Making the jump. Buying LTCI

[obgyn65]

After much consideration and reading a few threads on this topic both here and at Bogleheads, I have decided to make the jump and buy long term care insurance. Looking at Genworth, Prudential, and John Hancock. Only time will tell if this move was wise...

 

[Marita40]

I bought a Genworth policy last year at age 55 after looking at Prudential and John Hancock as well. I don't like the premiums, but then again they are not too terrible (yet) and it does give me some peace of mind. I thought the memory test given over the telephone was pretty silly.

 

[obgyn65]

I agree LTCI gives peace of mind, which is the main reason why I have decided to make the jump. I plan to pay up to $1,500 in annual premiums.

I bought a Genworth policy last year at age 55 after looking at Prudential and John Hancock as well. I don't like the premiums, but then again they are not too terrible (yet) and it does give me some peace of mind. I thought the memory test given over the telephone was pretty silly.

 

[HFWR]

I just started with Genworth in June. Yearly premium is $1612.56. Fits the budget, so decided to bite the bullet.

 

[brewer12345]

Be very careful in assessing carrier risk. This is a risky, long duration product that the industry has repeatedly mispriced.

Also be aware that you can be hit with premium increases (25+%) pretty much at the insurer's whim, after any initial guaranteed level premium period.

 

[HFWR]

Be very careful in assessing carrier risk. This is a risky, long duration product that the industry has repeatedly mispriced.

Also be aware that you can be hit with premium increases (25+%) pretty much at the insurer's whim, after any initial guaranteed level premium period.

Yes, definitely aware of these risks...

 

[imoldernu]

Passing on some experience in LTC Policies..

We began in 1994 with a policy from Travelers Insurance... The basic policy was $100/day, which, at the time was approximately the cost of a nursing home... about $35,000/yr. We bought after two health scares, and after seeing three relatives go in to nursing homes. At age 58, the thought of paying for nursing home care was pretty scary. Our two policies had an annual cost of about $1,000/person nursing home insurance cost. There are some weird rules that allow increases so today our cost is about $1100+ per person.

Travelers insurance became bankrupt, and the insurance was handled by Conseco, which also became bankrupt. The insurance is now held by SHIP, a Pennsylvania corporation which holds the existing policies in trust, and does not sell insurance. (As Brewer mentioned in this thread, the policies were not always stable or profitable.)

So, if we pay $2200 until age 85 in 2021, our total expense will have been about $55,000, or about 3/4ths the cost of one year in a nursing home.

It's not that simple. The insurance will only pay $36,000 of the roughly $70,000 yearly cost in our area. For us to upgrade to a $200/day insurance at our age, would cost about another $2,500 each, or a total of $7200/yr.

.....................................................................................
There is a 40% chance that someone who has reached 65 will enter a nursing home where the average stay is two and half years, according to stats compiled by Morningstar.
.....................................................................................

(Nursing Home costs in NYC or Long Island can be $135,000 or more.)

Gets confusing....

Here's an article that does a pretty good job of weighing the alternatives.

Long-term scare: The cost of insurance that covers?nursing home stays is soaring? - New York Daily News

 

[HFWR]

If/when the money runs out, they have my permission to inject me with lots of morphine, until I'm completely relaxed...

 

[SumDay]

If/when the money runs out, they have my permission to inject me with lots of morphine, until I'm completely relaxed...

What he said, times 10. Actually I wanted to find insurance that would shoot me right before I was supposed to be admitted to the nursing home. My goal is to never, ever use it.

My dad was the same way. He had a stroke and fell down a flight of stairs. 13 days later the hospital finally relented and admitted him to hospice. He was in a coma, but I know when he heard "transport will be here in an hour to take him to the nursing home" he just said "to heck with this" and went straight to heaven. That's my plan.

DH had LTC insurance through GM before he retired. We get to keep the group rate. $900 a year, and that's for both of us. And every other year we can opt for the inflation bump.

