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Old 09-06-2009, 01:32 PM   #21
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I've never been a fan of LTC and do not have a LTC policy. I choose to self insure for this limited risk. I have always thought that LTC coverage was too expensive for the risk that it covers and the limited data that is used to establish rates, as opposed to life insurance that has millions of cases of how folks have died over the last 100+ years.
Well, I think the fact that they've had to jack up "locked in" LTC rates rather steeply tells you all you need to know about the insurers' inability to appropriately price their risk. When you buy a life insurance policy with "locked in" rates, you don't have an insurer coming at you with premium increases down the road. Insurers know how to price life auto insurance very effectively -- even homeowners insurance to a large degree, despite the variability of super-cat disasters.

As far as health and LTC, it's pretty obvious there are difference pricing dynamics and the usual actuarial methods of trying to find an appropriate "price" (as with auto and life) are doomed to fail.
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Old 09-06-2009, 03:39 PM   #22
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Well, I think the fact that they've had to jack up "locked in" LTC rates rather steeply tells you all you need to know about the insurers' inability to appropriately price their risk. When you buy a life insurance policy with "locked in" rates, you don't have an insurer coming at you with premium increases down the road. Insurers know how to price life auto insurance very effectively -- even homeowners insurance to a large degree, despite the variability of super-cat disasters.

As far as health and LTC, it's pretty obvious there are difference pricing dynamics and the usual actuarial methods of trying to find an appropriate "price" (as with auto and life) are doomed to fail.
Methinks you give the industry too much credit for pricing acumen on other products. Auto policies get mispriced all the time, but they are only fixed for 6 or 12 months so it isn't hard to make adjustments to your pricing. Ovviously term life is fixed, but in universal and whole life policies pricing gets adjusted all the time.
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Old 09-06-2009, 04:10 PM   #23
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For now, I plan to keep the Federal LTC insurance even with the increase in premiums. I will consider changing our options to lower the price. DH and I have spent countless hours in nursing homes during the 15+ years his mother has required care. I gotta tell you, it's pretty darn depressing.
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Old 09-06-2009, 04:29 PM   #24
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Rewahoo , while I understand the reason you would drop hers I would drop yours instead and keep hers . The reason is that women outlive men (sorry but true ) and also women tend to be good caregivers so if you got ill she would probably care for you with some help eliminating the need for a nursing home . I'm sure you would also care for her but since statistically women outlive men she may need care that requires a Nursing Home stay .
Moe, I do understand why you suggest we do a 180 with our plans. We took these factors into consideration when reaching our decision.

Although odds are she will outlive me, I don't want to place her in a situation where she is forced to take care of me at home to avoid financial ruin. Nor do I think the odds are necessarily favorable that she would be physically or emotionally able to care for me at home, even with help.

She'll probably kill me long before I'm ready to be institutionalized, anyhow...
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Old 09-06-2009, 05:39 PM   #25
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She'll probably kill me long before I'm ready to be institutionalized, anyhow...
Watch out for the arsenic taste in your oatmeal !
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Old 09-06-2009, 05:42 PM   #26
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Well, I think the fact that they've had to jack up "locked in" LTC rates rather steeply tells you all you need to know about the insurers' inability to appropriately price their risk. When you buy a life insurance policy with "locked in" rates, you don't have an insurer coming at you with premium increases down the road. Insurers know how to price life auto insurance very effectively -- even homeowners insurance to a large degree, despite the variability of super-cat disasters.

As far as health and LTC, it's pretty obvious there are difference pricing dynamics and the usual actuarial methods of trying to find an appropriate "price" (as with auto and life) are doomed to fail.
Another very obvious issue is the fact that LTC is being heavily marketed to boomers with deep pockets of cash/savings. Generating fear-of-the-unknown in millions of sixtysomethings that think that they will live another 30-40 years (don't we all?) is a real cash cow for the insurance industry.
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Old 09-06-2009, 06:16 PM   #27
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Although odds are she will outlive me, I don't want to place her in a situation where she is forced to take care of me at home to avoid financial ruin.
YOU are a keeper
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Old 09-06-2009, 06:25 PM   #28
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YOU are a keeper
Yeah you cant turn em back in after 40 years anyways.
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Old 09-06-2009, 07:30 PM   #29
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I think the rate increases are primarily due to their investment losses, not payouts.
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Old 09-06-2009, 07:34 PM   #30
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I think the rate increases are primarily due to their investment losses, not payouts.
Investment losses from John Hancock, who recently won the contract or MetLife, who currently has the contract? I'm confused.
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Old 09-06-2009, 07:46 PM   #31
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I think the rate increases are primarily due to their investment losses, not payouts.
Highly unlikely, given what I know of the industry, the product and industry regulation. Far more likely that they underpriced the policies up front (intentionally or otherwise) and now have to catch up. A lot of insurers priced a lot of lapses into their assumptions, and LTC policyholders have proven to be a persistent lot.
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Old 09-06-2009, 08:37 PM   #32
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Highly unlikely, given what I know of the industry, the product and industry regulation. Far more likely that they underpriced the policies up front (intentionally or otherwise) and now have to catch up. A lot of insurers priced a lot of lapses into their assumptions, and LTC policyholders have proven to be a persistent lot.
This rings of the truth Brewer. Underpriced to win the big Gov'ment contract then repriced when reality hit the fan. And yes, Fed employees are a persistent lot. Kinda like badgers*.


