The long term care insurance dilemma

[Debinnov a]

My DH and I are recently retired this year. Ages 58 and 52. We basically have no income until we take social security, which we will be taking as late as possible. This will use up quite a bit of our savings until we get to Social Security, but I'm still worried but long-term care.

DH has diabetes type 2 and I'm having a few non life threatening medical issues.

My questions are where is the best place to purchase this type of coverage? And does anyone have any information on the top firms to go with?

I'm on a mobile device and I tried to search the forums for LTC but just came up with millions of unrelated posts. Thanks!

 

[Fermion]

I like the idea of delaying SS as long as possible. That is better LTC insurance than a policy that will eat up your saving and may not even pay what you need it to pay. SS is harder to garnish or go after than funds you may have in a saving account.

 

[REWahoo]

Can't help you with the best insurers but here are links to a few LTC insurance threads that may provide some information:

http://www.early-retirement.org/for...en-buying-long-term-care-insurance-71567.html
http://www.early-retirement.org/forums/f38/long-term-care-strategies-74269.html
http://www.early-retirement.org/forums/f28/ltc-poll-67962.html
http://www.early-retirement.org/forums/f38/new-ltc-study-75320.html

 

[ivinsfan]

Do you have to qualify health for a LTC policy, I always had the impression it was like buying life insurance and that permanent health conditions like Diabetes meant you were rejected or paid very high premiums.

 

[brewer12345]

Do you have to qualify health for a LTC policy, I always had the impression it was like buying life insurance and that permanent health conditions like Diabetes meant you were rejected or paid very high premiums.

Correct.

 

[Debinnov a]

I spoke with someone today who sells all the different ltc companies and he said that my husband could probably still get coverage but he wouldn't get the preferred rate. I have no idea how much it's going to be. I just wonder is there a a dollar amount at which point you have to say maybe it's not worth it? I just have a feeling that it's something that we will need moving forward so I think it's important. My biggest concern is that I don't want to get an inflated premium rate from a broker's he's looking for a big commission. I just am wondering where is a reputable place to buy it in the first place?

 

[bingybear]

I spoke with someone today who sells all the different ltc companies and he said that my husband could probably still get coverage but he wouldn't get the preferred rate. I have no idea how much it's going to be. I just wonder is there a a dollar amount at which point you have to say maybe it's not worth it? I just have a feeling that it's something that we will need moving forward so I think it's important. My biggest concern is that I don't want to get an inflated premium rate from a broker's he's looking for a big commission. I just am wondering where is a reputable place to buy it in the first place?

You got it with what you said in bold above. There are many knobs that can be turned to change a LTC policy. If you need it early... shortly after buying it... you make out. If you need it 30 years after... not so much.

I only got "examples" done for me, I never filled out all the forms. My decision was to pass on LTCI. Everyone needs to make their own decision. I am funding a HSA and creating other savings to help cover the possible LTC expenses.

Some of the knobs that are used:

1. daily benefit - $ they will pay per day after qualifying even and elimination period. Note this likely will not cover all the LTC expenses. This may or may not be inflation adjusted. Remember you must cover the rest!
2. The elimination period is the amount of time you must cover all expenses following the qualifying event before they will start paying. The longer this time is will reduce cost.
3. They will vary the daily benefit with number of years (keeping the max dollars the same) to give you a better rate or better daily benefit. Note all 3 can vary... but then is is hard to see how one effects the others.

The number of companies writing these policies is dropping... thus it should not be too hard to find most of them. But they will likely have reps that are working for the commission. I'm not sure you'll get away from that... much like whole life insurance.
Get a proposal/example based on your data... not a full application and see what the numbers tell you. Why a proposal/example... if you apply and get turned down... you will have to report that on future applications. This could cause issues with getting other insurances such as life insurance going forward.

Look around on the web for statistics of how long and at what ages people tend to stay in LTC facilities. Based on a few proposals and usage info you should be able to make you choices. I would also recommend that you search for both your conditions and LTC needs.