Now that I type all this, I wonder why I'm paying my share since I am so adamant about not using it....

 

[Mulligan]

Passing on some experience in LTC Policies..

We began in 1994 with a policy from Travelers Insurance... The basic policy was $100/day, which, at the time was approximately the cost of a nursing home... about $35,000/yr. We bought after two health scares, and after seeing three relatives go in to nursing homes. At age 58, the thought of paying for nursing home care was pretty scary. Our two policies had an annual cost of about $1,000/person nursing home insurance cost. There are some weird rules that allow increases so today our cost is about $1100+ per person.

Travelers insurance became bankrupt, and the insurance was handled by Conseco, which also became bankrupt. The insurance is now held by SHIP, a Pennsylvania corporation which holds the existing policies in trust, and does not sell insurance. (As Brewer mentioned in this thread, the policies were not always stable or profitable.)

So, if we pay $2200 until age 85 in 2021, our total expense will have been about $55,000, or about 3/4ths the cost of one year in a nursing home.

It's not that simple. The insurance will only pay $36,000 of the roughly $70,000 yearly cost in our area. For us to upgrade to a $200/day insurance at our age, would cost about another $2,500 each, or a total of $7200/yr.

.....................................................................................
There is a 40% chance that someone who has reached 65 will enter a nursing home where the average stay is two and half years, according to stats compiled by Morningstar.
.....................................................................................

(Nursing Home costs in NYC or Long Island can be $135,000 or more.)

Gets confusing....

Here's an article that does a pretty good job of weighing the alternatives.

Long-term scare: The cost of insurance that covers?nursing home stays is soaring? - New York Daily News

At this point in time I will not consider purchasing LTC, but I am a minimalist on insurance except in certain areas of health insurance and liability. I certainly do understand why people would purchase it, especially if they have the assets to protect and the means to pay for it. The statistics you cited seem awfully high to me, and I am not suggesting you misquoted the info, because you didn't. I will post some that would counter Morningstar a bit. This came from Nolo law website, but others I have read tend to be more this than a 40% chance of living 2.5 yrs in a nursing home average. If I am not mistaken the Morningstar said average not median, which may be why the numbers are different.

Most people will not spend years and years in a nursing facility.
Two-thirds of all men, and one-third of all women, age 65 and older will never spend a day in a nursing facility.
Most nursing facility stays are brief -- only about 10% of men and 25% of women age 65 and older spend more than a year in a nursing facility.
Only 10% of all nursing facility residents will stay longer than three years.
More than half of all nursing facility stays last six months or less. The average stay of those who enter a custodial care facility is about 18 to 20 months.
Assuming these statistics are true (and my math is correct also), as a male I would have a 3.3% chance of staying in a nursing home longer than 3 years. I live in a lower cost of living area so nursing homes are under $50k. I will just let my pension go direct deposit into their account since my vacationing days would be over, if I become a permanent fixture at one of these lovely retirement institutions.

 

[Nords]

After much consideration and reading a few threads on this topic both here and at Bogleheads, I have decided to make the jump and buy long term care insurance. Looking at Genworth, Prudential, and John Hancock. Only time will tell if this move was wise...

I agree LTCI gives peace of mind, which is the main reason why I have decided to make the jump. I plan to pay up to $1,500 in annual premiums.

I'm not an expert on long-term care insurance, but John Hancock has made me an expert on their customer "service" department.

For the sake of your loved ones who have to file your claim, please use a company with a better claims process than this:
Geriatric financial management update

 

[pb4uski]

....Travelers insurance became bankrupt

Huh? Travelers Insurance has never gone bankrupt. What are you talking about?

 

[imoldernu]

Huh? Travelers Insurance has never gone bankrupt. What are you talking about?

My bad!... sorry... For whatever reason, the Travelers LTC policy that I bought was transferred to Conseco. Can't remember the reason. Conseco
then, to SHIP. SHIP - Welcome
I believe SHIP is handling other LTC policies.

