Anybody Here Own LTC (Long Term Care)

[saluki9]

Rich

Personally I don't know anybody who has bought only $100 a day in benefits. Most people I've seen have purchased between $150 to $250 with simple indexing. Of course that depends on what kind of care you choose to buy

I don't know if you're spent much time in the homes that medicare pays for, but they aren't pretty. Around here a decent nursing home costs between $65,000 to $110,000 a year. Even they aren't what you would consider to be "nice" If you can avoid it most people would prefer to get in home care which isn't cheaper than a home. That being said $150 a day wouldn't be bad to help out with those costs.

In the case of my family, the LTCI would have saved us around $600K by now

 

[brewer12345]

saluki, its not that I don't take seriously the issue of paying for LTC. Its that I think the protection that is offered by LTC insurance is dubious at best for a prospective purchaser in their 50s or 60s. The product isn't mature enough and enough underpricing writers of this product have gotten burned that all that is left is the guys who are guessing as best they can at morbidity, hoping they can get the spreads they assume in their pricing, and telling themselves that if tings get bad they will just jack ates on their in-force blocks. This isn't a recipe for a stable industry that provides solid protection to insureds.

 

[youbet]

Saluki,  on the LTCI issue..........

A $5k to $10k/person annual premium would represent a significant chunk of our, and most folk's, RE budget.  Before going that route, I'd like to understand how to buy the product so that I could feel very comfortable that I understand what I'm getting and that the company will be there to deliver if and when we need it.  My current reading uncovered many concerns that companies might not be delivering, as promised today, a decade or two from now.

I feel comfortable with my home owners, auto, life and umbrella liability insurance and the companies I purchase them from.  How would you suggest I research companies and policies so that I could feel the same way about LTCI?

 

[brewer12345]

I feel comfortable with my home owners, auto, life and umbrella liability insurance and the companies I purchase them from.  How would you suggest I research companies and policies so that I could feel the same way about LTCI?

That's he problem: you cannot. LTCI is not a mature product like life, home, car, etc. insurance. The companies I would normally look to in the life industry (NWM, MassMutual, TIAA-CREF, USAA, maybe Pacific Life) either do not sell LTCI, or price it at stratospheric levels. Since we are talking about a LOT of money in premiums and very possibly some jacking up of rates down the road, I don't think LTCI is what it claims to be.

 

[Rich_by_the_Bay]

In the case of my family, the LTCI would have saved us around $600K by now

Yes, it's all but impossible to ignore personal experience and hindsight. Just that such experience is not always the best guide as to what to do for the future. Who knows.

I'm just glad that we'll probably have enough resources to even consider self-insuring in this situation. Maybe not to the level we would like, but at least the intact spouse will be able to live in comfort.

Better go jog and take my statin .

 

[Dawg52]

It's a tough call. I had an aunt who had a 5 year stay in a nursing home. It knocked a big dent in her savings but her husband had already passed so it didn't hurt anyone other than her kids inheritance. I'm sure she would have liked to have left them more but that is one reason we save, to have enough for our end of life uncertainties.

As I metioned before, I have a policy through our group company plan. Only cost $42/mo with $3,600/mo coverage(6 yr max) and a 5% per year inflation rider but caps out at $72,000 per year. Certainly won't pay for everything but not bad coverage for the price. Like Brewer said, the product isn't mature enough to know what the future holds for LTCI. I plan to hedge my bets for now and keep the policy as long as it is reasonable.  

 

[youbet]

I don't think LTCI is what it claims to be.

And I'm just not sure.........

I put together a DW-friendly spread sheet complete with color charts and graphs showing her the impact of both paying LTCI premiums beginning now and of self-insuring.  I ran a few scenarios..........one of us needing care for a short time through both needing care for a long time and everything inbetween.

She was showing a slight lean towards buying LTC until I mentioned that the product might be confusing to select and that there was some risk that it would actually be there for you, at least as compared to something simple such as term life insurance.  That revelation brought us back to the "what to do" status that the analysis started with........

