Just got LTC quotes....

[LightningDawg]

Just got LTC quotes via my insurance agent from three companies. This would be for my wife, who is 52 and in good health currently. I was surprised at how expensive these were. What are others on the forum finding in terms of cost? Should I get more quotes from another agent?

John Hancock, preferred, 5 years benefit, $6000/month with max $360,000: $3900/year.

Prudential, preferred, 5 years benefit, $200/day with max $365,000: $2600/year.

Mutual of Omaha, preferred, $200/day with max $360,000: $2600/year.


What do you guys think of these rates?

 

[REWahoo]

Waiting period? Inflation protection?

 

[dgoldenz]

MOO is pretty competitive. Pru just sent out a notice that they're raising rates by an average of 40% on the 5% compound inflation policies, so I'd avoid that. The increases are between 14-63% depending on age versus current rates. Are you not on the policy for health reasons or what? The spousal discounts can be pretty substantial.

Edit - just ran a sample rate and Pru is the lowest, but I'd be cautious with them given the new rate filings for April 2011...United of Omaha Assured Solutions Gold with 5% compound inflation rider and a 10-year rate guarantee is $3266. That drops to $2436 if the 5% compounded is only for the first 20 years. United of Omaha comes standard with a 5-year rate guarantee. The 10-year guarantee costs an extra 10-15% in premium. If you can afford it, I would suggest buying a 10-pay (i.e. fully paid up after 10 years) policy to avoid potentially large increases in the future.

 

[ziggy29]

Expect these "locked in" rates to go up a few times along the way.

 

[LightningDawg]

Waiting period? Inflation protection?

5% compound inflation protection

I don't see waiting period specified on this form.




So are these premiums reasonable, or are they high?

 

[dgoldenz]

5% compound inflation protection

I don't see waiting period specified on this form.




So are these premiums reasonable, or are they high?

Probably 90 day waiting period, which is pretty standard. For the specs you posted, they are reasonable. You can always cut back on benefit period, inflation rider, or waiting period to lower the cost.

 

[LightningDawg]

MOO is pretty competitive. Pru just sent out a notice that they're raising rates by an average of 40% on the 5% compound inflation policies, so I'd avoid that. The increases are between 14-63% depending on age versus current rates. Are you not on the policy for health reasons or what? The spousal discounts can be pretty substantial.

Edit - just ran a sample rate and Pru is the lowest, but I'd be cautious with them given the new rate filings for April 2011...United of Omaha Assured Solutions Gold with 5% compound inflation rider and a 10-year rate guarantee is $3266. That drops to $2436 if the 5% compounded is only for the first 20 years. United of Omaha comes standard with a 5-year rate guarantee. The 10-year guarantee costs an extra 10-15% in premium. If you can afford it, I would suggest buying a 10-pay (i.e. fully paid up after 10 years) policy to avoid potentially large increases in the future.

How did you get this quote? Is there a website I can go to for my own quotes?

I did not get a quote on myself, because we thought if something happened to me, my wife, a nurse, would care for me (at home if needed). Her mother did that for her father who had a stroke. If something happened to her, I probably would have a harder time caring for her and would need more help.

 

[LightningDawg]

Probably 90 day waiting period, which is pretty standard. For the specs you posted, they are reasonable. You can always cut back on benefit period, inflation rider, or waiting period to lower the cost.

Should I decrease the benefit period from 5 years to 3 years? I think I remember reading somewhere that 90% of claims were 3 years or less.

 

[dgoldenz]

Should I decrease the benefit period from 5 years to 3 years? I think I remember reading somewhere that 90% of claims were 3 years or less.

Reducing to three years would reduce the rates pretty substantially. Do you have the assets to self-insure part of the claim if something were to happen? If so, you may want to consider a 180-day waiting period and keeping the 5-year benefit or reducing to a 3-year and keeping the 90-day period.

How did you get this quote? Is there a website I can go to for my own quotes?

I did not get a quote on myself, because we thought if something happened to me, my wife, a nurse, would care for me (at home if needed). Her mother did that for her father who had a stroke. If something happened to her, I probably would have a harder time caring for her and would need more help.

I'm an agent, so I have access to the software to run comparison quotes from the major companies. There isn't any consumer portal online that I know of to get instant LTC quotes, so you'd have to go through an agent or directly to a company. Agents don't cost you anything, so there's no reason not to use one if you find one that you like and trust.

