Why would you not view LTCi the same way as term life?
I bought a term life policy to bridge a potential financial gap for my family until we became FI, could "self insure" and no longer had a need for it. I view the LTC policy we purchased at age 52 in the same way. At some point we can probably self insure and will no longer need it. I don't view that as a waste of premium any more than I view my home insurance premiums a waste if it is never destroyed by a tornado or a fire.
Right, but if one wanted to buy LTCi to cover a gap like that (say 10 years or so) it would be much less expensive to buy LTCi as a term policy. Of course, they don't sell that, but the closest thing is to buy a policy without the so-called "inflation protection." For example:
Policy type: $200/day benefit for 5 years, purchased by a 50 YO (info below from the Federal LTCi plan, because the info is easily available)
Option A: With the 5% Inflation protection: Monthly premium is $205
Option B: Without the 5% inflation protection (but with the guarantee that you can always buy additional insurance for an individual of your age at that time). Monthly premium: $55.
So, if you just need the policy for a limited time, it would cost much less to buy the "term" policy than the "whole life" policy. In fact, if you just needed the coverage for 10 years, you could buy twice as much (benefit of $400/day), at about half the price and you'd have even better inflation protection for that period. That's why I wrote to chinaco that an individual shouldn't buy the inflation coverage if they didn't intend to keep the policy for the long haul.
I'd thought about going this "term" route, and even keeping the policy for a long time. Exercising the "future purchase option" every few years gets very expensive as one gets older, but if you had reason to believe you were especially likely to need the LTCi, it might be worth buying. In the interim, you're protected, can invest the difference in premiums, and you can see if your larger portfolio grows enough to allow self-insurance to become a reality. As a bonus, if the insurer goes belly-up or raises rates to unaffordable levels, you've wasted a LOT less money.
Buying the LTCi policy without the inflation protection is, in effect, like buying a "decreasing term" life insurance policy. The buying power of the benefit amount decreases over time as a result of inflation (and so does the premium, since it's fixed). Maybe that kind of coverage makes sense for a lot of folks. Unfortunately, the state "Partnership Programs" only approve LTCi policies that have the inflation protection included. Without the partnership "seal of approval," you have to spend down a lot of your portfolio before you'd qualify for Medicaid. OTOH, with a 5 year LTCi policy, you might be able to transfer your assets to a trust and use the LTCi benefits while the 5 year "lookback clock" ticked down, then go on Medicaid.