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Old 08-09-2013, 01:37 PM   #21
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It seems like folks who are FI and living off their own assets (no pension income) are best off self-insuring.

If someone is FI based on a nice pension, but fairly low assets, LTCi makes more sense, since they don't have a pot of money to raid to pay for care. They also can use their monthly pension income to pay the premiums for the insurance.

You appear to have both a good pension AND plenty of assets. So self-insuring seems fine to me.
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Old 08-09-2013, 03:04 PM   #22
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Is there such a thing as catastrophic LTC insurance? For example, something where you would pay all of the costs for the first few years, then the insurance would only kick in after that. If such a thing exists, it should be dirt cheap, since the vast majority who need LTC only need it for a few years so most policies would never pay out anything. This could provide a middle ground between self insuring (since that's what you're doing for the first few years) and having coverage.
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Old 08-09-2013, 03:13 PM   #23
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Is there such a thing as catastrophic LTC insurance? For example, something where you would pay all of the costs for the first few years, then the insurance would only kick in after that. If such a thing exists, it should be dirt cheap, since the vast majority who need LTC only need it for a few years so most policies would never pay out anything. This could provide a middle ground between self insuring (since that's what you're doing for the first few years) and having coverage.
This been brought up before and I believe the consensus was this type of product is not offered. The probable reason is not being able to define the insurers potential long term cost. Catastrophic insurance works for a house because there ultimately is a definable cost to company. But once Granny makes it past 3 years in the home there is potentially no stopping her from making it her new home for 15 plus years. That being said, an affordable product like you suggest would be the only one that would interest me for LTC.
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Old 08-09-2013, 03:14 PM   #24
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Is there such a thing as catastrophic LTC insurance? For example, something where you would pay all of the costs for the first few years, then the insurance would only kick in after that. If such a thing exists, it should be dirt cheap, since the vast majority who need LTC only need it for a few years so most policies would never pay out anything. This could provide a middle ground between self insuring (since that's what you're doing for the first few years) and having coverage.
I would seriously consider this kind of policy, especially if premiums were not only low but increases were capped. Otherwise, I will continue to self insure.
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Old 08-09-2013, 03:22 PM   #25
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FWIW, DW and I each bought LTC from State Farm about 10 years ago, in our mid-50's. Five year coverage, with inflation increase it's now up to about $560k per person. Initial premium was ~$100/month per person. We have had one premium increase (this year), to about $140/month per person.

Some day, the premiums may become too expensive for us to stomach. But right now; if one of us goes into a home we don't want the other to be impoverished. Wait until we no longer have the health to go racing or traveling, then dropping the LTC makes more sense.
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Old 08-09-2013, 03:25 PM   #26
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This is a great description of my mindset.

I am self-insuring.

In a sense, with a policy that only pays for four years, you too are self-insuring for any long term care situation that lasts beyond four years. Your LTC policy pays $216/day for four years, that comes to a total of $315,576 right now. It will increase, but so will my portfolio at some rate beyond inflation, I presume. If one runs FIRECalc and specifies that, say, a minimum of $500K must remain in the portfolio at all times, that half million could be used for LTC.
Exactly. I can not see how LTC insurance could be compared to term insurance or some of the other parameters suggested here. It's a rolling crap shoot at this point and everyone should probably look out for their own best interests. Buyer beware
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Old 08-09-2013, 03:30 PM   #27
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I can not see how LTC insurance could be compared to term insurance...
Gearhead Jim gets the concept. Use LTCi to bridge the gap, then cancel when you reach the point you feel you can self-insure.
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Some day, the premiums may become too expensive for us to stomach. But right now; if one of us goes into a home we don't want the other to be impoverished. Wait until we no longer have the health to go racing or traveling, then dropping the LTC makes more sense.
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Old 08-09-2013, 10:19 PM   #28
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The best rule of thumb I've seen is from this piece from Forbes:
10 Questions To Ask Before Buying Long-Term Care Insurance - Forbes
+1

The income brackets make sense to me. For those with less than $1million in assets, a combination of home ownership and medcaid makes sense in todays legal structure.

