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Signed Up For LTC Policy
Old 05-14-2021, 07:38 AM   #1
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Signed Up For LTC Policy

To my great surprise, I decided to sign up for LTC just before my Birthday to lock in the price. I qualify for the Federal Govt plan through DWís job. I was surprised the cost seemed not unreasonable for two of us. They propose an affordability guideline of cost equal 7% or less of (gross?) income. Our policy starts around 5%. The problem of course is the potential for future price increases. Iím taking the next few months to fully evaluate this purchase. Iím ok paying a few months premiums while I decide. I can really only justify this as a benefit to our heirs if we both need LTC. I think we could handle the expense for one of us.
Curious to hear how others evaluate the decision to purchase vs self insuring or rolling the dice.
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Old 05-14-2021, 07:52 AM   #2
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My father decided to buy life insurance instead of LTC insurance. His thoughts were that he knew he would die. But did not know if he would need long term care. In the end, My mother needed about $50,000 in non-covered care during her last year. My father, who passed last year, never needed LTC. So his $200,000 policy paid the heirs more than the cost of the care for my mother. But I also realize both my parents were very fortunate not to need LTC for a long period of time.
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Old 05-14-2021, 08:04 AM   #3
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Mom has a LTC policy and they hiked her premiums this year. She had the option of keeping the same premium with less benefits, or paying more for the same. We came to the conclusion that even with the increase in premiums, it was still worthwhile to keep the same level of benefits.
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Old 05-14-2021, 08:07 AM   #4
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Just so happened I decided to dip my toe in the LTC insurance maze again.

Considering one of those hybrid plans and I had a traditional plan in the past but got too discouraged when seems too of getting a notice to either settle for less coverage or pay of a premium increase. A demoralizing feeling.

Yet at the same time, I kinda want to have more protection and control of my hard earned life savings than have that drained away and go on medicaid for LTC in the future.
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Old 05-14-2021, 10:30 AM   #5
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My application for the hybrid whole life with LTC rider has just been approved but DH’s application was declined, so we’ve decided to buy for me and self fund for DH using our Roth IRA money (which we won’t touch at all anyway).

I like the hybrid option because it locks in the price for life without worry of an increase, and there’s 100% premium payback clause after a number of years if we decide to cancel, or it will act like life insurance if I die early without using the LTC rider.
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Old 05-14-2021, 12:44 PM   #6
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The LTC rider is something I need to look into but it was not important to me when I purchased a term policy at retirement. That policy gets exorbitant after age 75 so not a good fit to supplement LTC expenses. It seems like the hybrid policies are new and likely underpriced so I wouldnít be surprised if the premiums ratchet up in the future, kinda like what happened with LTC. To me Itís ok to have a smallish policy or accept reduced benefits. Having a hedge to absorb a chunk of the expense seems like a reasonable compromise.
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Old 05-14-2021, 01:03 PM   #7
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To me It’s ok to have a smallish policy or accept reduced benefits. Having a hedge to absorb a chunk of the expense seems like a reasonable compromise.
I guess that's a very individualized point of view depending on circumstances. For DW and I, having a typical $300k total policy just wouldn't act as "insurance" for us. Sure, if someone else paid a nickle of our potential NH expenses, that's a good thing. Not arguing that. But as far as the impact on our overall lifestyle, I'd have to be able to find a policy with an affordable upper limit much higher to get interested.

We estimate that being private pay will cost between 0% and 25% of our total FIRE portfolio for both of us.

We are seriously shopping Type A CCRC's though. No upper limit. But a lot of other baggage...... There's always something.
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Old 05-14-2021, 01:26 PM   #8
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DW and I pay a little under $600/yr each for LTC policies with benefits capped at $266/day for up to three years ($266 x 364 x 3 = $290k). For us, that seems a reasonable compromise between totally self-insuring and paying substantially higher premiums for better/longer coverage.

It's a crapshoot.
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Old 05-14-2021, 01:46 PM   #9
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[QUOTE=jazz4cash;2606769]It seems like the hybrid policies are new and likely underpriced so I wouldnít be surprised if the premiums ratchet up in the future, kinda like what happened with LTC. /QUOTE]


Company I have a hybrid life/LTC policy with has been writing them for at least thirty years. Not exactly new. Also, once you buy, there "is no" premium increase ever, you are locked in. Those who buy hybrid in the future may at that time have to pay more (get less), but once they buy they are also locked in, no premium increases ever "for them".
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Old 05-14-2021, 01:46 PM   #10
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DW and I pay a little under $600/yr each for LTC policies with benefits capped at $266/day for up to three years ($266 x 364 x 3 = $290k). For us, that seems a reasonable compromise between totally self-insuring and paying substantially higher premiums for better/longer coverage.

