out assets. Long term care we can budget/save for, so we don't carry that insurance.
I have all the insurance coverage you have and I also have LTCi. I can also budget and save for long term care, as well. I'm somewhat puzzled by your bolded statement because traditional health insurance might not cover a devastating or long illness that's chronic, disabling or leaves you incapacitated. LTCi would cover that risk up to certain limits.

In all cases, I'm insuring against risk that a loss will do me financial harm and that I'm weighing the probability of risk and the impact it might have on my family. But I am also trapped by strong emotional issues based on personal experiences. I also have around $500K of a term life insurance policy in the last year of a guaranteed premium rate -- the risk of me eventually dying is pretty strong but I'm not likely to renew the policy at higher premium rates for another ten years. My gut tells me not to go another round of term life insurance at this age of my life. I don't think these issues of insuring against risk are simple questions of adding up dollars and cents. I think we are all moved by our current life experiences more than the budget issues.
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Old 10-16-2012, 10:01 AM   #73
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I have all the insurance coverage you have and I also have LTCi. I can also budget and save for long term care, as well. I'm somewhat puzzled by your bolded statement because traditional health insurance might not cover a devastating or long illness that's chronic, disabling or leaves you incapacitated. LTCi would cover that risk up to certain limits.
Were pretty much in the same camp as you. LTC will cover care if an accident happens and the health insurance coverage runs out. Let's say someone falls off a ladder or is in an auto accident and is damaged enough that they lose activities of daily life but not damaged enough to die.

In the old days someone in LTC likely had a pretty low quality of life with just TV and books on tape. But now with access to the internet and new technology for the disabled, keeping mentally active and engaged could be pretty satisfying for someone who had restricted physical abilities.

If we had no assets we wouldn't need the insurance but were not willing to risk everything on caring for one person in LTC for an extended period. In addition we have very reasonable rates for good coverage because we bought early from a group plan.
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Old 10-16-2012, 10:06 AM   #74
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We have auto and homeowners insurance, not because we can't afford to replace either, but because of what we might be liable for in an accident. Also because these are pre-requisites for umbrella insurance - more protection against wiping out assets. We have health insurance because a devestating or long illness could wipe out assets. Long term care we can budget/save for, so we don't carry that insurance.
We share this view and approach. I would just include one other reason we carry health insurance, which is the multi-tiered pricing scheme most providers have that results in preferred prices for insurance carriers vs punitive prices for self-pay.
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Old 10-16-2012, 10:42 AM   #75
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I have all the insurance coverage you have and I also have LTCi. I can also budget and save for long term care, as well. I'm somewhat puzzled by your bolded statement because traditional health insurance might not cover a devastating or long illness that's chronic, disabling or leaves you incapacitated. LTCi would cover that risk up to certain limits.

In all cases, I'm insuring against risk that a loss will do me financial harm and that I'm weighing the probability of risk and the impact it might have on my family. But I am also trapped by strong emotional issues based on personal experiences. I also have around $500K of a term life insurance policy in the last year of a guaranteed premium rate -- the risk of me eventually dying is pretty strong but I'm not likely to renew the policy at higher premium rates for another ten years. My gut tells me not to go another round of term life insurance at this age of my life. I don't think these issues of insuring against risk are simple questions of adding up dollars and cents. I think we are all moved by our current life experiences more than the budget issues.
+1 All insurance comes down to whether or not you want to assume the risk. I also have all the other types of insurance Audrey listed as well as Umbrella. The premiums I pay for those policies gives me peace of mind as well as peace of pocketbook. I would rather pay premiums and cost-shift the financial risk to my insurance company.