Looking at today's insurance policies, I wouldn't buy. We began our policies in 1995 and have $100/day coverage for 3 years. Premiums (for 2) are about $2400/yr. and haven't changed in 7 years. Currently Nursing Home care in our Long term care community is about $77K. Our total current investment is about $50K. A 3 year nursing home stay would see a savings of about $100K using the policy income. So no, we wouldn't buy again, but with our current investment, it seems a reasonable bet.

BTW, our poliucy has gone through three owners, and now, along with five other original LTC policiies, has been merged and is now being administerered by a Pennsylvania Trust...(SHIP) possibly a precursor for other future mergers.
(from the site history)
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The new ownership of Senior Health Insurance Company of Pennsylvania or "SHIP", an insurance company domiciled in the commonwealth of Pennsylvania, was approved on November 12, 2008, by the Commissioner of the Pennsylvania Department of Insurance.

Prior to November 12, 2008, SHIP operated as Conseco Senior Health Insurance Company. From 1997 to 2000, a number of other long term care insurance companies merged into, or were acquired by Conseco Senior Health Insurance Company.

Accordingly, SHIP will service the obligations of long term care insurance policies originally issued by the following companies:

Transport Life Insurance Company 1
American Travelers Life Insurance Company 2
United General Life Insurance Company 3
Continental Life Insurance Company 4
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Old 08-09-2013, 11:14 PM   #29
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A number of posters have stated that they fear that LTC insurance may become so expensive that they cannot afford it and they will lose their money.

So, I checked my LTC policy. My policy is complex. I won't attempt to quote it, but it does offer a variety of plans for a reduced benefit with the same or lower premium, or a paid up policy with a reduced benefit. IMHO this is somewhat better than term insurance. Whether or not this will be worth anything is unknowable. My policy also offers a partial return of premium if I die prematurely.
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Old 08-10-2013, 06:59 AM   #30
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My policy also offers a partial return of premium if I die prematurely.
Everyone dies prematurely.
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Old 08-10-2013, 07:15 AM   #31
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Thanks to all who posted in reply to my query. It seems as though the group who responded for the most part come down on the side of self-insuring. At the time that we purchased the policies we were aware of the principle of self-insuring if one had assets of 2 million or greater. At the time we were on the cusp but not quite there(2008). Then of course the market went south and our TA dropped significantly. We have since recovered and then some so we now comfortably exceed the threshold. I have lingering concern however about one of us being the impoverished spouse. I think it is an irrational fear but it is there nevertheless. Add to that the fact that nursing home costs in our area are above average($7400-$10,200/mo).

I also have concerns about rising premiums, although at the time that we purchased, we were told that our policies had been designed in the "new era" after companies realized that early policies were too generous. Our premiums haven't increased in the 5 years we have owned them, but we aren't naive. They will increase. The insurer of our policies is Prudential. Last year they stopped offering LTC policies. I'm not sure if that is a good thing or a bad thing

A final point. We do want to leave a legacy to our children. Soooo.... For the time being we will continue to pay the premiums. Ironically of course we hope we will never have to cash in. Yes I too hate insurance companies.

Thanks again for sharing.
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Old 08-10-2013, 09:15 AM   #32
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Thanks to all who posted in reply to my query. It seems as though the group who responded for the most part come down on the side of self-insuring. At the time that we purchased the policies we were aware of the principle of self-insuring if one had assets of 2 million or greater. At the time we were on the cusp but not quite there(2008). Then of course the market went south and our TA dropped significantly. We have since recovered and then some so we now comfortably exceed the threshold. I have lingering concern however about one of us being the impoverished spouse. I think it is an irrational fear but it is there nevertheless. Add to that the fact that nursing home costs in our area are above average($7400-$10,200/mo).

I also have concerns about rising premiums, although at the time that we purchased, we were told that our policies had been designed in the "new era" after companies realized that early policies were too generous. Our premiums haven't increased in the 5 years we have owned them, but we aren't naive. They will increase. The insurer of our policies is Prudential. Last year they stopped offering LTC policies. I'm not sure if that is a good thing or a bad thing

A final point. We do want to leave a legacy to our children. Soooo.... For the time being we will continue to pay the premiums. Ironically of course we hope we will never have to cash in. Yes I too hate insurance companies.