If we had an opportunity to buy something like DOG52 has with his company, we wouldn't hesitate.  We'd be strictly on the private market.  DOG, in a hypothetical situation where you retire and you could continue the policy for $500 a month with the possibility of significant premium increases going forward, how would you feel about it then?

 

[saluki9]

Yes, it's all but impossible to ignore personal experience and hindsight. Just that such experience is not always the best guide as to what to do for the future. Who knows.

I'm just glad that we'll probably have enough resources to even consider self-insuring in this situation. Maybe not to the level we would like, but at least the intact spouse will be able to live in comfort.

Better go jog and take my statin .

No doubt Rich. There is a good reason that most reputable research doesn't include testimonials. I just put it forth as my reasoning for believing in it so strongly. On top of that, my first hand experience in dealing daily with several dozen moderate to highly wealthy families has reinforced the importance to me.

As Brewer can attest, most early offerings were vastly underpriced. Companies like CNA and Trans would love to get rid of their book from that period. However the concept still make a lot of sense to me and as long as others are willing to share the risk I will buy the coverage as I near my 40's.

 

[brewer12345]

As Brewer can attest, most early offerings were vastly underpriced.  Companies like CNA and Trans would love to get rid of their book from that period.  However the concept still make a lot of sense to me and as long as others are willing to share the risk I will buy the coverage as I near my 40's. 

Actually, I'd wait until at least 50. That's one of the few advantages we yunguns have from following the boomers. By the time they have ruined thoroughly tested the systems designed to deal with the elderly, we will have a much better idea what not to do.

In 20 years, LTCI should be sorted out. Whether it will still be available on the open market is anther question.

 

[Dawg52]

And I'm just not sure.........


If we had an opportunity to buy something like DOG52 has with his company, we wouldn't hesitate.  We'd be strictly on the private market.  DOG, in a hypothetical situation where you retire and you could continue the policy for $500 a month with the possibility of significant premium increases going forward, how would you feel about it then?

When I retire my rate will still be at the group rate. But it will be dropped if it goes to $500/mo. I'm not sure where my pain threshold is.

 

[Brat]

There is another option: moving to a continuing care community that includes assisted living, nursing care in the monthly charge for everyone. I have priced certified non-profit communities who have been operating for many years with this program - they aren't cheap and they screen the new residents carefully.

 

[Rich_by_the_Bay]

Another strategy discussed in a prior threat on LTC:

Consider taking out term life on both parties once in your mid-fifties or so assuming you are reasonably insurable. Anywhere from 250k on up should do.

Skip LTCI.

First one in a NH gets expenses paid from the nest egg, perhaps depleting it seriously over time. IIRC, the mean life expectancy of long-term NH residents is measured in the 2-5 year range. Survivor gets the death benefit, repletes the nest egg.

Or, the independent spouse dies and the NH spouse gets the benefits to pay expenses.

Or, both end up in NH, use nest egg early on and when first dies, other gets benefit to pay expenses.

Not perfect, but cheaper than LTC, known risks, costs and benefits, and you'd feel alot better about decimating your nest egg to pay NH costs if you knew you'd pick up a large death benefit when the dependent spouse dies.

 

[brewer12345]

If anyone tries Rich's suggestion, an ordinary term policy won't cut it. You want one of the following from a reputable company:

- "Guaranteed No-Lapse" Universal Life
- Whole Life
- Maybe, annually renewable term

 

[Rich_by_the_Bay]

Brewer: "If anyone tries Rich's suggestion, an ordinary term policy won't cut it."

Why is that? Do they stop insuring after a certain age using term?

 

[youbet]

When I retire my rate will still be at the group rate.

Sweet benefit........!  

 

[brewer12345]

Brewer: "If anyone tries Rich's suggestion, an ordinary term policy won't cut it."

Why is that? Do they stop insuring after a certain age using term?