With my family history, I have an excellent chance of collecting under my LTC policy, for which I currently pay $1,500 a year. Just doing the math - a semi-private room in San Antonio currently costs about $50k a year. It's $58k in Austin. A private room in San Antonio is almost $70k and about $2k more in Austin. Because of my LTC policy I would be able to move into an upscale facility when the time comes for that change. Even if my premium doubles I'm ahead because the odds are I'll spend at least a couple of years collecting LTC. LTC is just another component of my insurance premium budget. Just on a side note - my auto and homeowner premiums have gone up every year while my LTC has stayed the same for the past ten years.
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Old 10-16-2012, 10:58 AM   #76
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We share this view and approach. I would just include one other reason we carry health insurance, which is the multi-tiered pricing scheme most providers have that results in preferred prices for insurance carriers vs punitive prices for self-pay.
Actually, and unfortunately, a similar situation is happening with NH's in Illinois. High tier NH's who accept only the required number of Medicaid patients receive more from private pay residents than the state pays them (if they ever pay them) for Medicaid patients.

Apparently it isn't an issue of having two separate prices, one for Medicaid and one for private pay, but rather that the NH frequently receives less than billed from the state (if they receive anything at all, it's a real mess here with billions in unpaid bills) and has little recourse.

I'm relatively comfortable self-insuring for LTC, for the same reasons you and Audrey put forth. But I'm sure if the time comes, I'll be ticked paying the NH more than the state does for the same services.
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Old 10-16-2012, 11:05 AM   #77
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+1 All insurance comes down to whether or not you want to assume the risk. I also have all the other types of insurance Audrey listed as well as Umbrella. The premiums I pay for those policies gives me peace of mind as well as peace of pocketbook. I would rather pay premiums and cost-shift the financial risk to my insurance company.

With my family history, I have an excellent chance of collecting under my LTC policy, for which I currently pay $1,500 a year. Just doing the math - a semi-private room in San Antonio currently costs about $50k a year. It's $58k in Austin. A private room in San Antonio is almost $70k and about $2k more in Austin. Because of my LTC policy I would be able to move into an upscale facility when the time comes for that change. Even if my premium doubles I'm ahead because the odds are I'll spend at least a couple of years collecting LTC. LTC is just another component of my insurance premium budget. Just on a side note - my auto and homeowner premiums have gone up every year while my LTC has stayed the same for the past ten years.
I've noticed many holders of LTC policies believe they'll be money ahead by having the policy and that belief is an important part of their decision making. But, LTC policy issuers must take in more than they pay out. Therefore the majority of policy holders will pay in more than they receive. Or at least the group of policy holders will pay in more than they receive. This is despite insurance salesmens' emotional stories regarding families wiped out by LTC bills that are an important part of the sales pitch.

I'm NOT saying that having a LTC policy is not the right decision for you. Rather, I'm just pointing out that the reason for having it shouldn't be that you think the odds are on your side. In your case, since you point to a family history of relatives needing NH care which is likely in your genes, perhaps this does skew the statistics. But the real reason should be because you need/want to pay a fee to have a possible risk partially shouldered by the insurance company.

IOW, for today's LTC shopper, I accept your first statement (bolded above) but not your second.
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Old 10-16-2012, 11:53 AM   #78
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Therefore the majority of policy holders will pay in more than they receive. Or at least the group of policy holders will pay in more than they receive.
Isn't this true for all types of insurance? Otherwise no one would offer any type of insurance at all. They are in business to make a profit. They have employees to pay, overhead etc.
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Old 10-16-2012, 12:00 PM   #79
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I've noticed many holders of LTC policies believe they'll be money ahead by having the policy and that belief is an important part of their decision making. But, LTC policy issuers must take in more than they pay out. Therefore the majority of policy holders will pay in more than they receive. Or at least the group of policy holders will pay in more than they receive. This is despite insurance salesmens' emotional stories regarding families wiped out by LTC bills that are an important part of the sales pitch......
This is true for all insurance.
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Old 10-16-2012, 01:33 PM   #80
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Isn't this true for all types of insurance? Otherwise no one would offer any type of insurance at all. They are in business to make a profit. They have employees to pay, overhead etc.
Exactly!
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