ltc insurance

[Huston55]

As I've said on many threads, including my answer to this one, I'm not a LTCi fan. However, I agree that the author of the LTCi analysis (which is detailed and well laid out IMO) doesn't provide enough detail on how s/he reached the conclusion regarding hybrid policies. I'd like to know how s/he concluded that hybrid policies are 3-4 times as expensive as traditional LTCi policies (I suspect it's some sort of PV analysis but, who knows?). I'm also curious why they are more complex (Is it because it's a "hybrid" of two products or the contract language is less transparent; again, who knows?).

I believe the LTCi salesman over on bogleheads who says hybrids cost 3-4x as much as straight LTCi for the LTC benefits provided, since he presumably sells both types of products.

Here's a 2018 article from an independent broker as to why he chooses traditional LTCi over hybrid:

https://advisorinsuranceresource.co...Hybrid-LTC-A-Treasure-Benefiting-Insurers.pdf

Outstanding article. Thx for the link.

In addition to providing a sound financial analysis of: (1) Traditional LTCi & (2) Hybrid LTCi, the structure of this analysis is a good model for those considering "Self Funding" to ensure that we accurately compare all benefits and costs.

 

[ncbill]

Is that the worst outcome? I agree that the hybrid overcomes some objections to LTC insurance. I am glad that it is working out for you. Others have indicated that they gave enough assets to cover ltc. Would you recommend a hybrid policy in those cases? I read the article that ncbill linked. The couple was young and the hybrid policy had no inflation protection. Ncbill mentions hybrids with universal life policies. I am not sure how that would work. I dodged the bullet on those policies 35 years ago but not because I foresaw the development of the universal life debacle.

Don't forget LTCi is to cover a possible need decades in the future...and there's always an opportunity cost...e.g. a lump sum invested in an equity index 20 years ago would have roughly tripled by now...and those funds would be available not just for LTC.

 

[TNBigfoot]

When considering LTC insurance, I found this article to be of benefit.

https://www.nolo.com/legal-encyclopedia/long-term-care-insurance-risks-benefits-30043.html

We have a LTC policy for for the wife. Benefit is $150/day for three years at 3% inflation factor per day. Ultimately, I’ve decided to self insure. In my plan, there is an additional $100k for four years built in for LTC whichever of us needs it. Plan also has some assets remaining at 90 plus home value as a contingency.

So instead of insurance, I feel I have a reasonable level of funding available which can be used for whatever or whichever of us will need it. It is also more likely for the DW to need the care.

 

[RetireeRobert]

Others have indicated that they gave enough assets to cover ltc. Would you recommend a hybrid policy in those cases?

No. For those who truly have enough assets to readily cover LTC for themselves and still leave an "enough" inheritance for the heirs, I would say no LTC, no hybrid, take care of it out of their own assets.

 

[RetireeRobert]

Don't forget LTCi is to cover a possible need decades in the future...and there's always an opportunity cost...e.g. a lump sum invested in an equity index 20 years ago would have roughly tripled by now...and those funds would be available not just for LTC.

This of course, assumes on the way to "decades in the future" one still has the skills and interest and ability to self-manage such investments. Or that a surviving spouse would have such skills. I know my own spouse had zero investing/financial skills. Her gifts lay elsewhere. I had interest in protecting her LTC needs after I was gone. So, another big advantage to the hybrids I forgot to mention earlier, is you do guarantee for a financially inept spouse, some funds to cover such surviving spouse's potential LTC needs.

Yes, in getting a hybrid, of course you give to the insurance company much of the time value of money on a single premium. But you get in return some leverage on your funds for both/either the LTC insurance coverage and/or the death benefit coverage for heirs. And you "know" you are never "wasting" those funds like you might with straight LTC. And you do get peace of mind.

A few articles I read, now a few years ago, indicated hybrid LTC/life insurance policies were far outselling straight LTC policies. Were all those insurance agents and all their buyers clueless?

 

[RetireeRobert]

I read the article that ncbill linked. The couple was young and the hybrid policy had no inflation protection. Ncbill mentions hybrids with universal life policies. I am not sure how that would work.

All I can say is my own hybrid has a whole life insurance policy, and from what little I have read since, most of the hybrid sellers also use whole life. Can't speak to every possible seller out there or some fringe companies that might couple a hybrid with universal life.

My own hybrid policy also has 3% inflation protection.

Like I say, I am happy as a clam. My hybrid just fits into my situation very well, and it overcame the main objections I had to buying straight LTC.

If I ever get unhappy, my hybrid insurer will refund my single premium money. Then I will be in the position of having had leveraged LTC/Life coverage for several years but got my money back! The insurer will be in the position of having had a lot of the time value use of my single premium for some number of years.

I am pretty sure, I am not going to ask for my money back. Kids will get it, and then some, as leveraged death benefit anyway when I croak.