If you get a level term policy (20 year term, etc.), one of two things can happen at the end of 20 years: 1) policy ends and goes away, or 2) policy converts to an annually renewable term policy at whatever the going rate is, probably a LOT higher than the fixed period premium. What you really want to do is lock in the cost of the policy at the outset. No-lapse UL is probably the cheapest way to do so, but this product is under significant regulatory pressure. If it goes away, whole life will be pretty much teh only way to go. Annually Renewable Term would be OK, so long as you are aware that premiums WILL increase every year.

 

[Rich_by_the_Bay]

If you get a level term policy (20 year term, etc.), one of two things can happen at the end of 20 years: 1) policy ends and goes away, or 2) policy converts to an annually renewable term policy at whatever the going rate is, probably a LOT higher than the fixed period premium. What you really want to do is lock in the cost of the policy at the outset. No-lapse UL is probably the cheapest way to do so, but this product is under significant regulatory pressure. If it goes away, whole life will be pretty much teh only way to go. Annually Renewable Term would be OK, so long as you are aware that premiums WILL increase every year.

Level premium term OK?

 

[brewer12345]

Level premium term OK?

Nope, probably not. What if you outlive the level premium period? Then either the policy expires or the premium jacks way up. The latter might not be such a big deal except that the family may be financially constrained when it happens.

 

[samclem]

Seems like a "first to die" policy is what you'd want (to re-fill the nest egg when the first spouse goes). Insurance on spouse 2 is moot at that point. Is this available? If so, I'd guess the premiums are more than on a single life but less than on two.

As Rich says, this isn't a perfect soluton. There's a good chance of destitution for the "healthy" spouse if the nest egg runs out while the NH bils keep coming, and there's te probem of guessing how big a policy to buy, since the costs of care keep rising and there's no telling when you'd need it.

As we discuss this, I'm starting to think a "least bad" approach for our family might be to buy LTCI for my wife and I covering an unlimited benefit period but with a modest daily benefit--just enough to cover te difference between what we coud afford to pay and the likely actual bill for a NH. Assume monthly income from our pensions, SS, and investments,assume the house s paid off, and figure out just how much the spouse on "the outside" would need to spend each month (with considerable belt-tightening--this is a worst-case scenario). The difference is available to spend on NH fees. Then, buy just enough LTCI to cover the difference between available monthly funds and the cost of care. That would be approx $75 per day of insurance benefit needed for each of us (slightly more for DW, since our pension gets cut a lot when I die, reducing the amount she'd have to contribute to her NH care). Why unlimited benefit period? It's not much more expensive than 5 year coverage, and it would entirely eliminate the fear of outliving the insurance.

With this aproach I'm self-insuring to the max extent we can, but building a plan to cover the cost of LTC if it does happen.

Still on the fence . . . we're talking big $$ here!

 

[Brat]

Most folks die within 5 years after needing care which is why the spread between 5 year and lifetime is low.

Pay close attention to the qualifying ADLs, and absolutely sign up for the compound benefit increase.

Play around with the OPM 'chooser' to see the impact of one option over another whether or not you use that program.

 

[saluki9]

If you get a level term policy (20 year term, etc.), one of two things can happen at the end of 20 years: 1) policy ends and goes away, or 2) policy converts to an annually renewable term policy at whatever the going rate is, probably a LOT higher than the fixed period premium. What you really want to do is lock in the cost of the policy at the outset. No-lapse UL is probably the cheapest way to do so, but this product is under significant regulatory pressure. If it goes away, whole life will be pretty much teh only way to go. Annually Renewable Term would be OK, so long as you are aware that premiums WILL increase every year.

Brewer, I'm not in the insurance business, but I do see and read a lot of policies.

No lapse UL makes LTCI seem cheap. I still think it's a great deal considering what you're getting, but you can't complain about the price of LTC and then suggest no lapse UL.

 

[brewer12345]

Brewer, I'm not in the insurance business, but I do see and read a lot of policies. 