Spousal discounts are usually about 30%. When two people are insured, you also can have a shared pool of years. As an example, you could have a joint policy with a 3-year benefit period, which gives you a total of 6 years. One spouse can use all 6 years, each can use 3, or one can use 3 and "borrow" one or two from the rest. When you have a joint policy, you can also add a survivorship rider that will make the policy fully paid up for life if you go 10 years without an LTC claim and then one of the spouses dies before making a claim. I am surprised your agent didn't give you that option, but it's definitely something to look into.

Here's a theoretical example:

52 year old couple (both same age), both with preferred rates
6 total years of shared benefits
$6000/month benefit (total beginning benefit pool of $432,000)
90-day elimination period (180-day period only saves ~$100/year)
5% compound inflation rider
0-day elimination period for home healthcare
Survivorship benefit included as part of base policy

Premium = $3742.20

IMO, that sounds a lot better than what you would pay for her alone, assuming you are close to her age and both in good health. Transamerica is also competitive, but only has their shared-care rider available in about half the states. I am also leery of them since they sold LTC a while ago, then stopped, jacked up the rates on existing policyholders, and are now back in the market. My grandfather has an older TA LTC policy, so I know first hand what is going on with those policies.

 

[Rich_by_the_Bay]

I did not get a quote on myself, because we thought if something happened to me, my wife, a nurse, would care for me (at home if needed).

Are you sure? Those are big assumptions. Suppose she is ill or needy herself when your time occurs. Suppose you have needs which she cannot meet for physical or emotional reasons? Suppose she becomes dependent before you do? IIRC, women live longer than men after LTC facility admission.

My gut tells me that if you feel LTC is important to you, you both should be covered, even if the details are different between you.

Just some food for thought...

 

[samclem]

There isn't any consumer portal online that I know of to get instant LTC quotes, so you'd have to go through an agent or directly to a company. Agents don't cost you anything, so there's no reason not to use one if you find one that you like and trust.

That's true. But some folks want to go online and get a feel for the product before engaging with an agent. The US Government offers LTCi to their employees, and the government doesn't subsidize the premiums. Folks can go to their site and run the calculator using different scenarios (inflation protection? What if I wait longer to buy?) and see how they affect the premiums.

Here's a link to the site: Federal LTCi Calculator

Caveats:
- The rates shown won't be the same as what an agent will quote you. If the client is in good health they'll pay less than these rates.
- The products offered through the Fed program are simple. You can't buy joint/shared benefits, you can't select a waiting period other than 90 days, etc)

OP: Be sure to consult the FAQs for previous threads on LTCi. We've talked about it a LOT.

 

[dgoldenz]

That's true. But some folks want to go online and get a feel for the product before engaging with an agent. The US Government offers LTCi to their employees, and the government doesn't subsidize the premiums. Folks can go to their site and run the calculator using different scenarios (inflation protection? What if I wait longer to buy?) and see how they affect the premiums.

Here's a link to the site: Federal LTCi Calculator

Caveats:
- The rates shown won't be the same as what an agent will quote you. If the client is in good health they'll pay less than these rates.
- The products offered through the Fed program are simple. You can't buy joint/shared benefits, you can't select a waiting period other than 90 days, etc)

OP: Be sure to consult the FAQs for previous threads on LTCi. We've talked about it a LOT.

You can't compare group benefits with individual policies just like you can't with health insurance, life insurance, or disability. They are completely different markets with different underwriting rules, product features, discounts, and guarantees. LTC quotes can't be found online for the same reason that disability quotes can't be found online - there are too many variables and the underwriting is too complex to just get a quote and apply.

All you get out of running a quote on that site is getting somewhere in the ballpark of an individual policy. That's no different than me telling someone it'll be "between $150 and $600 a month"

 

[LightningDawg]

Are you sure? Those are big assumptions. Suppose she is ill or needy herself when your time occurs. Suppose you have needs which she cannot meet for physical or emotional reasons? Suppose she becomes dependent before you do? IIRC, women live longer than men after LTC facility admission.

My gut tells me that if you feel LTC is important to you, you both should be covered, even if the details are different between you.

Just some food for thought...

good point. I'll have to re-think this.

 

[samclem]

All you get out of running a quote on that site is getting somewhere in the ballpark of an individual policy.