I have a pacemaker.... but talked with my doctor and I expect little effect for LTC or life expectancy based on my personal situation. YMMV,

 

[Nunthewiser]

Yeah YMMV.
My mom has been paying into a Genworth LT policy for about 20 years. She is 95 now and needs to collect (finally). She has perhaps paid about $100K over those years. Her benefits are $158/day for nursing home cover (real cost is now about $230-260 day) or $78/day for Assisted Living (real cost is $70-$100/day) after 30/60 day exclusion, Her max payout is $314K. We just spent the last 3 days exploring all the options. Is it worth it? Who knows...depends on how long you plan to linger...

 

[bingybear]

Yeah YMMV.
Is it worth it? Who knows...depends on how long you plan to linger...

It is a bit of a crap shoot. If she had invested the premiums instead of paying them? Older policies were typically better as the insurance companies found their actuarial projections were not accurate.

I'm suggesting people look into the plans carefully... know what you are getting for your $. It is very much an individual decision that depends on each unique situation. If you don't get LTCI, devise a plan for how to handle it.

 

[brewer12345]

Tread carefully. The really high quality insurers mostly do not sell this product any more, so you have to hold your nose and pick from what is left. Even worse, the premiums are not guaranteed. If the insurer finds that there are more claims than expected, they can jam you with huge rate increases pretty much at their discretion (see Life, Investments & Everything: Insurer Nastygrams: When Long Term Care Insurance Premiums Rise ). I think this product sucks and suggest you may be better off just saving your money.

 

[Newventurer]

We bought a Genworth plan a few years ago for my DW who is in good health and it is $57 a month, lots of restrictions as mentioned by others. Our thought was we would buy it for one of us with her having the likely longer life, thus more likely to need it. We have reduced our risk by 50% the way we look at it.

 

[brewer12345]

We bought a Genworth plan a few years ago for my DW who is in good health and it is $57 a month, lots of restrictions as mentioned by others. Our thought was we would buy it for one of us with her having the likely longer life, thus more likely to need it. We have reduced our risk by 50% the way we look at it.

Maybe, maybe not. Genworth probably has the shakiest balance sheet of the major players in the LTC business.

 

[Newventurer]

Maybe, maybe not. Genworth probably has the shakiest balance sheet of the major players in the LTC business.

Yes, you are right, and I might live longer than her, or we might both go in a plane crash, or there might be a nuclear event that renders it all useless, or....

Not making a decision is also a decision, which may not turn out to be best under all circumstances.

 

[easysurfer]

I'm tempted to cancel my LTC insurance so I can use the premium to help pay for a cruise. Not saying that I will, but the thought crossed my mind

 

[brewer12345]

Yes, you are right, and I might live longer than her, or we might both go in a plane crash, or there might be a nuclear event that renders it all useless, or....

Not making a decision is also a decision, which may not turn out to be best under all circumstances.

I am more suggesting that LTC insurance is not the panacea that the industry would like you to see it as.

 

[REWahoo]

The case for buying long-term care insurance - CBS News

Saw this article on LTC insurance and thought of this thread. The author is obviously pro-LTCI and cites some concerning statistics about the odds of needing LTC:

According to the Department of Health and Human Services, 70 percent of folks turning age 65 can expect to use some form of long-term care during the rest of their lives. And since women outlive men by five years on average, their risk is higher.

The average length of a stay in long-term care facility for women is almost four years, and for men it's a little over two years.

The above information is reflected in this chart:

 

[braumeister]

According to the Department of Health and Human Services, 70 percent of folks turning age 65 can expect to use some form of long-term care during the rest of their lives.

I've never seen how they came up with that statistic.
Maybe "Of all the LTC users, 70% were once 65 years old"?
It just feels wrong to me.

