Making the jump. Buying LTCI

[Mulligan]

I am assuming that the insurance companies take your premium money and invest "x" amount in interest bearing investments. Since the rate of return is low on these now, they may be making up for this shortfall by increasing premiums. Other forum members may have a better response.

 

[brewer12345]

What's the connection between LOW interest rates and insurance co profitabiltiy?

Everything.

LTCI is commonly sold to people in their 50s who make claims when they are 80. They pay annually for about 25 years. The insurers have to invest that money every year, but they have no certainty about what rates they will get when they do so. Imagine guessing back in 1998 that you would be able to invest 2012's premiums at 7%.

So as rates fall, the cost of LTCI goes up because there is less interest income subsidizing the payouts (and insurer profits, if any).

 

[marko]

Ohhh! My head was in the space of the plusses of getting low interest rates raising profits by getting cheaper money etc.
Thanks!

 

[Katsmeow]

LTCI is different from other forms of insurance in many ways.

I've always been a fan of getting insurance and we are in that group of people who have too much money not to worry about it but less than really enough to totally self insure.

So theoretically we buy it. The big reasons are two fold. One, what if you or your spouse is the person who was in a nursing home for years? DH's mother fell in this category (she was there due to strokes). She was there about 7 or 8 years. And, DH's sister died in her 50s after several strokes and also in a nursing home.

Which brings up point 2. If DH ended up in a nursing home for many years, then I am impoverished as everything I have would go to his care (yes I know there are some things that can be kept, but not enough to fund my retirement). (This could also go the other way - me in the nursing home - but since DH is 7 years older than me, it is more likely to be the other way).

So, I'm not worried about having to pay for a nursing home for 2 or 3 years...that we can self fund. The question is paying for it for many more years.

It is different from buying auto or homeowner's insurance as you buy those on an annual basis. Also you buy a policy for year and then the next year you get a new one and priced accordingly. LTCI is different in part because you are buying 20 or 30 years in advance coverage that you hope you won't need for many years. It would be more like buying today the insurance that will cover your home and auto 20 years from now....

Like many I wish I could buy a catastrophic high deductible LTCI plan but those don't exist. Add to that the financial problems in the industry and the fact that your premium can go up coupled with the fact that many policy only cover 3 years or so of a NH stay. So, I keep wanting to buy it but the drawbacks are so severe that we still haven't done it (DH is 65 now).

 

[Ally]

They wouldn't take me due to health reasons, but we cover my husband. Both of my parents needed it and each stayed partly home and partly in nursing home care. Between the two, the cost averaged $7000 monthly for about 8 years. At the end, we were selling my dad's art work and antiques to keep him going at home with 24 hour care. This is not including regular expenses of food, utilities, etc.

They had more money in savings than my husband and I do, so at least having one covered will give us peace of mind.

 

[Mulligan]

Read something today in Kiplinger's that may be of interest to some about Long Term Care Insurance. Genworth, the largest provider of this type of insurance, is instituting some changes for next year, that others may follow suit. The company will switch from unisex to gender-specific rates which will of course, cause rates to rise for women. It may even out for couples, though. It also plans to expand medical underwriting, so your general health will also determine the premium you pay.
It mentioned this past year they ( Genworth) shrank the couples discount, discontinued lifetime benefits, and limited pay policies.

 

[obgyn65]

Great news. I was informed yesterday that my LTCI was approved two days ago. The first bill is on its way...

 

[gerrym51]

my wife and I bought GE(now genworth) 10 years ago when I was 52 and she 57.


she fought me on it then but is glad i talked her into it. she would not qualify now

 

[Corporateburnout]

We are 59 and 60 and we just received a quote from 10 companies through LTC tree for a $200/day 3 year policy with 5% compound. The premiums ranged from $4000 from Mutual of Omaha to $8400 from NY Life !!!

It seems that some companies like John Hancock and NY life don't want to underwrite too many LTC policies.

 

[gerrym51]

We are 59 and 60 and we just received a quote from 10 companies through LTC tree for a $200/day 3 year policy with 5% compound. The premiums ranged from $4000 from Mutual of Omaha to $8400 from NY Life !!!

It seems that some companies like John Hancock and NY life don't want to underwrite too many LTC policies.

you should look at genworth. 10 years ago my wife and i bought two 4 year policies we were 52 me 57 her
with 5 percent compound. we pay 2700 dollar total per year.10 years ago it was at rate of 150 dollars a day it would be about 220 a day now with the compounding. i found GE the best overall deal then

 

[Corporateburnout]

you should look at genworth. 10 years ago my wife and i bought two 4 year policies we were 52 me 57 her
with 5 percent compound. we pay 2700 dollar total per year.10 years ago it was at rate of 150 dollars a day it would be about 220 a day now with the compounding. i found GE the best overall deal then

Genworth's premium for the same policy is $4450. The agent claims that they were the most competitive in the industry about a year or so ago but recently raised their premiums and lowered their spousal discount from 40% to 20%.

 

[dgoldenz]

Genworth's premium for the same policy is $4450. The agent claims that they were the most competitive in the industry about a year or so ago but recently raised their premiums and lowered their spousal discount from 40% to 20%.

That would be correct...now it is usually between Genworth and MOO, depending on the state. They do have a few benefits that MOO doesn't offer though.

 

[Dawg52]

My old employer offered a group LTCI policy with Unum(portable at retirement). Some what unusual for a company to offer this as a benefit, but they did. So I purchased a 6 year max benefit policy that would pay $3k/mo with a 5% annual inflation feature. Capping out at $60k per year.