Thanks again for sharing.
I can see your hesitancy to give up the policy if leaving a legacy is a priority. $7400-$10,200 a month? Wow! Well I guess you would have another option to help preserve the nest egg. If you ever health ever gets bad enough you cannot live on your own, get a friend or relative to throw you over their back and head to the airport. You can get a nice nursing home in parts of the Midwest for half that. Just make sure you say bye to everyone as you probably wouldn't get many visitors.
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Old 08-10-2013, 09:21 AM   #33
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Ha ha. Thanks Mulligan. I should have pointed out that the range of rates is for a single occupancy room. But double occupancy rates were only 1,000 or so less per month. Unless DH or I were comatose I'd like a private room.
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Old 08-10-2013, 09:28 AM   #34
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Ha ha. Thanks Mulligan. I should have pointed out that the range of rates is for a single occupancy room. But double occupancy rates were only 1,000 or so less per month. Unless DH or I were comatose I'd like a private room.
You reminded me Golden of a recent discussion I had with my elderly neighbor couple who are both in their 80s. Very much the planners. They both have already made preparations for the nursing homes they will live in if ever needed. The hilarious part is they both have chosen separate facilities not even in the same county. I guess they have spent enough time together already.
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Old 08-10-2013, 09:39 AM   #35
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You reminded me Golden of a recent discussion I had with my elderly neighbor couple who are both in their 80s. Very much the planners. They both have already made preparations for the nursing homes they will live in if ever needed. The hilarious part is they both have chosen separate facilities not even in the same county. I guess they have spent enough time together already.
LOL! There was a time when my parents were both in a rehab facility at the same time for different reasons. The social worker asked if they wanted to be in the same room, and my mom said NO!!!! She does spend most of her waking hours taking care of my mostly-immobile dad. He seems to go into the hospital once or twice a year for various surgeries and problems. Mom refers to these hospital visits as her "vacation".

As far as LTC, we have had various friends and "advisers" suggest that we get it, but I have zero confidence in an insurance company being in business and able to pay out if I need them in 25-30 years, not to mention the probability of constantly increasing premiums. JMHO
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Old 08-10-2013, 09:51 AM   #36
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LOL! There was a time when my parents were both in a rehab facility at the same time for different reasons. The social worker asked if they wanted to be in the same room, and my mom said NO!!!! She does spend most of her waking hours taking care of my mostly-immobile dad. He seems to go into the hospital once or twice a year for various surgeries and problems. Mom refers to these hospital visits as her "vacation".

As far as LTC, we have had various friends and "advisers" suggest that we get it, but I have zero confidence in an insurance company being in business and able to pay out if I need them in 25-30 years, not to mention the probability of constantly increasing premiums. JMHO
Hilarious, CJ. Mom must not get much quality "alone time" if she can only get it in a rehab facility.
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Old 08-10-2013, 11:53 PM   #37
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I guess they have spent enough time together already.
I think that's certainly the case with this couple! Woman threatens to kill husband of 71 years, says it's her 'right | www.wpxi.com

Sorry for the OT.
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Old 08-11-2013, 02:31 AM   #38
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I sometimes hear men say this (including Mr. A. who doesn't even own a gun). I always wonder at what point, before total dementia, that somebody would "know" all hope is lost, it's time to pull the trigger, and would still be able to do so. Gruesome line of thinking!

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. Me I am self insuring with Smith&Wesson.
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Old 08-11-2013, 05:25 AM   #39
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If one of us has to go into LTC, I would consider selling our house, renting a small apartment, and using the equity to pay for the LTC.
I would suggest finding an attorney/accountant that specializes in "elder law" first.
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Old 08-11-2013, 07:44 AM   #40
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To the OP: I agree with the recommendations from the article provided below.

Good luck with your decision.

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The best rule of thumb I've seen is from this piece from Forbes:
10 Questions To Ask Before Buying Long-Term Care Insurance - Forbes
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