More info from here...http://www.longtermcarelink.net/eldercare/long_term_care_insurance.htm It explains a lot about how the LTC industry has changed. Major Changes... worth reading.

Excerpt:

In the past 5 years, 18 major companies have sold out their long term care insurance business , may sell out or are gone from the market. Transamerica was bought by Aegon and recently Transamerica and four other Aegon companies, selling long term care insurance, have pulled out of the market. The long-term care business of Time/John Alden/Fortis was acquired by John Hancock. Travelers sold it's LTCi business to GE Capital. Conseco and Bankers United are also gone. CNA put it's individual life and LTCi business on the block in 2002, but withdrew the sale because of inadequate offers. CNA now offers only group. American Travelers was bought by Conseco. Lincoln Benefit, Farmer's, IDS, TIAA/CREF and AFLAC are also gone. And finally, Penn Treaty Network America, a leading producer selling only LTCi-- but a small company asset-wise-- has run out of capital. It has no deep-pocketed parent company so may be up for sale. Probably no one has kept track of the number of smaller companies selling long term insurance that have pulled out of the market as well.

 

[imoldernu]

Mulligan said:

At this point in time I will not consider purchasing LTC, but I am a minimalist on insurance except in certain areas of health insurance and liability. I certainly do understand why people would purchase it, especially if they have the assets to protect and the means to pay for it.

Except for the fact that we bought the insurance 17 years ago, I would agree... We don't have enough assets to protect today, and are counting on our house value to provide enough if the state takes everything else for Nursing Home care before medicaid sets in. but when we bought, based on health at the time, it seemed the right thing to do. Now, with so much already invested in the insurance, it doesn't make sense to cancel.

You are fortunate to have a $50,000 nursing home available...

One interesting quote from the website cited in the above post.

The probability of a house fire is 1 in 1200, of having a major auto accident is 1 in 240 and of needing long term care is 1 in 2 . With a much higher probability doesn't long term care insurance make as much sense as buying those other coverages?

 

[akck]

Now that I type all this, I wonder why I'm paying my share since I am so adamant about not using it....

Probably for the same reason I'm contemplating it, to ensure you or your spouse doesn't suffer financially if one of you ends up in a LTC facility. If I was single, I'd likely pass on it. Being married, I wouldn't want either of us to suffer because the other is too incapacitated to do anything about it. Should one of us pass or end up in LTC, the other should consider canceling their policy.

 

[pb4uski]

My bad!... sorry... For whatever reason, the Travelers LTC policy that I bought was transferred to Conseco. Can't remember the reason. ...

My guess is that Travelers decided they didn't want to be in the LTC business (like many others have) and then sold their in-force policies to Conseco through either some form of reinsurance agreement or sale of the Travelers subsidiary that issued those LTC policies.

 

[Walt34]

My dad was the same way. He had a stroke and fell down a flight of stairs. 13 days later the hospital finally relented and admitted him to hospice. He was in a coma, but I know when he heard "transport will be here in an hour to take him to the nursing home" he just said "to heck with this" and went straight to heaven. That's my plan.

I like the idea, and have always hoped that when I saw it coming I'd have both the presence of mind and the physical ability to squeeze off one last round.

The problem is if you don't....

 

[T-bird]

Just initiated a LTC policy last month. DW wanted to assure we would have someone there to keep us clean in our advancing age. We live in a low cost area so between our pensions (DW's and mine effective April 2013) and SS we should be OK. For us annually about 1,360 a year for both of us. Both in good health and 56 and 57 YOA. We can handle it and you know what they say "a happy wife means a happy life". I rest my case.

T-bird
Class of 2013
DW Class of 2012 (May a done deal)

 

[Nords]

The probability of a house fire is 1 in 1200, of having a major auto accident is 1 in 240 and of needing long term care is 1 in 2 . With a much higher probability doesn't long term care insurance make as much sense as buying those other coverages?

