Long-Term Care Insurance

[NanoSour]

Like most days in ER, I had some time today and decided to stop by a local insurance agent and learn something about long-term care insurance. Needless to say, I don't have a policy.

I did find out that you can only get a policy that covers 2, 3, or 5 years. After that, you're on your own. So it's not really "long" care at all. Doesn't really work too good if you are stricken at a relatively young age with multiple decades of needing care. Seems a disability policy would work better in this situation.

I did get a quote for a 50 year old paying $150/day for 2 years: $144/month….ouch! I understand this product has not sold to well. Now I know why.

 

[Marita40]

I bought a Genworth policy a couple of years ago, when I turned 55. I'm happy with it. Stats say that the average stay in nursing homes, or need for home care, is about 3 years. So that's what many buy, as I did. It is a stop gap insurance for those who worry about the ability to self-insure and, especially, for those like myself who will not have "built in" family caretakers should care be needed.

 

[InParadise]

I am very hesitant to get a LT care policy after what Dad went through with his. He was in the first wave of policy holders, and much like today's policies they are almost impossible to understand what the payout will be until you use it. In a nutshell, for Mom and Dad the payout wasn't much, even with Sis who is a nurse fighting for them.

In Dad's early 80's, after Mom had passed, he decided he was done paying for this policy. So after paying $70K in premiums for something that didn't pay out much, he stopped paying, telling us only after the fact. Of course he cancelled when he might need it most, with not many more years of paying to be done, but frankly as he aged knee jerk decisions ruled, with this once financially proficient man making some idiotic decisions.

We are our own worst enemy as we age, and the law keeps the kids out of their parents' affairs, until of course the filial responsibility act kicks in and we have to pay their bills.

But back to what we are doing for LT care. Our FP suggested a policy where you pay in upfront...in our case $50K each. No more premiums. (Sorry, no link or company name.) It also acts as a life insurance policy, and if you decide you don't want it anymore you can get your premium back without interest. So that was better than what Dad had, but I looked at what the returns would be if we just took that $100K and kept it with our FP. Using a moderate investment rate, we found that it should provide almost as much funds as the policy would for LT care. A bit less, but while it is likely that one of us may need LT care, it is much less likely that both of us will, and this way we can throw the whole amount at the person who needs it. In addition, if we don't need it then the kids can inherit all of it, principal and investment return. No insurance if we need this soon...they like to throw examples at you of people getting ALS in their 50's, but I insure for probable, not possible.

So we are self-insuring, holding back $100K of IRA money from our retirement calculations and letting it build.

 

[REWahoo]

I did get a quote for a 50 year old paying $150/day for 2 years: $144/month….ouch! I understand this product has not sold to well. Now I know why.

Wow.

In 2000, when DW and I were in our early 50's, we each bought 3 year policies paying $100/day plus a 5% annual inflation increase. That adjustment brings the current benefit up almost $200/day. The premiums were less than $50/month for each of us but will increase this year to $73/mo, an increase of 50%.

You pays your money (or not) and takes your chances...

 

[Corporateburnout]

Like most days in ER, I had some time today and decided to stop by a local insurance agent and learn something about long-term care insurance. Needless to say, I don't have a policy.

I did find out that you can only get a policy that covers 2, 3, or 5 years. After that, you're on your own. So it's not really "long" care at all. Doesn't really work too good if you are stricken at a relatively young age with multiple decades of needing care. Seems a disability policy would work better in this situation.

I did get a quote for a 50 year old paying $150/day for 2 years: $144/month….ouch! I understand this product has not sold to well. Now I know why.

I would shop around for a better quote. I got an LTC policy 2 years ago at the age of 58 but DW was denied for health reasons. Premiums would have been cheaper if she was approved due to couples discount but my premium for a 3 years $200/day with a 3% inflation adjustment was $150 per month.

 

[SJ1_]

Like most days in ER, I had some time today and decided to stop by a local insurance agent and learn something about long-term care insurance. Needless to say, I don't have a policy.

I did find out that you can only get a policy that covers 2, 3, or 5 years. After that, you're on your own. So it's not really "long" care at all. Doesn't really work too good if you are stricken at a relatively young age with multiple decades of needing care. Seems a disability policy would work better in this situation.

I did get a quote for a 50 year old paying $150/day for 2 years: $144/month….ouch! I understand this product has not sold to well. Now I know why.

Found the same thing. We do have enough for to cover 5 years and when
I look at the cost of LTC knowing that the premiums can go up at any time
it just does not seem worth it.
Insurance cos. are also experts at denying claims which you will not be aware of until you actually need the insurance.

