LTC Insurance - Let's be careful out there...

[BOBOT]

This really got my blood boiling this morning, but it's a good wake up call for anyone contemplating LTC insurance. Be skeptical & do your DD.

http://www.nytimes.com/2007/03/26/business/26care.html?hp

 

[FinanceDude]

Well, the problem, which was no fault of the persons involved was Conseco.......

If you buy LTC, there are only a few companies that have ENOUGH MONEY set aside to pay claims,, like Guardian, USAA, NML, and Genworth...........

Buying LTC from the rest is like playing Russian Roulette............

 

[OKLibrarian]

Disgusting. Unsurprising...but disgusting. Well, chalk up another reason to try to keep our rate of return well over our SWR--while I'd like to leave a nice legacy for our church and some charities we care about, we may need it to make sure we don't get taken advantage of.

 

[brewer12345]

As I have said many times in the past, be careful who you buy insurance from.

 

[donheff]

The free market for health care certainly works well. Just think, after a hundred thousand or so of these poor people have their old age destroyed, some of the companies that did it will go out of business. Of course, the despicable predators that created those businesses will just move elsewhere and start over.

This kind of article almost makes me support the death penalty -- for the right category of crimes. It would be nice to see the CEO of Conseco doing a perp walk.

 

[BarbaraAnne]

What is unsettling is that you can do your "due diligence" today and pick a company that appears to have sufficient reserves and that company over the next 20 years can merge, reorganize, go bankrupt etc and if/when you need them they won't or can't pay.

It doesn't make sense to pay those kind of premiums without iron-clad guarantees. I would never feel secure that they wouldn't weasel out of paying if/when the time came.

 

[youbet]

Setting the bar on your RE budget high enough so you can self-insure for LTC is an aggressive target, but might well be worth it.

 

[Rich_by_the_Bay]

Setting the bar on your RE budget high enough so you can self-insure for LTC is an aggressive target, but might well be worth it.

It is aggressive to self-insure, but perhaps not reckless. It is likely that assisted care facilities will evolve to handle at least some patients who would today end up in a nursing home. Assisted care is about the same cost as luxury apartment living.

Furthermore, the average nursing home stay is 2.5 to 3 years long, not 20 years (though that does happen). So even at $90k per year the likeliest financial catastrophe is $250K. That's a lot of money, but not out of reach for wealthier retirees if they plan ahead and it includes some offset for living expenses that are part of NH care.

You have to decide whether decades of multi-thousand dollar premiums for incomplete coverage, carrier insolvency risk, opportunity cost on the premius, etc. is worth it. I worry about the issue, but am not convinced that LTC insurance is a sound strategy.

 

[d]

the average nursing home stay is 2.5 to 3 years

i believe this is an overstatement. if calculated based on admissions, i expect you'd find it to be considerably lower ... lots and lots of 30/60/90 day stays ... many fewer multi-year stays.

not convinced that LTC insurance is a sound strategy

... i'm leaning toward the conclusion that it's not (absent personal family history which might otherwise change my conclusion).

 

[Rich_by_the_Bay]

i believe this is an overstatement. if calculated based on admissions, i expect you'd find it to be considerably lower ... lots and lots of 30/60/90 day stays ... many fewer multi-year stays.

It's 892 days for all current residents and 272 days for those who eventually get discharged. Here's the reference.

There are lots of subsets, but a 2.5 year stay in the context we are referring to seems to be an accurate rule of thumb (no one buys LTC because of the risk of a 30 day stay).

 

[d]

no one buys LTC because of the risk of a 30 day stay

exactly!

 

[mickeyd]

Conseco
Bankers Life and Casualty
Penn Treaty American
John Hancock


These companies were mentioned in the article. Does anyone here have experience with filing a LTC claim with any of these companies?

This article reconfirms my decision to self-insure this part of my life. A lot of $ being thrown around by policyholders. Just with Conseco, $4,200,000,000 in 2006 premium alone were paid to the insurance company.

This LTC seems to be a cash cow from where I sit.