LTC providers/resources

[Finance Dave]

Can the group advise as to some providers I could look at? What's the best way to measure their financial strength and longevity....are they rated? I want to pick one that will be around in 40 years....as I'm 50.

Any good articles or websites? (I did do a search here and read about 4 threads already).

I have done some basic research and most sources state that you really don't buy a length and a benefit (such as 4 years x $200/day), but that what you're truly buying is an amount (4 years x 365 days x 200/day = $292,000...so you'd be buying a $300k policy)...and then they are willing to state that amount in any combination of years and $$/day that you'd like...is that true? So for example, a 4 yrs x $200/day policy would cost the same as an 8 year x $100/day policy.

I also know a bit about the ADLs....I've read some on that, but any further advice in that area would be helpful.

Lastly some logistics questions. Do I have to get a physical to be accepted? If so, is it at all beneficial to be "healthy" during the physical? In other words, are your premiums or ability to insure based on things like weight, BMI, glucose levels, Blood pressure, etc?

Thanks in advance for any help. I'm 50, DW is 54, and we're considering buying in the next 2 years or so...want to start narrowing down the field.

Dave

 

[Koolau]

Finance Dave, I'm no expert on LTC, though DW and I have policies that we picked up at age 50. We've had two rather hefty increases in the premiums since that time (just about doubling the original premiums.) Increased premiums HAVE been discussed quite a bit here.

So, to your other points: I just pulled out my policy, and, sure enough, the total benefit happens to be $291K. (In my best imitation of Johnny Carson) "I did not know that."

Regarding underwriting: Yes, there is underwriting. IIRC, it was pretty extensive: blood work, height, wt, medical history (with permission to check your medical files, etc.) ekg for me due to murmur, etc. etc. Pretty much what you would expect for a Life Ins. policy, really. DW was "rated" due to recent cancer experience at the time. Don't know if we would be able to have that revisited due to her long survival (wooohooo!). My guess is that it would mean taking out a new policy which would be MORE, not less expensive.

All insurance carriers DO have ratings, much like bonds IIRC. Don't recall much about them, but you should let Google be your friend, here. My feeling is that (with the caveat about life being a crap shoot) you should pick a "known" company with an above average rating who has the best rates you can find. Check their history of rate increases and dig into their "complaints". Don't know how to do all of this, but I know it is doable.

A more important question might be the philosophical one about whether you need LTC insurance. I'm a belt and suspenders guy or I would probably self insure, based on my ER stash. There supposedly is a sweet spot where you can protect your limited assets with insurance or go naked if you have lots of assets. Don't recall the figures, but that's also available someplace.

I think keeping in mind that figure of $292K really puts this all in perspective. If you think of the policy that way, you may swing one way or the other on the question of whether you need it or not.

Again, I am absolutely NOT an expert. I just bought the product and have been both reassured by it and royally pi$$ed off about the premium hikes. SO, as always, YMMV.

 

[52andout]

I hope more people chime in- I have another question about single policy long term care insurance. From everything I can research, it sounds to me more like a whole life or annuity that you can use to pay your long term care.

I hope someone knows about this as my friend is almost ready to sign the papers and I think it doesn't sound like a very good idea. She didn't know questions like does the broker get a fee? Is there a cap on total benefits etc. I hope you can direct me as well to some good info on this, she doesn't have a lot of money and I think this could be a bad mistake for her. I told her my gut instinct was this was not a good idea, but she needed to research every nook and cranny of the policy.

In order to also answer the OP questions, what would you ask of someone who was trying to sell a long term care policy to you.

I can think of
do you get a commission?
how can the policy change (ie. higher commissions, lower benefits, premium increases if not a single payment) and under what circumstances? Are these changes in the policy tied to an index, or expenses or what?
for single payment policies what happens if you decide to cancel before say 5 years? 10 years? Do you get any money back?
if you die without using it even one day does any of your money go to your estate or spouse?

 

[Brat]

About 15 years ago DH & I purchased a paid up in 10 years from Allianz. Brewer may have an opinion as to whether or not they are likely to be good for the long run.