Major concern for us is one person draining the assets
and leaving the surviving spouse broke. imoldernu had a great post (that I cannot seem to find) a couple of months ago on this subject.

 

[Rustic23]

We self insure. Short form, we have about $350,000 in the bank available for LTC. That would give us over five years at $60,000. I also figure there would be a reduction in annual expenses, i.e. we not budget $10,000 a year for travel. If one of us were in LTC that would not be used. Some minor expenses might go up but I don't think they would affect us. Only major problem with this is if both DW and I have to be in LTC at the same time. In that case my guess is the kids would cash out the IRA's and sell the house. As stated before, I can defer the property tax on the house, and that another $7,000 a year.

 

[mpeirce]

The devil's in the details on many of these policies. You need to understand what you are buying.

One of my grandma's had a policy that worked out very well of her. It paid for her care as expected. The only additional cost she had was to pay one of the folks who worked there to spend extra time with her to attend to her needs. This allowed her to stay at the lower level of care.

We paid for LTC insurance that work offered. Then dropped it when we hit FI. To us that was one part of the definition of financial independence.

 

[Live And Learn]

I haven't bought a policy either. I came close to buying one of those "pay all up front" policies but then decided to stick with the self-insure route.

I hold 14 months at $250 / day outside of my portfolio calculations. I think the average stay is 7 months so I've assumed 7 months for each of us. The reality is that the second person would probably die in LTC in which case the house could be sold to pay for it.

 

[retire2020]

I am very hesitant to get a LT care policy after what Dad went through with his. He was in the first wave of policy holders, and much like today's policies they are almost impossible to understand what the payout will be until you use it. In a nutshell, for Mom and Dad the payout wasn't much, even with Sis who is a nurse fighting for them.

In Dad's early 80's, after Mom had passed, he decided he was done paying for this policy. So after paying $70K in premiums for something that didn't pay out much, he stopped paying, telling us only after the fact. Of course he cancelled when he might need it most, with not many more years of paying to be done, but frankly as he aged knee jerk decisions ruled, with this once financially proficient man making some idiotic decisions.

We are our own worst enemy as we age, and the law keeps the kids out of their parents' affairs, until of course the filial responsibility act kicks in and we have to pay their bills.

But back to what we are doing for LT care. Our FP suggested a policy where you pay in upfront...in our case $50K each. No more premiums. (Sorry, no link or company name.) It also acts as a life insurance policy, and if you decide you don't want it anymore you can get your premium back without interest. So that was better than what Dad had, but I looked at what the returns would be if we just took that $100K and kept it with our FP. Using a moderate investment rate, we found that it should provide almost as much funds as the policy would for LT care. A bit less, but while it is likely that one of us may need LT care, it is much less likely that both of us will, and this way we can throw the whole amount at the person who needs it. In addition, if we don't need it then the kids can inherit all of it, principal and investment return. No insurance if we need this soon...they like to throw examples at you of people getting ALS in their 50's, but I insure for probable, not possible.

So we are self-insuring, holding back $100K of IRA money from our retirement calculations and letting it build.

Excellent idea. This is something I will plan also. I do not have any LTC and not planning to buy one.

 

[ejman]

I still do not understand why the insurance industry does not provide true insurance for LTC. What I mean by true insurance is say a 1 or 2 year waiting period after admittance to a nursing home but then full open ended coverage after that waiting period. Most people would not collect since NH stays are generally shorter but those few that do would be covered.

 

[target2019]

It pays to shop around, as with most insurance. I can only vouch for John Hancock LTC. I can't say for sure if they still offer it, but both in-laws are drawing from their policies. The total amount is capped, and will run out in a few years. But they are paying for much of the costs, which are well over $100K for two.

In this coming year, all of their investments will continue to grow, and pension/social security checks will be deposited and not used.

I always thought this insurance was rather expensive. I don't think I could retrieve the cost of all of their paid premiums, but it must be close to 100K for 15-20 years. Still they could conceivably draw down well over 500K in a few years.

Just some more info, in case anyone can benefit.

 

[Jack_Pine]

I still do not understand why the insurance industry does not provide true insurance for LTC. What I mean by true insurance is say a 1 or 2 year waiting period after admittance to a nursing home but then full open ended coverage after that waiting period. Most people would not collect since NH stays are generally shorter but those few that do would be covered.

That would work for me if the cost made sense..................

 

[akck]

I went ahead and got LTC policies offered by my PERS. It will cover us for about 4 years and has a simple inflation of 5%. My reasoning to get it was I didn't want the non-LTC spouse to become destitute trying to cover the cost. When there is only one of us, it will be evaluated and possibly dropped.