It's a crapshoot.
I agree! I just got a letter in the mail today about my LTC insurance. They are increasing daily max by about 4% and the premium by 26%!!!! On previous occasions, I bit the bullet and agreed to the increase - this time, I decided to decline. These premiums are getting out of hand. Just like REWahoo, I figure a combination of SOME LTC insurance and self-insurance will probably be fine.
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Old 05-14-2021, 03:42 PM   #11
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If you're looking at hybrid policies just make sure the underlying insurance is whole life, not universal.

A few years ago an agent tried to get me to convert an old whole life policy to a hybrid w/ LTC rider, but the underlying policy was universal life...at the guarantee it would "blow up" in my 60s.
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Old 05-14-2021, 08:47 PM   #12
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Originally Posted by jazz4cash View Post
To my great surprise, I decided to sign up for LTC just before my Birthday to lock in the price. I qualify for the Federal Govt plan through DWís job. I was surprised the cost seemed not unreasonable for two of us. They propose an affordability guideline of cost equal 7% or less of (gross?) income. Our policy starts around 5%. The problem of course is the potential for future price increases. Iím taking the next few months to fully evaluate this purchase. Iím ok paying a few months premiums while I decide. I can really only justify this as a benefit to our heirs if we both need LTC. I think we could handle the expense for one of us.
Curious to hear how others evaluate the decision to purchase vs self insuring or rolling the dice.
I enrolled in this plan about 10-12 years ago (for both me and spouse). I donít have the cost details handy and am too lazy to dig it out right now. There have been 2 or 3 premium increases since I enrolled (coinciding with the expiration of the multi-year contracts between the insurance companies and the government. In each case, the increase was significant if you wanted to keep the same (original) levels of inflation protection. There was also an option to keep the premiums level and take a lower (or zero) inflation adjustment going forward. Another option was to just walk away from the policy altogether and have all your premiums refunded. I canít recall if all of these options were offered at each renewal or only selectively. I will likely take the highest inflation adjustment available next renewal as I opted to keep the premiums level the previous renewals.
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Old 05-14-2021, 08:55 PM   #13
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I'm rollin' the dice. Pops was in for 6 months and Medicare stopped and he was paying. So I engaged his LTC insurance and all they did was ask for info. The more I sent, the more they asked.

Then they cancelled the claim.

But they did refund the prorated policy premium after he died. Somehow they knew he died. I didn't tell them.

I will never ever sign up for LTC insurance. They burned me for 15 grand.
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Old 05-14-2021, 09:07 PM   #14
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I'm rollin' the dice. Pops was in for 6 months and Medicare stopped and he was paying. So I engaged his LTC insurance and all they did was ask for info. The more I sent, the more they asked.

Then they cancelled the claim.

But they did refund the prorated policy premium after he died. Somehow they knew he died. I didn't tell them.

I will never ever sign up for LTC insurance. They burned me for 15 grand.
Sad to say you often need a claims assistance professional to jump through the hoops necessary to get a LTC claim filed and payments initiated. Well worth the $ to let them do all the work as the insurance company will try to wear you down in the hopes you will give up - as you found out.
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Old 05-14-2021, 09:10 PM   #15
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Yup. Loss reduction plans in full effect.
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Old 05-14-2021, 09:56 PM   #16
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I'm rollin' the dice. Pops was in for 6 months and Medicare stopped and he was paying. So I engaged his LTC insurance and all they did was ask for info. The more I sent, the more they asked.

Then they cancelled the claim.

But they did refund the prorated policy premium after he died. Somehow they knew he died. I didn't tell them.

I will never ever sign up for LTC insurance. They burned me for 15 grand.
What insurance company?
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Old 05-14-2021, 10:11 PM   #17
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We will self-insure. Between our real estate and financial assets, we should be ok. And we donít have kids so if we spend our last $ on our own care, so be it. Many nice LTC facilities accept Medi-Cal if you initially come in as a Medicare/private pay resident.
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Old 05-14-2021, 10:51 PM   #18
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Originally Posted by Popsicletoes View Post
My application for the hybrid whole life with LTC rider has just been approved but DH’s application was declined, so we’ve decided to buy for me and self fund for DH using our Roth IRA money (which we won’t touch at all anyway).

I like the hybrid option because it locks in the price for life without worry of an increase, and there’s 100% premium payback clause after a number of years if we decide to cancel, or it will act like life insurance if I die early without using the LTC rider.
I plan on using plain IRA money, as the extra taken out to pay non reimbursed medical bills will be a deduction for the amounts over 7.5% (2020) of income.

I could see if one was taking substantial RMD's that taking out non-taxable money like Roth or bank account cash for living, while using the RMD mostly for medical bills would keep the taxable income lower and make more percentage deductible due to the lower threshold.
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