And for all my peace of mind in the interim, I don't have to worry about being, or remaining, a capable investment manager for that particular pot of money. Just my luck, markets would be in a downturn and my LTC funds pot shrunk to miniscule just about the time I ended up in assisted living condition! I avoid that. I have peace of mind, LTC I need is covered.

 

[RetiredAt55.5]

This of course, assumes on the way to "decades in the future" one still has the skills and interest and ability to self-manage such investments. Or that a surviving spouse would have such skills. I know my own spouse had zero investing/financial skills. Her gifts lay elsewhere. I had interest in protecting her LTC needs after I was gone. So, another big advantage to the hybrids I forgot to mention earlier, is you do guarantee for a financially inept spouse, some funds to cover such surviving spouse's potential LTC needs.

I do share that concern with my spouse. She only has to remember one thing, which I have repeatedly told her - "if something were to happen to me, your first phone call should be to sign up for Vanguard's advisory service at a 0.30% management fee".

If/when the day comes I lose the skill/ability, that'll also be my plan. However, I don't actively manage my money today. I just periodically check my asset allocation, to be sure it doesn't get too far off course. I don't have individual stocks or bonds, so it's pretty low maintenance with a healthy mix of index funds.

 

[RetireeRobert]

I do share that concern with my spouse. She only has to remember one thing, which I have repeatedly told her - "if something were to happen to me, your first phone call should be to sign up for Vanguard's advisory service at a 0.30% management fee".

I was also considering almost exactly that scenario with Vanguard. But as to LTC, I thought that possible need on her part (if she survived me) might still get short shrift. I wanted more assurance just in relation to long-term care that any need on her part was already specifically provided for financially. Hence, my final decision to pull the trigger on the hybrid policy.

As it turns out, I survived her. But since she was seven years younger than I, when we got the hybrid which covered both spouses in one policy, we got to purchase it rated on our actuarial "combined age". So, I end up with better LTC coverage gotten at a way better deal for my age than I ever would have gotten otherwise. Just funny how things work out sometimes.

 

[RetMD21]

As it turns out, I survived her. But since she was seven years younger than I, when we got the hybrid which covered both spouses in one policy, we got to purchase it rated on our actuarial "combined age". So, I end up with better LTC coverage gotten at a way better deal for my age than I ever would have gotten otherwise. Just funny how things work out sometimes.

Is the insurance universal life? If so is the LTC benefit guaranteed? Are you ok with only getting the guaranteed rather than the illustrated return?

 

[retire48in2018]

We got detailed quotes from a LTCi broker and they wanted a lot personal information, including our net wealth details that made us very uncomfortable to continue with that broker. However, we did get several quotes.

I would have more interest if the insurance transferred the risk to the insurer from me for longer term care (4+years) with meeting higher daily actual cost care - like a very high deductible type plan, where we self-insure up to 2 or 3 years. There was not a plan for that scenario. Effectively, a "catastrophic" coverage only policy.

We can easily self-insure at the amount that these policies would cover.

At that time, no one would do unlimited number of years due to either insurer rules or medical history.

 

[youbet]

I would have more interest if the insurance transferred the risk to the insurer from me for longer term care (4+years) with meeting higher daily actual cost care - like a very high deductible type plan, where we self-insure up to 2 or 3 years. There was not a plan for that scenario. Effectively, a "catastrophic" coverage only policy.

We've had that discussion here frequently over the past few years and everyone seems to agree that there is no "catastrophic coverage" (long elimination period) LTCi being offered.

I agree that since the available policies offered today generally only offer $200k - $400k total coverage, they don't really completely solve the "catastrophic coverage" issue and still leave you with some self-insuring to do. So, we're skipping the insurance and self-insuring all the way.

 

[youbet]

If I ever get unhappy, my hybrid insurer will refund my single premium money.

My apologies if you've already stated it (I'm joining late), but how much was the single premium you paid? Approximately how much lump sum money would one need to be able to give up to the insurance company to get what you've got?

 

[ncbill]

Is the insurance universal life? If so is the LTC benefit guaranteed? Are you ok with only getting the guaranteed rather than the illustrated return?

My recommendation is to never buy anything based on a universal life policy...whole life only...in my experience, universal life policies always collapse to the guarantee, usually when you think you'd need them.

 

[RetireeRobert]

Is the insurance universal life? If so is the LTC benefit guaranteed? Are you ok with only getting the guaranteed rather than the illustrated return?

I already stated in a post above my policy has whole life insurance. Please, those of you who have an obsession with universal life, read all my posts above for details.

 

[RetireeRobert]

My apologies if you've already stated it (I'm joining late), but how much was the single premium you paid? Approximately how much lump sum money would one need to be able to give up to the insurance company to get what you've got?

It is pointless to state a lump sum that was for my particular circumstances, my age and my wife's age, the length of time we wanted a pot of funds to last, and all of that five years ago. Also I went with One America/State Life Co. which provided a policy that would coverage both spouses under one policy. There are some other sellers of hybrid policies.

