Long Term Care Insurance

[REWahoo]

Way back when this thread was active I said I would post any premium increase when my and DW's LTC policies from CNA came up for the 10th year renewal. I just got the invoices in the mail and the increases are 15%:

My policy: from $862 to $ 991 per year
DW's policy from $677 to $779

With the escalation provision the policies now provide $163 per day benefit (50% for home health care) with no lifetime limit and 30 day exclusion.

Thanks Grumpy. I do appreciate you following up with this post.

Wow, I am very surprised they only increased 15% after no increase for 10 years. Seems like all the stories I've heard involve increases of 50% or more. Our CNA 10 year guarantee of premium doesn't expire until May of 2010, but your report is encouraging compared to what I'd feared. And yes, I realize my mileage may vary...

I guess the next question is how much and how often your premiums will continue to increase now that you are out of the guarantee period. I'd be interested in hearing about any future adjustments if you're willing to share.

Once again, thanks.

 

[Rich_by_the_Bay]

To get comparable premiums to our current policies we would have to reduce benefits to $100 per day, 3 year max benefit and 90 day exclusion.

Thanks, Grumpy. May I ask your age? I gather it is 60ish, but just for reference.

I am led to believe that the major bump for LTC claims occurs in the late 70s and early 80s. Your current increase doesn't sound too bad. I wonder if they hold this one down to retain policies and 5-10 years from now when it statistically is most dangerous, the premiums would rise faster.

Seems worth hanging on to for now.

 

[Goonie]

Thanks, Grumpy. 15% over 10 years ain't too bad, I could handle that.

Hopefully my LTC premium increases will be comparable in years to come!! I'm glad I started mine early too.....10 days after I turned 50. The agent said the company allowed them to back-date the policy up to 2 weeks (it's actually in writing in the policy), so I got in at 49 and saved about $40-50 per month.

But like car ins, and homeowner's ins......I hope I NEVER need it!

 

[theoldwizard]

More coverage for less $$$ ?

DW and I just shifted our LTC to the "new" John Hancock Group LTC sponsored by my former employer. Maximum Daily and Maximum Lifetime payment both went up for a small decrease in premium.

Believe me, the both of us went over the coverage with the proverbial fine tooth comb and can't see any downside.

 

[grumpy]

Thanks, Grumpy. May I ask your age? I gather it is 60ish, but just for reference.

I turned 60 this past February (I try not to think too much about that ).

Grumpy

 

[grumpy]

I am led to believe that the major bump for LTC claims occurs in the late 70s and early 80s. Your current increase doesn't sound too bad. I wonder if they hold this one down to retain policies and 5-10 years from now when it statistically is most dangerous, the premiums would rise faster.

Seems worth hanging on to for now.

I hope that we will be in a position to self insure well before that point.

Grumpy

 

[honobob]

To get comparable premiums to our current policies we would have to reduce benefits to $100 per day, 3 year max benefit and 90 day exclusion.

Grumpy

I've just had mine less than 10 years. Bought when I was in my 40"s. My preminum did go up 50%!!!! I thought it was very cheap when I bought so I'm OK with the increase. In almost 10 years I still have paid only enough to cover about two months of care. My policy is the best with lifetime/home care/inflation etc. One thing to consider is that most will let you decrease coverage. I'm still young enough that the lifetime coverage is important but if the increases get too much when I'm older or I decide to pay out of pocket I can always decrease the coverage and I'll still be paying the rate someone would if they bought the lesser coverage when I originally purchased.

 

[REWahoo]

I am led to believe that the major bump for LTC claims occurs in the late 70s and early 80s. Y

I hope that we will be in a position to self insure well before that point.

Yep. I bought LTC coverage for DW and myself when we were 52 and 53 respectively. My intent was to treat it somewhat like term life insurance...keep it for a limited time period until we reached the point we could self insure.

The only potential fly in the ointment is what I've been hearing regarding huge rate increases. If Grumpy's example holds true for us, we can stay on plan. As I've stated previously, if rates skyrocket I may drop a policy on one of us and keep it on the other. Of course the trick will be deciding which to keep...

 

[Gearhead Jim]

.
...
I am led to believe that the major bump for LTC claims occurs in the late 70s and early 80s. Your current increase doesn't sound too bad. I wonder if they hold this one down to retain policies and 5-10 years from now when it statistically is most dangerous, the premiums would rise faster.
...

If your policy allows you to reduce coverage in return for reduced premiums, it might make sense to do that as you get older, if the premiums become too high. Nothing is for sure, but:
If you go into a nursing home at age 60, you might live another 20 years.
If you go into a nursing home at age 80, probably only a few years left.

 

[Rich_by_the_Bay]

If your policy allows you to reduce coverage in return for reduced premiums, it might make sense to do that as you get older, if the premiums become too high. Nothing is for sure, but:
If you go into a nursing home at age 60, you might live another 20 years.
If you go into a nursing home at age 80, probably only a few years left.