If you don't find it useful, then don't use it. For all we know, the OP (or his wife) is a Fed employee and rates at that site DO apply to him (her). I don't think seeing these rates is going to hurt anyone. You gave a "theoretical example" without any physical exam/health info, I'm not sure how that's any different from the information the OP would find at the Fed LTCi site.

 

[JakeBrake]

DW and I followed Dave Ramsey's teachings and bought LTC insurance policies for both of us at age 60.

We bought John Hancock policies through Megacorp. With our policies John Hancock can make an inflation adjustment (raise) rates every three years. They raised rates and coverage in 2008 and I feel sure they will raise rates and coverage in 2011.

Right now for both of us we pay an annual premium of $3,167. with a maximum benefit of $419,750 for each of us.

My mother spent her last 5 years in a nursing home. For the last two years she was comatose. Her LTC policy was a Godsend.

 

[LightningDawg]

DW and I followed Dave Ramsey's teachings and bought LTC insurance policies for both of us at age 60.

We bought John Hancock policies through Megacorp. With our policies John Hancock can make an inflation adjustment (raise) rates every three years. They raised rates and coverage in 2008 and I feel sure they will raise rates and coverage in 2011.

Right now for both of us we pay an annual premium of $3,167. with a maximum benefit of $419,750 for each of us.

My mother spent her last 5 years in a nursing home. For the last two years she was comatose. Her LTC policy was a Godsend.

I wonder why my wife's quote is about what you pay for both of you......

 

[JakeBrake]

I wonder why my wife's quote is about what you pay for both of you......

John Hancock may be quotng the 2011 rates to you. They will tell me about the 2011 inflation adjustment in August.

 

[Brat]

Years ago we purchased a paid up policy through Allianz. I suggest you put their offerings in the mix.

Having cared for elderly parents the one important factor is inflation protection. All things equal if you need to save $ go for a longer waiting period. You want to insure against an extended period of disability.

 

[East Texas]

My spouse and I both have JH LTC although they're different policies. I have 5% increase in coverage compounded annually with a flat premium and my spouse has to purchase a CPI adjustment every three years at current rates. Both policies are lifetime - an option no longer offered.

I got two discounts up front on my policy: USAA group rates and I pay annually.

Our preference is to stay home as long as possible - LTC makes that possible. If we need to go into assisted living or a nursing home, we want to decide where that will be based on a variety of factors, none of which are financial.

I know JH has petitioned Texas for a rate increase. Even if my rates go up the whole 40% next year, I still feel this is affordable. It's definitely cheaper than one month in assisted living or a nursing home. Plus, the stay at home benefits of LTC are pretty good.

Where I'm going with this is you just don't know what the future holds. You could easily look back in several years, as we have done, and realize the policy you purchased at that time was a very good investment. As Jake said, your family will appreciate your having a LTC policy should the time come.

 

[brewer12345]

Dgoldenz, can you talk a bit about the 10 pay policies? Who offers these? Is there any wiggle room whatsoever for the insurer to raise premiums or cut benefits once you are in a 10 pay policy that will be paid up after 10 years? Can you give a rough idea of the premium differential between a 10 pay and an annual (indefinite) pay policy?

Thanks.

 

[dgoldenz]

Dgoldenz, can you talk a bit about the 10 pay policies? Who offers these? Is there any wiggle room whatsoever for the insurer to raise premiums or cut benefits once you are in a 10 pay policy that will be paid up after 10 years? Can you give a rough idea of the premium differential between a 10 pay and an annual (indefinite) pay policy?

Thanks.

Transamerica, Prudential, Assurity, John Hancock, and Mutual/United of Omaha are all offering them right now. Of those companies, United of Omaha and Transamerica offer a rider to guarantee the rates for the full 10 years. They both guarantee the rates for the first three or five years depending on your state, but you can pay extra to have them guaranteed to your choice of 6, 7, 8, 9 or 10 years. The other companies do not have rate guarantees and can raise your rates at any time, even for a 10-pay. Just as an example:

52 year old couple, both preferred health risks
$200/day benefit or $6k/month benefit
3-year benefit period (total of 6 years of shared benefits)
5% compound inflation
90-day elimination period
0-day elimination period for home healthcare
Survivorship benefit and joint waiver of premium after claims begin

Genworth has by far the lowest rates, but no rate guarantee. For Genworth:

Lifetime pay premium = $3,742

United of Omaha has the lowest rates for a company with a 10-year guarantee available. For UoO:

Lifetime pay premium = $4363
10-pay with standard 5-year guarantee = $12,310
10-pay with 10-year rate guarantee = $13,824

So as you can see, there is a big difference in premium, but this example is also for a younger couple that may live another 40-50 years. So that begs the question....do you feel lucky that they won't raise rates in the future, or are you willing to accept the risk for the lower premium?

