Originally Posted by Running_Man
How much are we talking about for a premium that would cover two people at 20K per month each? I see $6,400 a year for a policy that covers $6,000 a month for 5 years if you triple that to $19,200 per year and assume a 3% real return by age 80 you would have over 600K in today's money. And that is assuming there are no increases in premiums over 22 years. Maybe there are policies that are more affordable but it seems quite daunting to me.
Here is the thing. There is no reason to buy a policy to cover the full amount of future care. Doing that will probably be prohibitively expensive. Also, there is no reason to buy a policy with unlimited number of years of benefits. These are almost nonexistent.
My goal was to look for a policy that would cover a portion of future care and we would cover the rest through our investments.
Our policy from a superior insurer (AM Best Rated) costs $3,000 a year in premiums.
For this my wife and I each get 2 years of coverage and we get a 2 year shared pool of benefits. You can lower your premiums with a longer elimination period. You have options.
So one person could receive 4 years of care if needed.
Also, this includes a 3% CI (compound interest) rider. This rider is necessary to qualify for the partnership program which I explained in a previous post. By the time we are in our 80's; the benefit amount should cover about half the cost of care and we would pay the rest.
In terms of the hybrid plans that seem so popular. You cannot deduct the premiums on your taxes if you still ( or may in the future ) itemize deductions as you can every year with a traditional plan.
Also you can earn 3% on a short term investment grade bond these days. So $100,000 in a separate account pays your annual premiums.
Yes, premiums may increase in future years but so may interest rates.
And if we ever decide that future premium increases are too much , we can cancel the plan and haven't "lost" anything because we were covered for the time period we had the plan, as with any insurance. You can still have a stroke or become disabled or develop dementia in your 60's and need LTC. One of the deciding factors for me was a family history of dementia. My father "lingered" in a memory care center for 8 years.....with no insurance. Burned through hundreds of thousand of dollars.
Michael Kitces is an advocate of trying to find one of the few remaining decent traditional LTC plans and pay the annual premiums versus purchasing one of the hybrid plans and laying out $100,000 in one shot.
I agreed with him. Who knows?
But as mentioned before....don't stress too much about this because honestly many folks will not even qualify. My wife and I were lucky. We applied and were accepted in our late 50's. We were told that only 50% of applicants are accepted. Out of that 50% there are 3 categories of health grades given to applicants: Standard (highest rates); Preferred; and Utra (lowest rates given to only 15% of those accepted). My wife and I received the Ultra rating and this kept our premiums reasonable.
One thing I cannot stress enough is ; Do Your Homework. I killed a lot of trees copying a lot of info from various insurers. And you can always apply and go through the process and just see what coverage you can get at what rates if accepted. Good luck.