 

[MissMolly]

FinanceDave
We recently signed up for LTCI with Genworth. Basically, the answer to all your questions are "it depends". It depends on what options you choose. You choose a certain number of $$ per day for a certain number of years and that gives you a pool of money to draw from. So, although you have a maximum amount of $$ per day they will pay, if the amount per day is less, you have more years. You can choose an inflation rider or not. You can choose how often the inflation kicks in - 3 years, 5 years, whatever. You choose how much inflation - 3%, 5% or even 0%. If you are married you can choose to share the policy with the spouse. For instance, you buy 8 years of coverage. One spouse can use 6 years and the other spouse has 2 years available to them (although with Genworth you are guaranteed at least 50% coverage even if the spouse used more than 50%). And on and on. I will try to attach our brochure which I think does a pretty good job explaining things. I had to sort of squish the brochure into a format that was small enough for upload. I hope you find it helpful.

 

[tightasadrum]

A more important question might be the philosophical one about whether you need LTC insurance. I'm a belt and suspenders guy or I would probably self insure, based on my ER stash. There supposedly is a sweet spot where you can protect your limited assets with insurance or go naked if you have lots of assets. Don't recall the figures, but that's also available someplace.

The number I remember when researching LTC insurance several years ago was, if you have over $2.5MM in assets, you self-insure. There was also a low number which meant you just didn't bother to insure, Uncle Sugar will take care of you, just not in a manner you have become accustomed. If you're in the middle, get LTC insurance.

 

[Koolau]

I hope more people chime in- I have another question about single policy long term care insurance. From everything I can research, it sounds to me more like a whole life or annuity that you can use to pay your long term care.

I hope someone knows about this as my friend is almost ready to sign the papers and I think it doesn't sound like a very good idea. She didn't know questions like does the broker get a fee? Is there a cap on total benefits etc. I hope you can direct me as well to some good info on this, she doesn't have a lot of money and I think this could be a bad mistake for her. I told her my gut instinct was this was not a good idea, but she needed to research every nook and cranny of the policy.

In order to also answer the OP questions, what would you ask of someone who was trying to sell a long term care policy to you.

I can think of
do you get a commission?
how can the policy change (ie. higher commissions, lower benefits, premium increases if not a single payment) and under what circumstances? Are these changes in the policy tied to an index, or expenses or what?
for single payment policies what happens if you decide to cancel before say 5 years? 10 years? Do you get any money back?
if you die without using it even one day does any of your money go to your estate or spouse?

Wonder where dgoldenz is. Probably got tired of getting beat up every time he offered some free insurance advice. Always considered him a good source even though he was in the bidness. I've never revealed my Megacorp's products for the same reason. Too many folks can't deal with anyone making a profit by making/selling something that folks actually need (think oil, but it ain't oil). But, I digress.

Once again, not an expert but a purchaser: If your friend has relatively limited funds, the advice I have READ is that s/he does not need LTC insurance. This is because the premiums are a large part of his/her funds and s/he should use those funds for less speculative things (food, living, stocks, etc.) rather than on insurance. If s/he runs out of money after entering a nursing facility, Medicade will most likely keep him/her there.

Now, if s/he has a moderate amount of money, it may be worth while to put off some of the risk onto an insurance company. That becomes a personal decision to wrestle with. I've come down on the side of insuring, but a good case can be made for not insuring. Belt and suspenders, baby, belt and suspenders.

Yes, most insurance companies use sales people who receive a commission. I personally do not find that a "bad" thing per se. But it does provide an incentive to over sell or sell the wrong product. I do not know if there are any LTC policies which can be purchased via the internet or other "free" (no load) source. I doubt it, but never looked. In any case, one would still need to go through underwriting.

I know my policy does NOT return anything if it is never used.

My policy has an inflation rider (set at 5% per year IIRC) and yes, you pay for that.

Don't know your friend's age, but we signed up at age 50 and our current premiums are in the $1800/year/each range. If you are older at sign up, those premiums are higher IIRC.

Interesting concept you mention about an annuity. It would be cool if you could design an annuity something like this: You hand the insurance company a pile of money. They give you a piece of paper allowing you to begin taking payments at any time. The sooner you take the payments, the lower the monthly amount. So, at age 50, you give them the pile of cash, and then, let's say at 75, you need to go into nursing care. At THAT point, you contact the insurance co. and they start making the appropriate payments to you either for life (or preferably, for four years if such a thing is possible -- that would make it equivalent to pretty much the "best" LTC policies I think.)

