Finally--I Am At Peace Regarding Long Term Care

[Co2012]

My financial adviser is urging me to use one of my annuities to purchase a LTCI policy with his company. I told him that my plan is to use my annuities for the purpose of my health care. I told him that I had saved long and hard for this. In addition to purchasing a critical care policy from AFLAC as well as two other policies from another company that will aid some in long term care, he still thinks that I should buy long term care. To end this discussion one way or another, I contacted a friend of mine who I thought had to have purchased some type of LTCI as she has a husband who has had home health care for eleven years. (No one dreamed he would still be here--not that that's a bad thing.)

She said that she had not purchased LTCI and that if she had she would probably be destitute by now and her husband living in a sub care nursing home. She said that her husband had always taken good care of her and she felt she owed it to him to do the same for him. After a short stay in a nursing home, she brought him home and with the care of excellent licensed home caregivers, she is able to take care of him. She said that she pays $10 per hour (I know this sounds kind of cheap but in this area it is not hard to find caregivers to work for this or even less. Whenever I find someone with rates like this, I take the info and and also pass it along.)

At first my friend said she started out with 8 hours per day, but after a year; realized he did not need that much. He is bedridden and have tubes to do pretty much everything. She now uses health caregivers no more than 4 hours a day. She that what she pays is a fraction of what she would have to pay a nursing home.

She said this plan works fine for her and in her opinion anyone who can afford it may do well to go this route. She did say that the down side was her time was limited as to what she can do as she did not like to be gone too much. In hearing this, I felt so much better and at peace. I feel confident that as for myself this is the right thing for me. To his disappointment I told my adviser: Thanks but no thanks.

I know this subject has probably been beat to death but I wonder if there are other alternatives to purchasing LTCI or even if there is a reason that I should reconsider buying LTC. One friend told me that she has put her daughter's name on her house so that when the time comes she could take care of her. I don't think I'd go that route. You must might find yourself in a nursing home anyway.

 

[mickeyd]

I know this subject has probably been beat to death but I wonder if there are other alternatives to purchasing LTCI or even if there is a reason that I should reconsider buying LTC.

You will find many pros and cons here as this has been discussed many times. LTCi is expensive and the insurance premium often increases as you get older. One alternative is to save/invest more along the way so that your retirement stash includes the possibility that you may need part of it for a nursing home.

Like many issues discussed here, there is not a right or wrong way for everyone.

 

[aja8888]

Ask your FA how much it would cost you to cash out an annuity and what his commission is on an LTC policy for starters.

If you have enough funds and a paid for house, you can possibly be considered self insured for the long term care you may need. Most LTC policies are for a specified amount of benefit per day (usually less than what the care costs), have a deductible waiting period where you cover, and are term limited (ex, 2 or 3 years).

 

[Animorph]

I'd fire an FA that recommended an insurance product through his company. He's an insurance salesman! And you already have three other policies I never knew existed.

If have too little, you can't afford LTC insurance. If you have enough, you can self insure. Somewhere in between there may be case where it makes sense. Especially if you have inside information that it might be necessary.

 

[bmcgonig]

I'd fire an FA that recommended an insurance product through his company. He's an insurance salesman! And you already have three other policies I never knew existed. If have too little, you can't afford LTC insurance. If you have enough, you can self insure. Somewhere in between there may be case where it makes sense. Especially if you have inside information that it might be necessary.

+1 on getting rid of that FA

 

[samclem]

I have a lot of concerns about LTC insurance, I think the product is a shaky one. And yet, if I bought it, it would be to allow my family options if I become unable to care for myself. The OP's friend is certainly making the best of the situation, and seems to be holding up. But, to me, the situation shows that any value of LTCI is for others in the family, not the insured. An illness like this won't be a cakewalk under any circumstances.

 

[Co2012]

I've have thought about not using him but I don't see how I can get out of it. I call him my self-appointed FA. We have had several difference of opinions. When I retired I was forced to open a new annuity account to put my severance pay in. I had a couple of ING annuties that I paid through payroll until a year before I retired but for reasons I never quite understood, we could not use my company and was asked to pick a new company. So I did and this adviser came with it. But now he wants to handle my other assets and calls himself my adviser. I really don't know what to do about him. He wants me to move assets from a company I have been doing business with for 30 years into his company. There is a 1% advantage in interest but my old policies has advantages this new ones does not. It seems every time I look up it something something. Sometimes I get angry with my company for putting me in this position.

 

[bmcgonig]

For your own peace of mind I would hire a CFP on an hourly basis and have him go through everything. What you really need is qualified independent advice from someone who is not trying to get a commision

 

[seraphim]

I'd fire an FA that recommended an insurance product through his company. He's an insurance salesman! And you already have three other policies I never knew existed.

All FAs are salesmen selling their company's products. In addition, you often pay them a fee for doing so. Of course he wants you to move assets to his company. He makes more money that way, and his company is happier with him. FAs do NOT have fiduciary responsibility towards you - they are not required to do what is in your best interest, only offer you products - with no guarantees - which are designed to attempt to meet your goals. I repeat, you are dealing with a salesman trying to sell you his products. There is no other way to look at it. period. I'm not disparaging their product, only trying to let you know what you're actual relationship with him is.

CO2012: I think you've already discussed this on a different thread - about firing your FA(?). If you're so angry, get away from the FA, hire a fee only RA who DOES have fiduciary reonsibility towards your best interests, or go the Vanguard route. It's your money - put it where the costs are low and where YOURE comfortable, and can stop being angry.