That's great FUD. However, unlike fires and auto accidents, I'd like to think that I'd have a little more control over whether I "need" LTC.

Probably for the same reason I'm contemplating it, to ensure you or your spouse doesn't suffer financially if one of you ends up in a LTC facility. If I was single, I'd likely pass on it. Being married, I wouldn't want either of us to suffer because the other is too incapacitated to do anything about it. Should one of us pass or end up in LTC, the other should consider canceling their policy.

I like the idea, and have always hoped that when I saw it coming I'd have both the presence of mind and the physical ability to squeeze off one last round.
The problem is if you don't....

My spouse has pretty much personally guaranteed me that if I need LTC then neither one of us is going to suffer physically, mentally, or financially for very long.

 

[Sun456]

I view it like other types of insurance. You buy them and hope to never use them. I'll be a happy camper if I never get in an auto accident and make a claim on my auto policy, never have my house burn down and make a claim on my home owners insurance, never have a vacation cancelled and have to claim on travel insurance and if we never end up in LTC. However if we did we wouldn't want it to wipe out the assets of the one not in a nursing home. I do also like the professional home care component. That could be very useful for either an accident or in old age.

 

[Mulligan]

Mulligan said:

Except for the fact that we bought the insurance 17 years ago, I would agree... We don't have enough assets to protect today, and are counting on our house value to provide enough if the state takes everything else for Nursing Home care before medicaid sets in. but when we bought, based on health at the time, it seemed the right thing to do. Now, with so much already invested in the insurance, it doesn't make sense to cancel.

You are fortunate to have a $50,000 nursing home available...

One interesting quote from the website cited in the above post.

Very valid points to consider. I guess for me, the reasons why I won't consider it at this point are these. 1) unreliability of premium costs down the road 2) Housing and car insurance protects me here in the now where it could have a huge financial impact on my current life. I see entering the nursing home as the end of the road with no future to protect or look forward too. Maybe down the road, if such a policy is available, I would consider some catastrophic policy that say covers everything after year 3 in the home, so I wouldn't be a burden to society if nursing care costs continue to escalate.

 

[marko]

Are there any studies of how LONG a person spends in LTC? My experience is that average LTC (after at-home healthcare) is a few months, max.

People hear a 'weekly' nursing home rate and automatically multiply it by 52 weeks; it might not be the norm. Just guessing.

At the same time, my expectation is that once the dust settles, "affordable nursing home care" will be the next arena that our government will work to improve upon and make more fair.

If not, there are tons of companies out there that help you hide your assets for a lot less than LTCI

 

[samclem]

Are there any studies of how LONG a person spends in LTC? My experience is that average LTC (after at-home healthcare) is a few months, max.

It's about 2 years average, IIRC.

. . . the next arena that our government will work to improve upon and make more fair.

I can't wait to find out what "fair" means in this context. Anyway, the government recently took a swing at designing a program to assist with LTC expenses, they abandoned it before it even took flight. It was the first significant part of the PPACA to be jettisoned.

 

[marko]

It's about 2 years average, IIRC..

Well, for 2 years average, I can't see how paying $1500 a year for 20+ years makes sense for something that may not happen. I"ll roll the dice and find a good asset hider if need be.

No wonder insurance companies have such nice skyscrapers!

 

[marko]

I can't wait to find out what "fair" means in this context.

The 'fair' I'm thinking about is one where you work all your life at a good job, pay your taxes, save what you can and LBYM only to have it depleted on LTC (because you're 'rich' you see) while the guy in the next bed spent all his money on booze and has Medicaid pay for it.

My grandad was the former and had to be 'moved on' to another facility while "Mrs X" was the latter and was able to stay in the better (best) facility. When I asked why I was told "well...you know...you know...(whisper) welfare is paying for it...".

I'd just like to see something more 'fair'...if it's not too much to ask, like maybe having everyone get the same LTC...a little better maybe if you paid into the system.