No idea if such a vehicle exists. I would think an SPDA could be "used" that way, but I doubt it could be set up for 4 years pay out. Maybe??. It would favor starting early and getting sick later, but that's not such a bad bet for most of us. Think I would pursue that if I were still in the market for LTC insurance.

Remember: YMMV.

 

[Koolau]

While I was waxing verbose, I see MissMolly and tightasadrum gave some more terse and to the point advice regarding at least part of what i was trying to say.

 

[REWahoo]

Wonder where dgoldenz is. Probably got tired of getting beat up every time he offered some free insurance advice.

He was logged in yesterday, so he's around. I think he's got a pretty thick hide.

 

[tightasadrum]

Ha..Usually it's ME that is too "verbose."

 

[misanman]

I believe there may be insurance policies that have a LTC benefit. You buy a policy for a face amount and it either pays off when you die or you can draw against it to pay for LTC. That's all I know but I imagine it could be relatively expensive.

 

[brewer12345]

I hope more people chime in- I have another question about single policy long term care insurance. From everything I can research, it sounds to me more like a whole life or annuity that you can use to pay your long term care.

I hope someone knows about this as my friend is almost ready to sign the papers and I think it doesn't sound like a very good idea. She didn't know questions like does the broker get a fee? Is there a cap on total benefits etc. I hope you can direct me as well to some good info on this, she doesn't have a lot of money and I think this could be a bad mistake for her. I told her my gut instinct was this was not a good idea, but she needed to research every nook and cranny of the policy.

In order to also answer the OP questions, what would you ask of someone who was trying to sell a long term care policy to you.

I can think of
do you get a commission?
how can the policy change (ie. higher commissions, lower benefits, premium increases if not a single payment) and under what circumstances? Are these changes in the policy tied to an index, or expenses or what?
for single payment policies what happens if you decide to cancel before say 5 years? 10 years? Do you get any money back?
if you die without using it even one day does any of your money go to your estate or spouse?

Every one of these things generates a commission, so I would not even bother asking.

The way these combo policies work is that you buy, say, a fixed annuity for 250k with a LTC rider that gives you up to 500k of LTC coverage. If you use the LTC coverage, it usually eats your cash value first and then eats into the remaining guarantee provided by the rider. If you never use the LTC cover, then you get whatever cash value the annuity accumulates.

I see a couple of issues here. First, you typically get a fixed amount of LTC benefts and I think most of these policies do not include inflation protection. Second, you pay up for the rider and the cost is not fixed. If the insurer is not getting enough premium to pay for the benefits they can jam you with rate increases for the rider just like they can with a stand-alone LTC policy.

 

[Ally]

We just bought Genworth for my husband. They rejected me. Had they accepted both of us, you could choose a provision that if the first spouse died without using it, the second spouse would no longer have to pay a premium. It would have cost about $28 a mo more.

We chose a policy with inflation protection, in the sense the benefit increases by 4 percent each year. It costs more, but not too much- maybe $25?

I am appealing my decision, but am doubtful. I have kidney disease that is stable, but nevertheless it has the potential to be a problem.

If you look into it, ask if you state has a partnership program. What that does is if you have an approved policy, and use it for the first spouse, then the second spouse is able to shelter a great deal of their money from Medicare. Google LTC and partnership program. It's hard to explain, but is worthwhile.

 

[Nords]

We chose a policy with inflation protection, in the sense the benefit increases by 4 percent each year. It costs more, but not too much- maybe $25?

My father paid premiums on his LTC policy for nearly 18 years, and the inflation rider has turned out to be by far the most valuable component. It's nearly doubled the duration of the payout as well as covering the monthly expenses.

 

[panacea]

Can the group advise as to some providers I could look at? What's the best way to measure their financial strength and longevity....are they rated? I want to pick one that will be around in 40 years....as I'm 50.

Any good articles or websites? (I did do a search here and read about 4 threads already).