 

[seraphim]

Now that you're retired, you no longer have to do what the company wants. DW is accepting a severance package being distributed over a five year period. By the contract, the money is required to be distributed to a limited number of companies, all limited to a particular option. Once distributed to those companies, however, we can roll the money over wherever we please, because the money is ours. So it can go straight into a compnay approved money market, and be rolled over into another account of our own choosing shortly afterward; just use the FAs company as a clearinghouse, if you will. You're not locked into one option...

 

[imoldernu]

Wouldn't do it again, but purchased policies in 1993... with a $100/day pay... enough at the time, but less than twice today's costs.
It was after DW's stroke, and shortly after we retired, so a scary time... (she's fine now, thanks)
Now, after about $50K invested, can't really afford to drop it... and just to double the payout to $200/day would cost almost 4 times as much as we're now paying... (our age being the factor).
In the interim, as the industry changed, and as costs began to exceed promises, the original insurance company had changed hands three times and the policies are now held in a (passive) trust.
I wouldn't do it again, but keeping policy much like a losing investment, that "could" pay off.

 

[jebmke]

Nembutol. The problem is, you may not remember where you left it.

 

[H2ODude]

I spent a lot of bitterness about the companies that handled the 457 for me and other employees of the two local governments I worked for. Blatantly bad deals, one was I believe in cahoots with former employee who had selected them. Pension financial service is in our state, I believe, a professional service that should be selected on basis of submitted professional proposals. That was not done. The finance director and city attorney finally gave them the boot but it took years to release the funds. I have no doubt DW and I would have at least 10% more in assets if we had a more Fidelity or Vanguard like provider. Doesn't matter now, but there were more than a few of us who understood just a tad about personal finance and investment that were livid how we were gigged. When I left each agency I got stuff moved into FIDO IRA as soon as I could. In last case, they held onto some ING annuity that was provided by the city and unless you held it with them for something like 5 years you took a hit. I took the hit; I'm not a control freak but it freaks me out when someone has there claws in what's mine and won't let go.

 

[mickeyd]

I really don't know what to do about him

.


Hey Co2012,

I think you know what to do.

 

[Co2012]

All FAs are salesmen selling their company's products. In addition, you often pay them a fee for doing so. Of course he wants you to move assets to his company. He makes more money that way, and his company is happier with him. FAs do NOT have fiduciary responsibility towards you - they are not required to do what is in your best interest, only offer you products - with no guarantees - which are designed to attempt to meet your goals. I repeat, you are dealing with a salesman trying to sell you his products. There is no other way to look at it. period. I'm not disparaging their product, only trying to let you know what you're actual relationship with him is.

CO2012: I think you've already discussed this on a different thread - about firing your FA(?). If you're so angry, get away from the FA, hire a fee only RA who DOES have fiduciary reonsibility towards your best interests, or go the Vanguard route. It's your money - put it where the costs are low and where YOURE comfortable, and can stop being angry.

Seraphim

I did not discuss this in another thread but what you are saying is something that I need to hear and understand. I think I always feel a false sense of obligation to someone I feel is going through a lot of trouble for me--even though it is their job. I did the same with a real estate agent. (I'm beginning to think that maybe it is their job to make you feel obligated)
I'm not angry with the FA but now maybe I should be. Just today I get a notice in the mail that my car and home insurance policies have been non-renewed and I have 30 days to find another company. Two years ago I dropped the insurance company I had been using because he recommended it and said that I could save $700 a year and I did. But now they say that he is no longer one of their agents and so they have dropped all of his clients. I don't understand why I could not stay with the company anyway under a new agent. Now I have to try go to the trouble of finding new coverage. Oh boy.

 

[daylatedollarshort]

I'm not angry with the FA but now maybe I should be. Just today I get a notice in the mail that my car and home insurance policies have been non-renewed and I have 30 days to find another company. Two years ago I dropped the insurance company I had been using because he recommended it and said that I could save $700 a year and I did. But now they say that he is no longer one of their agents and so they have dropped all of his clients. I don't understand why I could not stay with the company anyway under a new agent. Now I have to try go to the trouble of finding new coverage. Oh boy.

That seems like a big red flag.

If you have an average of 500K nest egg over 50 years and your FA gets 1% a year, that adds up to $250K, which would buy a lot of LTC. Plus if he has you in investments with fees and commissions that are another .5% more than Vanguard or Fidelity type investment options, there's another $125K, for $375K total.

To earn $375K after tax, depending on your tax bracket and SS deductions, you might have to make another 40% more, or $525K.

It isn't a coincidence most people here do not use FAs. Having an FA that charges a percent of investments gets very pricey the more you save and adds a very high hurdle to ER. Plus for all that money you aren't even getting unbiased advice. You are just getting high pressure sales pitches.

 

[ziggy29]

I have a lot of concerns about LTC insurance, I think the product is a shaky one.

Same here. My biggest concern is that they don't know how to price it yet, so even though they tout "locking in a low rate" while you are young and healthy, they can still impose essentially unlimited rate increases in the future.

The lack of pricing certainty is a huge negative for this product, IMO.

 

[Hexdump]

I struggled with this for some time and decided to not get it. Instead I have been maxing out our I-Bond purchases for each year. If we need it they will be there, inflation protected, and if we don't need it then it's like found money,,,sorta.

 

[Live And Learn]

I struggled with this for some time and decided to not get it. Instead I have been maxing out our I-Bond purchases for each year. If we need it they will be there, inflation protected, and if we don't need it then it's like found money,,,sorta.

I keep $100k outside of my portfolio for long term care when I do my calculations. It should cover about 14 months of care. It may not be enough, but I've read too many horror stories about the cost of LTC insurance. LTC is one of the many excuses I use for working two more years.