Not accurate, Jim. The 60 year old in a nursing home is there for a reason and does not have a 20 year life expectancy. 3 years is closer to the average length of stay til celestial discharge, in many cases. Late 70s and early 80s are typical for a non-rehab nursing home stay.

And therein lies the dilemma with LTC. You can be paying relatively cheap premiums which seem like nothing; you might win big (premium to benefit-wise) if you need a long early NH stay but more likely you will not need any NH stay or, if you do, you will be 80ish (think 30 years of escalating premiums into the several thousand a year range) and use up 3 years of benefits which probably will provide only partial coverage. But by the time you are 70 and have 20 yrs of "skin" in the game, it would be tough to drop despite high cost,

It's a classic insurance dilemma but in this case there is more uncertainty than usual (costs by then, Medicare, SS variables, medical advances, carrier survival). I don't know the answer, but have personally deferred LTC and hope to self-insure if savings and returns permit. Tough decision, LTC.

 

[brewer12345]

Thanks, Grumpy. 15% over 10 years ain't too bad, I could handle that.

Yes, but lets hear what the increases are in each of the next few years. 15% annual bumps every year for the next 10 years could result in sme large dollar amounts.

 

[REWahoo]

Yes, but lets hear what the increases are in each of the next few years. 15% annual bumps every year for the next 10 years could result in sme large dollar amounts.

Yep. The 15% bump after a 10 year rate hold could be just a teaser.

 

[honobob]

To get comparable premiums to our current policies we would have to reduce benefits to $100 per day, 3 year max benefit and 90 day exclusion.

Grumpy

Sounds like you got 10 years of nest egg protection at a pretty cheap price and have locked in a reduced preminum in the forseeable future. Sounds pretty smart to me. Do you regret not claiming on the policy?

 

[cocobird]

LTC Insurance is just like any other insurance - it's for catastophic protection.

Unlike many people, my family has has spent massive amounts of money for nursing care with three grandparents living up to 90 and one with Alzheimers for seven years because LTC wasn't common and they didn't have it. On top of that, my mother was in a catastrophic car accident that resulted in permanent traumatic brain injury. Thankfully, we have LTC, although unfortunately, there was a premium increase and my parents opted to lower their coverage only a month before the accident.

With the cost of LTC getting into the $80,000 range, I'm surprised that many people could self insure.

 

[FinanceDude]

I am hoping to self-insure in the event of LTC, but have seen the devastating effects on a portfolio if one needs advanced care like a nursing home,and there's not a lot of assets available to help pay it..........

Costs are climbing fast for LTC coverage........

 

[prubin]

Recommended Reading

Check out Allen Hamm's book -- Long-Term Care Planning: Assuring Choice, Independence, and Financial Security. It is a good primer and he does an excellent job of explaining LTC choices and policy features.

We (I am 62 and my wife 57 at time of purchase) purchased LTC from JHancock earlier this year. We were motivated by seeing parents exhaust funds and go on Medicaid. I have been a USAA member for almost 40 years and they have provided me with excellent service, so I turned to them for direction. The deal with only 3 companies -- Genworth, Metlife and JHancock and they helped us to determine that JHancock was the best choice for us. While I wish we had purchased a policy when I was younger this is an evolving product and there are now product features available which weren't choices a few years ago. In addition many of the questionnable providers have left the market and while there may fewer choices they are more reliable

 

[REWahoo]

I have been a USAA member for almost 40 years and they have provided me with excellent service, so I turned to them for direction. The deal with only 3 companies -- Genworth, Metlife and JHancock... In addition many of the questionnable providers have left the market and while there may fewer choices they are more reliable

FYI, I'm a USAA member who followed their advice on an LTC policy 8 years ago. We were led to purchase a policy from one of those providers who have since left the market. Not saying USAA led us astray, just that following their advice is no guarantee you won't have future issues with an LTC policy.

 

[Rich_by_the_Bay]

FYI, I'm a USAA member who followed their advice on an LTC policy 8 years ago. We were led to purchase a policy from one of those providers who have since left the market. Not saying USAA led us astray, just that following their advice is no guarantee you won't have future issues with an LTC policy.

Do you still have the policy? I always wondered what happens in such circumstances. If there was a conversion, did it affect premiums?

It's clearly one of the tougher calls for me in this whole retirement thing.

 

[prubin]

Ltc

FYI, I'm a USAA member who followed their advice on an LTC policy 8 years ago. We were led to purchase a policy from one of those providers who have since left the market. Not saying USAA led us astray, just that following their advice is no guarantee you won't have future issues with an LTC policy.

What was the outcome? DId you have to start over? I did not intend to imply that USAA was infallible.

 

[REWahoo]

The LTC policy is still in force, the company (CNA) didn't go out of business, just stopped writing new LTC policies about 5-6 years ago.

Prubin, I understand you weren't implying USAA is infallible. I was just pointing out that LTC coverage is so new that even a conservative, relatively well run company like USAA can't figure out which companies will be in the business for the long haul.