I have done some basic research and most sources state that you really don't buy a length and a benefit (such as 4 years x $200/day), but that what you're truly buying is an amount (4 years x 365 days x 200/day = $292,000...so you'd be buying a $300k policy)...and then they are willing to state that amount in any combination of years and $$/day that you'd like...is that true? So for example, a 4 yrs x $200/day policy would cost the same as an 8 year x $100/day policy.

I also know a bit about the ADLs....I've read some on that, but any further advice in that area would be helpful.

Lastly some logistics questions. Do I have to get a physical to be accepted? If so, is it at all beneficial to be "healthy" during the physical? In other words, are your premiums or ability to insure based on things like weight, BMI, glucose levels, Blood pressure, etc?

Thanks in advance for any help. I'm 50, DW is 54, and we're considering buying in the next 2 years or so...want to start narrowing down the field.

Dave

There are several rating agencies out there but I think you have to pay for a membership (I think Weiss is supposed to be a reliable source). I'm not an insurance specialist but I work with some and have heard that some of the stronger ones include Genworth, Northwestern Mutual and John Hancock... apparently these are some that are more likely to be around when it's time to make a claim.
I believe you can buy a LTC policy with either a specific daily benefit or by amount, as you described. Can't think what this option is called.
As far as ADLs, I think most policies kick in after you are unable to perform 2 activities (dressing, eating, etc.) on your own.
Definitely required to go through lots of testing... unhealthy can mean much higher premiums or denial.
One thing I've concluded is that these insurance "specialists" don't seem to look at the big picture at all... at least the ones I've dealt with. They seem to be trained to tell you how much of a daily benefit you'd need based on the potential future cost of care and then recommend that you get enough to cover that amount. Mr. customer, given the cost of care in this area you should start with a daily benefit of $250, and we'd also recommend a lifetime policy. Wait a minute, you didn't even ask any questions about how much I have in savings, or how much my Social Security is, or if I have a pension. I don't know how they can come to any reasonable conclusions without asking some basic questions.
One piece of advice I've come across a few times is that the optimal time for most to consider buying coverage, if they need it at all, is around late 50s. Buying too young means you may be paying for coverage too long unnecessarily and waiting too long means your premiums could be too high or you may not qualify due to health issues. However, if there's a history of a specific illness or disease in the family (for example Alzheimers) I would apply sooner (maybe early to mid 50s??). Oh, one other thing... I think the elimination period can make a big difference with the cost. This is the period of time you have to wait for benefits to begin after you make a claim. I think most agents argue for a shorter elimination period (like 90 days), but it seems to me a longer period would make more sense to keep the cost down. In my case, if I buy it, it'll be for catastrophic coverage and I should have plenty set aside to cover a year's worth of costs on my own. Not entirely sure about that one, but the answer feels right. Anyone else have thoughts on that issue?

 

[MissMolly]

We just bought Genworth for my husband. They rejected me. Had they accepted both of us, you could choose a provision that if the first spouse died without using it, the second spouse would no longer have to pay a premium. It would have cost about $28 a mo more.

We chose a policy with inflation protection, in the sense the benefit increases by 4 percent each year. It costs more, but not too much- maybe $25?

I am appealing my decision, but am doubtful. I have kidney disease that is stable, but nevertheless it has the potential to be a problem.

If you look into it, ask if you state has a partnership program. What that does is if you have an approved policy, and use it for the first spouse, then the second spouse is able to shelter a great deal of their money from Medicare. Google LTC and partnership program. It's hard to explain, but is worthwhile.

Your comment regarding the partnership program is certainly one to consider. Kentucky, where I live, participates in the program. What this means, is that if you have LTCI and you use up all the insurance available under the policy and are then forced to turn to Medicade (not Medicare) then an amount equal to the amount of insurance funds you received is protected and and not taken into the calculations to see if you qualify for Medicade. In otherwords, if you used up $500,000 in LTCI and then went on Medicade, you would be able to retain $500,000 in your accounts instead of being required to pay down to $2,000 before qualifying for Medicade. You would then still have assets to pass on after your death.

 

[brewer12345]

There are several rating agencies out there but I think you have to pay for a membership (I think Weiss is supposed to be a reliable source).