You need to decide how much monthly LTC dollar coverage you want, how long you might want it to last, and factor in your age, and your wife's age (I am assuming you are married) at the time you are ready to commit, and whether you want to add inflation rider. In other words, it all depends on you and your circumstances and desires.

For example, one decision I made, based on looking at statistics of average lengths of stay in LTC facilities and of percent of LTC residents who ended up staying longer than three years, was to look for coverage (or a "pot of funds") that would cover us for three years. I decided three years would cover us for "likely" scenario. And if we by small chance exceeded the averages, I would self-insure for the extra stay. If "you" want unlimited lifetime coverage, you can be sure the premium is going to be many times larger than the single premium for three years coverage.

That said, this link may be helpful. Lots of sub-threads on this link, check out a bunch of them. This link will also talk about hybrids vs straight LTC, and will talk about hybrids available from three or four different sellers. You can then get quotes from other links here as well.

https://www.longtermcareinsurancepa...esigning-your-long-term-care-insurance-policy

 

[MuirWannabe]

For policies with inflation riders. Are those tied to CPI or something typical? Or are they tied to some type of index that tracks LTC costs which I assume might track at a different rate than general inflation?

Thanks for all the info on hybrids. I’m still on the fence. But posters have listed enough pros/cons to at least have me thinking about it.

 

[RetireeRobert]

For policies with inflation riders. Are those tied to CPI or something typical? Or are they tied to some type of index that tracks LTC costs which I assume might track at a different rate than general inflation?

Thanks for all the info on hybrids. I’m still on the fence. But posters have listed enough pros/cons to at least have me thinking about it.

I got a rider on my particular policy that is 3%---It does not vary with any index, every year it is 3%. If inflation is 1%, I get 3%. If inflation (by whatever index) is 10%, I get 3%.

The link I just posted above, you might be able to look around there at sub-links to see if any of the sellers offer inflation riders tied to an index. As opposed to a "fixed" increase amount such as I have.

 

[RetireeRobert]

Another thought occurred to me about long-term care insurance. And the argument about paying years and years of premiums for something you may never use (such as one does with straight LTCi). And maybe one should "self-insure" therefor for long-term care.

I could apply that same thinking to home fire insurance! And I think it "probably" more likely I would have a claim on LTCi than I ever would for my house burning down. So maybe I should self insure my home and cancel my fire insurance!

 

[RetMD21]

Are there any people posting on this thread who have had great experiences with LTC claims?

 

[REWahoo]

Are there any people posting on this thread who have had great experiences with LTC claims?

I'm also interested in seeing responses to this, and not only from those who have had great experiences, how about so-so experiences? It seems we've only heard negative stories, leaving the impression that's always the case. Is it?

 

[Koolau]

Are there any people posting on this thread who have had great experiences with LTC claims?

My mother had a policy back in the 1990s. When she went into the care facility, it was relatively straight forward to make a claim and be paid. I have told the story before that my mother came out "even" money wise when she passed. That included my selling her house to cover care costs. Her LTC policy had exhausted (it was set up for only 2 years of pay out). But without that policy, she would have needed to apply for Medicaid which might have been a nightmare. My mother had donated to every charity who ever asked (this fund, that fund, on and on.) I'm guessing the look-back would have made Medicaid at best a long hassle and at worst, a non-starter.

No, I don't recall the name of the company that supplied the insurance but I do recall the name of the nice lady there who was their contact. I suppose most policies have this - a rider to stop the premiums once a claim is made. That was handy though I'm sure the cost was "in there" someplace. YMMV

 

[medved]

I'm also interested in seeing responses to this, and not only from those who have had great experiences, how about so-so experiences? It seems we've only heard negative stories, leaving the impression that's always the case. Is it?

I am not sure this qualifies as "great" but as I mentioned briefly earlier in this thread, my mother had an LTC policy. The insurer initially denied her claim, but then reversed itself when I appealed. After that, they paid on time, without any real difficulties, every month. The total paid was something like $200,000, or thereabout. That was much more than she paid in premiums. So it worked out well for her. (Of course, if she had not had someone with the requisite knowledge to successfully prosecute the appeal, the result might have been very different...)

 

[RetireeRobert]

No direct experience with claims, yet.

But another possible advantage of Hybrid LTC/Life policies over straight LTCi, is the Hybrid insurer would have no big motive to deny LTC claims. Life coverage payable amount with Hybrids is reduced by any amounts paid under LTC coverage. Insurer has to pay one way or the other. It either pays full death benefit, if LTC claims never made--or never paid, or it goes ahead and pays the LTC claim, and thereby has a lesser or no amount of death benefit to pay.

Under straight LTCi, if insurer never pays the LTC claims, then, it pays nothing.

 

[REWahoo]

Ah, the sound of a one-note piano, played over and over again...

 

[RetireeRobert]

Ah, the sound of a one-note piano, played over and over again...

The sound of a very helpful piano teacher.