 

[JoeWras]

Yeah YMMV.
My mom has been paying into a Genworth LT policy for about 20 years. She is 95 now and needs to collect (finally). She has perhaps paid about $100K over those years. Her benefits are $158/day for nursing home cover (real cost is now about $230-260 day) or $78/day for Assisted Living (real cost is $70-$100/day) after 30/60 day exclusion, Her max payout is $314K. We just spent the last 3 days exploring all the options. Is it worth it? Who knows...depends on how long you plan to linger...

We started paying on a policy a few years ago. We're using it for early onset issues. We'll drop later and self insure assuming we don't need it.

Seems backwards? Maybe. I guess you could say we're treating it a bit like term life. We won't end up paying $100k into it.

Nords has had many stories on this and it is very enlightening. I've cooled off quite a bit on LTCI.

 

[REWahoo]

I've never seen how they came up with that statistic.
Maybe "Of all the LTC users, 70% were once 65 years old"?
It just feels wrong to me.

I think they got it from this govt. website: How Much Care Will You Need? - Long-Term Care Information

Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and supports in their remaining years

Now where the govt. got it I haven't drilled down to see.

 

[2017ish]

Here is a nice collection of stats from PBS earlier this year. Includes footnoted authorities for assertions. https://caregiver.org/selected-long-term-care-statistics

Just note that there is a big difference between "needing some type of long-term care services and supports" and entering care facility within scope of LTCI coverage....

_____________
E.T.A. We are in the "not gonna buy it" camp. We are unlikely to fit into the "neither 'rich' nor 'poor'" asset category that arguably would benefit.

 

[athena53]

Just note that there is a big difference between "needing some type of long-term care services and supports" and entering care facility within scope of LTCI coverage....

This is huge. I've mentioned this in another discussion but after Jim Cramer's father died he went on a rant about how the LTC insurer refused to pay when his father entered a nursing home after a stroke because the insurer didn't think he was sufficiently debilitated. Cramer took them to court and won, but didn't end up with much after the lawyers were paid. Too bad he didn't name the company.

 

[braumeister]

Now where the govt. got it I haven't drilled down to see.

That's what I was talking about.
As far as I can tell, the statistic isn't supported by any of the references cited.

I may be missing something, but this (frequently repeated because it's on a government website) statistic appears dubious to me.

 

[MichaelB]

That's what I was talking about.
As far as I can tell, the statistic isn't supported by any of the references cited.

I may be missing something, but this (frequently repeated because it's on a government website) statistic appears dubious to me.

It does include home care, and part of that is unpaid home care by a family member. That's a pretty broad definition.

 

[Katsmeow]

Part of the problem with Long-Term Care policies is that nowadays they typically provide benefits sufficient to cover only a few years.

Look at what nunthewiser posted:

My mom has been paying into a Genworth LT policy for about 20 years. She is 95 now and needs to collect (finally). She has perhaps paid about $100K over those years. Her benefits are $158/day for nursing home cover (real cost is now about $230-260 day) or $78/day for Assisted Living (real cost is $70-$100/day) after 30/60 day exclusion, Her max payout is $314K.

So she spent $100k (at least) to get at most $314k cover. So, if the cost was $100k then the net potential benefit if $214k. Is it worth getting LTC insurance to potentially get a benefit of that amount?

I was very interested in LTC insurance but I just can't feel it is worth the huge cost for something that you may never need, may need for only a limited amount of time, and provides so little benefit.

I would love to see a LTC policy that had a huge deductible (a year or two of care) and then paid everything above that amount for the rest of life. But, that isn't what I've seen (if that exists, in other words, I haven't seen it).

 

[H2ODude]

We are pretty much self insured, and what I cannot fathom is buying LTC insurance "when you're younger and get a better deal" and yet I repeatedly see where they can increase your premiums at will. How on earth can you assess the value of a policy when they can ratchet it up to the point you drop it, perhaps a year or two when you could collect? Seems like a great business model for them but for you "buying a pig in a poke." Whatever that means.