Rating agencies I would look at are Moody's, S&P and AM Best. All three will give you the rating of any issuer they cover. Most insurers list their ratings on their own websites as well. I personally would not purchase a long term insurance policy from an insurer rated less than Aa3 (Moody's), AA- (S&P), or A (AM Best). I purposely bought our life insurance policies from a Aaa-rated insurer that remains so rated even after the financial crisis.

 

[Koolau]

I believe there may be insurance policies that have a LTC benefit. You buy a policy for a face amount and it either pays off when you die or you can draw against it to pay for LTC. That's all I know but I imagine it could be relatively expensive.

Actually, I have one of those policies - took it out 20+ years ago when I was young and stupid (okay, just stupid). It is a $50K "whole life" policy which can be used if one is in need of LTC. I am reasonably certain it IS way overpriced, but it does have cash value (love that or hate that, it is cash one can access in an emergency). I had not mentioned it before as it is nothing like LTC in principle. I do NOT recommend such a policy, but it did come out WAY before LTC insurance became popular. So, even though stupid, I was ahead of my time in preparing for my dotage. YMMV

 

[52andout]

wanted to clarify that I know there is a fee, but my friend goes to a financial planner who charges a lot of fees and I really wanted her to be clear what charges she will pay up front.
I don't have a problem paying fees for some things as long as you know what fees you pay and agree to them. Kinda like mutual funds, with loads and expenses etc. it's all about being informed and agreeing to it.

Actually the policy sound like a one payment whole life now that I think about it.
Good idea to ask about inflation protection.

 

[panacea]

Rating agencies I would look at are Moody's, S&P and AM Best. All three will give you the rating of any issuer they cover. Most insurers list their ratings on their own websites as well. I personally would not purchase a long term insurance policy from an insurer rated less than Aa3 (Moody's), AA- (S&P), or A (AM Best). I purposely bought our life insurance policies from a Aaa-rated insurer that remains so rated even after the financial crisis.

Good point about checking the company websites. For the ones that don't post their rating, I think it's safe to say their ratings probably aren't very strong and are not worth pursuing.

 

[Ally]

The agent I used was able to give us all the ratings and financial strength of the top 5 or 6. He also gave their history of rate increases. One reason we choose Genworth was that they have tons of experience, raised rates less than than some, and they have a provision where you can use relatives or individuals for home health care. Most of the others required using an agency. I asked an unbelievable number of questions before we decided.

 

[Col. Klink]

To LTCI or Not to LTCI?

From the perspective of a Nursing Home Administrator, we love to welcome new residents with LTC insurance. It ensures that we have a secure payer source for and extended period of time, However, I am personally unsure whether I would purchase it for myself. Here are my considerations:

1. The cost of LTCI is high and like life insurance, it is rated based on your medical history.
2. Most short-term LTC stays for an orthopedic procedure or caridiac are of a short duration (<21 days) and are payable under Medicare or a Medicare Advantage program.
3. If my family or that of DW had a history of Alzheimer's or other dementia, I would be more likely to buy. The end game here almost always ends in a long term stay in the nursing home as the ADLs fail. It is very difficult to care safely for one with advanced dementia in the home. It is brutal on the caregiver.
4. The Centers for Medicare and Services is working diligently to provide for services in the home through programs called PACE. Nursing homes are closing across the country and those that remain will likely be non-profits. Most LTCI policies pay for in-home-care services. Yet, am I getting the full value that I paid for when buying the LTCI?? Medicare also pays for in-home-care services. The qualifications for long-term nursing home care will be more oriented to a dementia population and a limited number of other chronic illnesses that are difficult to handle in a home setting?? The chances of any of us ending up long-term in a nursing home in twenty years will be significantly less than it is today.

Anyway, that is what I am thinking about as I consider LTCI.

 

[Nords]

It is brutal on the caregiver.
The chances of any of us ending up long-term in a nursing home in twenty years will be significantly less than it is today.
Anyway, that is what I am thinking about as I consider LTCI.

My spouse has assured me that my chances of ending up in a nursing home are practically zero...

Although you make good points, I think many buy LTC insurance for the peace-of-mind reassurance that they're covered for catastrophic events. Unfortunately the insurance companies have demonstrated that their actuarial assumptions were almost as catastrophic as the events, and that negates the value of the insurance until the insurers get it right. By then it'll be as unaffordable for everyone as earthquake insurance in California.