*CFB, any chance you are lurking? Remember that insane badger song you posted?
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Old 09-06-2009, 08:41 PM   #33
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*CFB, any chance you are lurking? Remember that insane badger song you posted?
This one? Badger Badger Badger
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Old 09-06-2009, 08:50 PM   #34
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A lot of insurers priced a lot of lapses into their assumptions, and LTC policyholders have proven to be a persistent lot.
Yep, and why not. With years or decades of paid premiums behind you it would be tough to just walk away from renewing. An increae of 20% may be frustrating but not enough to make you abandon the tens of thousands that you have already paid them.

I worry about not having LTC insurance, but I still can't make the arithmetic work well enough to convince me to buy. The recent round of premium increases doesn't make it any more appealing.
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Old 09-06-2009, 09:20 PM   #35
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Yup. That's it. Now it will be stuck in my head for week just like when Bunny posted it. Hey, better than frettin' over LTC insurance, huh?
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Old 09-06-2009, 11:16 PM   #36
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Not investment losses Humm...

Counting on lapses? The insurer didn't do a behavioral analysis of Fed employees. As a former member of that clan I can confirm that once they make a decision it is rarely revisited. Many of their benefit programs are one way roads, there are few opportunities to re-enroll. OPM trained them well.
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Old 09-07-2009, 06:06 AM   #37
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http://spwfe.fpanet.org:10005/public...e%20Versus.pdf Financial Planning Journal Article

Some Statistics. Long term care insurance facts statistics information on long term care planning from long term care insurance industry organization

FCA: Selected Long-Term Care Statistics

More Information:

http://aspe.hhs.gov/daltcp/reports/ltcinsfr.htm
http://www.emaxhealth.com/1/105/3214...ice-index.html
http://www.guidetolongtermcare.com/charts.html
http://www.financinglongtermcare.umn...k/LTCrisk1.htm -- Quote below
Quote:
Myth: There is less risk associated with long term care than with other life events.
  • FACT: Some estimate that the actual risk of needing long term care (either in the home or in a nursing home) is 50%. This risk is significantly greater that the risk associated with other life events. For example, insurance professionals (Kesy, 2000) cite the following probabilities for other life events:

  • Probability of losing a home to a fire is 1 in 1,200
  • Probability of having a car accident is 1 in 240
  • Probability of a hospital stay costing $30,000 is 1 in 15
New Hybrid Insurance Products:
http://retirementincomejournal.com/i...just-a-concept
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Old 09-07-2009, 07:04 AM   #38
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I believe the decision factors about LTC and perception of them changes as one ages.

  • The younger you are, the less it seems to make sense. Seems like a poor investment. The sinking reality of failing health seems distant.
  • The older you are (when you realize it might make sense), you are more likely to be uninsurable because of some sort of illness or problem that makes you a risk that the insurance company will avoid (not underwrite you). At this point in life, it looks less like an investment and more like the lack of resources is a major life changing factor (for you or your surviving spouse).
I think it is safe to say we all should plan for LTC needs (if you have any assets). This is one of those things that you need to consider while you are still fairly young. If you intend to self-insure, you need to setup a reserve fund. If you go the insurance route, better do it while you have no health problems (or that avenue will be closed to you).

The other option is to just hope for the best. It seems odd, but hoping for the best in this case is hoping for a quick exit when one goes.
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Old 09-07-2009, 07:21 AM   #39
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Not investment losses Humm...

Counting on lapses? The insurer didn't do a behavioral analysis of Fed employees. As a former member of that clan I can confirm that once they make a decision it is rarely revisited. Many of their benefit programs are one way roads, there are few opportunities to re-enroll. OPM trained them well.
AFAIK, insurers generally are not allowed to (directly) pass on investment losses to policyholders, at least outside of participating policies (which these are not). OTOH, the industry as a whole priced LTC with certain lapse assumptions (3% a year plus or minus from what I understand). It turns out that lapses have been a lot lower. This is also an extremely long duration policy (possibly the longest of any major product line) so small mistakes quickly become big ones.
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Old 09-07-2009, 08:45 AM   #40
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And yet if you drop the insurance, essentially you have put $11,400 into LTC insurance over the past 10 years and got nothing for it, so that is an incentive to accept whatever increase is imposed. With LTC premiums going up so much, even for the fed LTC insurance, I think you and many others have good reason to be worried.
Insurance is insurance so what can you do. I paid for disability ins for 25 years and never got to use it. Also pay 7K a year for my whole life policy and have done so for over 20 years. I pay health ins and auto ins and home owners ins. So should I hope that I got to use the life ins, had a car accident, hope my house burns down or was disabled?
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