At the time(10 years ago) $3k/mo would handle the cost for some nursing homes in the area. Now it's roughly double that. Obviously if I live to be in my 80's, this policy will only pay a drop in the bucket. But I look at the policy as a supplement, not something intended to fully fund my LTC needs. I only pay $38.40/mo and have never had a premium increase in the 10 years I have owned it. Who knows what Unum may do with premiums in the future, but I'm OK with it at the moment.

 

[imoldernu]

I may have posted this before, but it fits in here. Our policies have gone through three "ownerships", and are now help by S.H.I.P. a Trust, operating in Pennsylvania. While they do not offer insurance, they do manage policies in trust. The FAQ may be of some help in understanding policy handling, from a non profit standpoint.
FWIW, here's the website... SHIP - Welcome

BTW, last year, the policies were changed to be gender based, and the base rates for DW went up, but slightly.

Edit... After rechecking the site. the FAQ has been changed.... not much info there now, but... here's a referenced site that may help you find information for your own area.

http://www.eldercare.gov/Eldercare.NET/Public/Index.aspx

 

[RetireBy90]

So I know there are retired military on the board, my dad used VA for his Nursing home care at the end. With DW and I both retired Army, we plan to use VA if we need NH care.

 

[misanman]

I was in the audience at a presentation today where they mentioned that one way to pay for long term care was VA. Do any of you know what this about? I should have asked during the Q&A but didn't get it done.

 

[rodi]

I'm not a veteran but have been looking into the VA nursing home thing for my FIL - who's a purple heart WWII vet.

I've talked to Veterans homes in 2 states (Kentucky and Pennsylvania.) Both are run by the STATE, not the VA - but are affiliated with the VA.

Both have a sliding scale for payment - if you have a VA service qualified disability of 70% or more, it's a great deal. FIL only has 15% service related disability.
They do not take medicaid - but they have a spend down that is surprisingly similar to medicaid spend down.

There are other VA nursing homes that are specific for vets with a chance of recovery (vs long term, elder care type). Those ones are run by the VA - but most seniors wouldn't qualify. That's more for returning soldiers learning to deal with TBI, prosthetic limbs, etc.

The state run homes sometimes have long waiting lists. The one in Philadelphia estimates about 7-8 months before a bed opens up.

 

[SoReady]

My wife and I are investigating LTCi as well. We have quotes from Genworth and from Northwestern Mutual Life(NML). We are 56 (me) and DW is 54. Right now we are leaning towards NML. The premium is $3k/yr, but there are unique variations on this e.g. inflation adjusted at 3%, I think it is ~$4k/yr and then they have a option to increase 5% a year but then stop at any point an just pay that premium going forward. The other item I like about NML is they seem to pay a dividend (not guaranteed) which can offset some of the premium.

It actually seems pretty complicated and we are scheduled to talk through this in greater detail in a couple of weeks. Hopefully I'll have a better idea after the meeting.

Has anyone used NML?

 

[pb4uski]

I don't have a policy with them but I know the company pretty well. Great company. Best financial strength ratings in the industry. Top notch.

 

[Ally]

Last year we bought a Genworth policy for my husband. No one would quote me due to a health issue. They are pretty strict on medical issues, so I would advise anyone in their 50's to consider applying before something crops up that will make you uninsurable, if you intend to apply at all.

 

[explanade]

So if you start buying in your 50s, you can pay premiums for what 15-20 years before you might actually collect?

How do they determine what's a valid claim?

You decide to go to a facility and they have to start paying? Or is there some medical threshold that you have to reach and it's determined you need care?

 

[Moemg]

Interesting discussion on LTCI. I have not bought LTCI insurance .I looked closely at my family history & except for my grandfather who spent about a year in a VA nursing home no one else has. We have no history of Alzheimer's or strokes . I have decided to self insure . Hopefully it is a wise decision.

 

[gerrym51]

So if you start buying in your 50s, you can pay premiums for what 15-20 years before you might actually collect?

How do they determine what's a valid claim?

You decide to go to a facility and they have to start paying? Or is there some medical threshold that you have to reach and it's determined you need care?

the ltci insurnce is much more involed than that. since i am enrolled-havent't used i'll tell you what i know.

when ltci provider informed you get assigned one of their facilitators.they work with you and md to decide course of action. there are several guidlines. my policy also does home health care. it depends on how bad you are as to whether you go into a home. there are many government rules and regulations overseeing this. I would not worry about the insurance service and worry how to afforrd the premiums. as to when they start paying it depends on what kind of policy you buy. most have number of days after entry dpending on how much you want to pay in premiums. mine starts after 50 days-however medicare usually picks up to one month then you are on your own.

the ltci book is like a contract-it has pages and pages about every step.

i bought mine 10 years ago. somethings may have changed

 

[REWahoo]

So if you start buying in your 50s, you can pay premiums for what 15-20 years before you might actually collect?

How do they determine what's a valid claim?

You decide to go to a facility and they have to start paying? Or is there some medical threshold that you have to reach and it's determined you need care?

Search Nords posts on LTCI. He is the conservator for his dad and has posted extensively about working with the LTCI insurer to pay for his dad's care.

 

[dgoldenz]

My wife and I are investigating LTCi as well. We have quotes from Genworth and from Northwestern Mutual Life(NML). We are 56 (me) and DW is 54. Right now we are leaning towards NML. The premium is $3k/yr, but there are unique variations on this e.g. inflation adjusted at 3%, I think it is ~$4k/yr and then they have a option to increase 5% a year but then stop at any point an just pay that premium going forward. The other item I like about NML is they seem to pay a dividend (not guaranteed) which can offset some of the premium.

It actually seems pretty complicated and we are scheduled to talk through this in greater detail in a couple of weeks. Hopefully I'll have a better idea after the meeting.

Has anyone used NML?

A comparable policy from NWM should be 30-60% more expensive than Genworth. Are you sure the policies you are comparing have similar benefits?