Personally, I would take my chances with the lifetime pay premium and survivorship benefit. It is entirely possible that this couple could live to age 65 and then one spouse drops dead of a heart attack. At that point, the remaining spouse would have a policy paid up for life since there were no claims and they'd still likely come out ahead of the 10-pay as long as their rates didn't double or triple. The survivorship benefit can also be reduced to a 7-year timeframe instead of the standard 10 years for about an extra 3% in premium cost.

 

[brewer12345]

Thanks very much for the insight. So the cheapest way for this couple to permanently defease the bulk of their risk on LTC costs with no risk of the insurer effectively welshing on its protection promise (short of default) would be to shell out $138k over 10 years. Such protection does not come cheap.

I am generally of the opinion that standard LTC products are, um, not the industry's best work. I would not recommend them to anyone. A 10 pay or single pay policy from a solid insurer would be attractive on a risk reduction basis, but the cost is high. It will be interesting to watch the evolution of this product over time.

 

[dgoldenz]

Thanks very much for the insight. So the cheapest way for this couple to permanently defease the bulk of their risk on LTC costs with no risk of the insurer effectively welshing on its protection promise (short of default) would be to shell out $138k over 10 years. Such protection does not come cheap.

Well, the company can't "welsh" on its protection promise because insurance policies are contracts. They can raise rates, but the benefits are still available. That's no different than a health insurance company raising rates every year to cover claims - policies are guaranteed renewable, but they reserve the right to raise rates.

A single pay with TA using the example above would be about $135k, so the 10-pay with 10-year rate guarantee is the best option if you want a 100% guarantee that those are the rates and when you're done with those payments, you don't have to worry about it going forward. I'd still go with the lifetime pay if I were buying a policy myself given the cost difference.

Here's another perspective - a single year in a nursing home is expected to average $220-230k by the year 2030. With a 5% compound inflation rider and $432,000 starting benefit pool, the policy maximum benefit in the year 2030 would be about $1.14 million. That's for six years of benefits. How many people can self-insure against more than $1M in claims without spending every penny they have? If we take that example out to 30 years (age 82) instead of 20, there is a benefit pool of over $1.8M available. IMO, $4k/year is a low price to pay for that kind of protection when there is a very good chance that one or both spouses will need LTC at some point.

If you were to set aside $135k and earned 5% interest, you'd have around $358k by the year 2030. That will buy you about 1.5 years in a nursing home at that point using the assumption above. The average nursing home stay is around three years IIRC. One of my relatives spent 7 years in a nursing home...where would the other 5.5 years of payments come from?

 

[brewer12345]

Spare me the agent-speak. I know full well the math and risks here.

My interest in the limited pay products is quite simple. You cannot defease your LTC potential liability by buying a stadard annual pay policy because the insurer always has the option of jacking rates to the moon. As such, you are still effectively on the hook for these costs via premium increases. In contrast, a single pay policy gives one an up front, firm quote on defeasing this risk once and for all with no wiggle room short of carrier default.

 

[dgoldenz]

Spare me the agent-speak. I know full well the math and risks here.

My interest in the limited pay products is quite simple. You cannot defease your LTC potential liability by buying a stadard annual pay policy because the insurer always has the option of jacking rates to the moon. As such, you are still effectively on the hook for these costs via premium increases. In contrast, a single pay policy gives one an up front, firm quote on defeasing this risk once and for all with no wiggle room short of carrier default.

I agree. Limited pay policies with guaranteed rates are the only way to do that at this point, but at a very high price as you noted. Along the lines of "buy term invest the difference," the interest on $135k could potentially cover most/all of the premiums indefinitely if there were no rate increases. Even in this low interest rate environment, a 10-year fixed annuity is paying about 3.8-4% right now. 4% of $135k = $5400/year, which is a good bit more than the premium itself. Lots of assumptions here obviously....every situation is different.