No lapse UL makes LTCI seem cheap.  I still think it's a great deal considering what you're getting, but you can't complain about the price of LTC and then suggest no lapse UL.

I don't think Rich's idea is a great one, personally. I was just trying to get the idea across that plain old term insurance wouldn't cut it.

Actually, in one sense, no lapse UL runs rings around LTCI: at least you know for sure what you are getting and the premiums can't be jacked to the moon in the future. Can't say either about LTCI, which is why I don't find the current incarnation appealing.

 

[wabmester]

As trustee on a family trust I have signed well over $1,000,000 of checks to pay long term care expenses for my grandmother that could have been avoided by a $5K annual premium. 

Saluki, can I ask how the expenses got that high?   Was it for an especially high quality of care, an extraordinarily long term of care, or something else?

Can anybody comment on the worst-case term length for long-term care?   I assume that for people with, say, stroke-induced dementia that lifespans are relatively short and quality of life is fairly low.   Is there a group who needs long-term care but who also maintain a high level of brain function and quality of life?

I just watched Soylent Green recently (thanks to the SciFi thread here).    I liked the part where people volunteered to die, were asked their favorite music, color, etc, and then were led to a nice room where they sipped a glass of poisoned wine, snuggled into a cozy bed, and then watched a nice IMAX movie till they croaked.   Seems a lot more dignified (and less expensive) than various alternatives.

 

[saluki9]

Saluki, can I ask how the expenses got that high? Was it for an especially high quality of care, an extraordinarily long term of care, or something else?

Can anybody comment on the worst-case term length for long-term care? I assume that for people with, say, stroke-induced dementia that lifespans are relatively short and quality of life is fairly low. Is there a group who needs long-term care but who also maintain a high level of brain function and quality of life?

I just watched Soylent Green recently (thanks to the SciFi thread here). I liked the part where people volunteered to die, were asked their favorite music, color, etc, and then were led to a nice room where they sipped a glass of poisoned wine, snuggled into a cozy bed, and then watched a nice IMAX movie till they croaked. Seems a lot more dignified (and less expensive) than various alternatives.

Sure, not a problem

My grandfather was a very successful man (owned an insurance agency) He made a very nice living for himself and was very independant (the reason he turned down the LTC)

In 1994 at age 78 he had a stroke that left him with permanent brain damage. At the same my grandmother (80 at the time) started losing her ability to care for herself and certainly for my grandfather. Due to life long knee problems she became unable to walk.

There was really only one option for them when it came to care. They weren't sick enough to subject them to a nursing home. Assisted living also was not an option because my grandfather was too sick and we would not even consider separating two people who had been together day and night for almost 60 years.

So, the only option available to us was to hire in home care. This was a huge help to both of them (my grandfather passed away a couple years later) My grandmother is now well into her 90's, requires a nurse to do anything from feeding, dressing, toileting, etc .. A full time caretaker (not an RN) costs us about $6K a month in salary, plus payroll taxes, health insurance for the caretaker, transportation, medication etc

In total this costs our family around $90K - 100K per year. We have been paying this for 12 years now. My grandmother (despite having a very low quality of life shows no signs of giving up) so as for the $1M figure, do the math

 

[Rich_by_the_Bay]

So, the only option available to us was to hire in home care. This was a huge help to both of them (my grandfather passed away a couple years later) My grandmother is now well into her 90's, requires a nurse to do anything from feeding, dressing, toileting, etc .. A full time caretaker (not an RN) costs us about $6K a month in salary, plus payroll taxes, health insurance for the caretaker, transportation, medication etc

In total this costs our family around $90K - 100K per year. We have been paying this for 12 years now. My grandmother (despite having a very low quality of life shows no signs of giving up) so as for the $1M figure, do the math

Are you sure that LTCI would have paid for the items you listed above for your grandmother? I would be very surprised if so. Perhaps some small proportion of it?