Interesting article on new LTC study indicating that previous LTC research may have been inaccurate.
Only one out of five men and 1/3 of woman benefit from LTC. Why purchase it?
Fewer Need Long-term Care Insurance | Squared Away Blog
As ClifP mentioned, that study inspired me to write the post about my Dad's experiences.
All of the charts for long-term care are bell curves with fat tails. There is no statistical way to analyze that distribution. (And we saw how well statistics handled the "normalized" investment returns bell curves during the 2008 financial crisis.) Over 10% of the LTC patients are still in care after 10 years-- how can that be?!? The statistics don't apply to the individual.
My Dad's father lived with dementia for nearly 20 years, over 14 of them in a care facility. He died of the flu at age 97. The biggest problems he had were emphysema and dementia. The only reason he died was the flu, and if he'd been in home care then he might even have avoided that.
He had no LTC insurance but he had savings and a decent pension. He was about six months from Medicaid when he died.
My Dad lived alone and fiercely independently with Alzheimer's (in retrospect, quite dangerously) for nearly three years. For at least a year of that he was chronically malnourished. The perforated ulcer was the leverage to get him into a care facility.
Today he's nearly 81 years old and, despite all the physical trauma, extraordinarily healthy. His appetite is back. His blood pressure is under control with Lisinopril, he survived his 2012 chemotherapy for multiple myeloma, he's on a low dose of Lexapro, and he's mobile and articulate. If you met him in a coffee shop, it'd take you 30 minutes of social chitchat to realize that he has dementia. He has certainly used up his quota of luck, but his longevity seems indefinite. He's healthier and happier today than he has been for over a decade. Unless the elder flu or pneumonia get him, or unless Alzheimer's strangles a few critical neurons, he could easily survive for another two decades.
I'm a nuke, so I have a spreadsheet. Even with my ridiculously conservative assumptions, Dad's pension and investment income will pay for at least another decade of care before Medicaid kicks in. Even when his assets are depleted and he "goes on Medicaid", he'll still have about $3600/month of income (in today's dollars) from pension & Social Security.
The only "statistics" which apply to me are my patrilineage and my personal habits. I'm in much better health than Grandpa and Dad, and I'm pretty sure that I can break triple digits. The only question is when my cognition will decline, and it's possible that I'll have that answer in about 25 years. Hopefully later. Or best of all, it never gets a chance to decline.
Today my military pension income is $3566/month. I'll also have Social Security, and with my heritage I'm waiting until age 70 to start it. Who knows-- with telemedicine, self-driving cars, and personal robots then maybe my care expenses will be within my income and I'll never need my assets, let alone Medicaid. As long as the robot can surf, I'll be fine.
If a better policy comes along then I'm willing to reconsider. But first my spouse and I will talk with the claims department and a few of the clients who are getting payouts.
That said, I have the same brand insurance as Nords dad and it is making me nervous.
You should be. I'd like to tell you that other companies do a better job, but John Hancock is one of the largest (if not the largest) LTC insurance companies. My father bought his policy in 1992 from Time, which later was bought by Hancock. So I suspect they've been rolling up the industry-- losing a little on every transaction but planning to make it up on volume.
The worst part of the process has been the tracking burden. I had to wrestle monthly invoices out of the care facility, get them to John Hancock, wait a month for the paper check (which could get lost in the mail), and make sure it got deposited (again by mail). When I eventually got an iPad to read eBooks, I kicked myself for not starting mobile deposit earlier. Hancock finally shifted to electronic deposits but the paper invoices continued.
And then I discovered that nobody had even been tracking the total payments at Hancock. When Dad bought the policy in late 1992, it included 20 years of 5% inflation adjustments with a cap on the total payout. By conventional math (the kind I like to use) the 20th adjustment would have been in late 2012. Yet in late 2013 Hancock actually applied a 21st inflation adjustment to the payments. (In retrospect, they did not raise the cap by 5%.) The net effect was to make the policy reach its cap a little faster, but it proved to me that nobody at Hancock was watching the books. At one point my spouse and I had a discussion about whether Hancock would just keep paying right through the cap, and how much further would we let them go? We decided that we'd only return the money once they woke up and asked for it. Of course that was before they tried to stiff us for the last $6175 out of a $318K payout. They had no documentation to back up their numbers, and it looked as if they were just makin' stuff up.
It's hard to tell whether Hancock is truly that incompetent, or simply breathtakingly negligent, or merely evil.
If you have a chance to exchange your policy then I'd take it. Maybe you should drop it. Better still, describe the claims process to your prospective caregivers and see whether they want to deal with it. My spouse says she'd rather spend the money on us now (while I'm as cognitive as I'll ever be) instead of trying to get it back from an insurance company later.
Everything he says is true and if anything, understated IMO. My mother's experience with the same LTC insurance was probably worse, if anything. After years and years of paying through the nose on her premiums, when she was in her mid 90's the time came for her to make a claim. She had a number of very upsetting phone conversations with them. She couldn't get a dime out of them until she had her grandson (a forceful and high powered NYC attorney) contact them. According to him and my brother, the grandson/attorney said the exact same things she had been saying, but they paid attention to him, not her.
She was lucky that she had a grandson in that occupation who was willing to go to bat for her. What good is insurance if you need to hire an expensive attorney as advocate? Pfft. Plus, it didn't really pay that much anyway IIRC.
I'm self insuring and I will be able to come up with more than the total amount the insurance company would promise to pay (which often isn't much). This way I can avoid dealing with [-]CROOKS[/-] LTC insurance companies when I am at my weakest and most vulnerable.
YMMV but I just don't personally happen to care for these policies.
I think the worst part was when the insurance company acknowledged that he couldn't live safely on his own, but since he could still handle the six activities of daily living then he wasn't eligible for long-term care. Or maybe the worst part was having to pay nearly $4000 to have a neuropsychologist document a conversation with Dad to validate the claim, when it would've cost less to fly the Hancock claims department out to the coffee shop where they could talk with Dad and see for themselves within the first 30 minutes.
At least the neurospych's assessment was also admissible as evidence in probate court for our guardian & conservator's petitions.
One of the arguments I read on M* for LTC insurance was how difficult it might be to manage your money and cash flow to pay for your care if self-insured. And all I could think of was that sounded way easier than riding herd on the LTC insurance company to pay claims.
That's pure fear marketing. You have to manage your money and cash flow whether you're self-insured or fully insured. The only difference is that when the claim pays out then (hopefully) you're managing two different streams of money, but you're getting paid the same amount of hourly wage that you were getting for the first stream...
I am not sure about Missouri. I think you would have to show me.
That humor might have been a little too subtle for some of this group.