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Old 11-19-2018, 05:05 AM   #21
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I had previously suggested life insurance. You can buy a "first to die" policy.

Unlike a LTC policy, you get a payoff for certain with a life insurance policy. I like this better than LTC and the ethics-challenged options.

It is a tough issue for sure. Policies should be getting cheaper with higher interest rates but of course more expensive as we age.

As others have pointed out, a key is determining how much coverage you need above and beyond then-current spending. Which means you have to predict LTC rates, how much you time you need, etc.

At least with life it will eventually pay off.
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Old 11-19-2018, 07:09 AM   #22
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Life expectancy of someone with Alzheimer’s is 8-10 years. At 80 yo Mom is on year 3, we expect at least a few more. She was blessed with an unlimited term LTC plan that reimburses $3k per month, cost of facility is $4500 per month in the Midwest (low cost of living area). Her husband was killed in a car wreck and he had been providing some of her in home care. She will likely go into a memory care unit before long and the cost goes up from there. All this is to say, be careful of having any confidence in the 3 year ‘rule’. Go ask some people that work at your local assisted living facility and see what they have to say.
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Old 11-19-2018, 08:09 AM   #23
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All this is to say, be careful of having any confidence in the 3 year ‘rule’. Go ask some people that work at your local assisted living facility and see what they have to say.
Sure. I don't think it's a rule however but your story also implies that to bring a 3 year average some people last only a few months. There will always be people at both ends of the average.

My uncle for one was in LTC for only 2 months before he passed. Another friend was in LTC for 6 months.
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Old 11-19-2018, 08:16 AM   #24
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This is a few years old but illustrates the distribution of length of stay.
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Old 11-19-2018, 08:31 AM   #25
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This is a few years old but illustrates the distribution of length of stay.
Great chart!

If these were casino numbers I'd be playing those odds.
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Old 11-19-2018, 09:44 AM   #26
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Great chart!

If these were casino numbers I'd be playing those odds.
If "playing the odds" really means "hoping my luck isn't worse than average," then I guess that's what most people end up doing. But I wouldn't call it much of a plan. That's not a criticism, this is a tough problem and the insurance industry has truly failed us. Their past screw-ups make it impossible to trust them going forward. In my opinion.
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Old 11-19-2018, 10:03 AM   #27
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My in-laws divorced and this has worked well for them. She is a retired teacher and gets a decent pension plus SS. Not enough to live a lavish lifestyle, but enough to rent a small cottage and fund her other expenses. FIL has only SS as income. Neither of them have much savings - no IRA’s and just a small taxable portfolio. If she had paid market rate for his LTC, they would both have been destitute quickly. Instead they divorced and his SS plus Medicaid funds his LTC. She buys clothes and incidentals for him out of her income.

I realize their situation is very different than most on this board. They never had an investment portfolio and like many in their generation, retired based on pension and SS income. They’re in their 80’s and I think the divorce solution was really their only viable option. Better for them, and better for society that she can support herself indefinitely vs both of them depending on government funding to survive.
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Old 11-19-2018, 10:14 AM   #28
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If "playing the odds" really means "hoping my luck isn't worse than average," then I guess that's what most people end up doing. But I wouldn't call it much of a plan. That's not a criticism, this is a tough problem and the insurance industry has truly failed us. Their past screw-ups make it impossible to trust them going forward. In my opinion.
Isn't that what we do when we run FireCalc and say, "Gosh, I have a 95% probability that my money won't fail to last my lifetime. Time to plan the 6 week trip to Lower Slobovia and see the sights."

I would love to find certainty in the LTC Insurance market at a price I that allows me to enjoy my life. Alas, for this person, it's not possible today.
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Old 11-19-2018, 10:21 AM   #29
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I don't think I follow you.

- Why buy the annuity at 75? If you don't otherwise need the annuity, you could wait until you You could wait until the person starts needing care to buy it (the annuity provider shouldn't care that the person is sick, they should be happy).
-
I guess I did not make myself clear. My apologies.

I meant buy a deferred annuity in one's 60's or even 50's, that starts at about 75. Use the premium money one does not pay for LTC insurance to partially offset the cost of the deferred annuity. Then at 75 the payments could help with LTC costs, if necessary, OR be invested to help pay for future LTC costs, OR spend part of it on wine, women and song and waste the rest.
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Old 11-19-2018, 04:43 PM   #30
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I guess I did not make myself clear. My apologies.

I meant buy a deferred annuity in one's 60's or even 50's, that starts at about 75. Use the premium money one does not pay for LTC insurance to partially offset the cost of the deferred annuity. Then at 75 the payments could help with LTC costs, if necessary, OR be invested to help pay for future LTC costs, OR spend part of it on wine, women and song and waste the rest.
If I understand this strategy, it appears it shares one of the weaknesses of a LTC policy: it may be a lot of money down the drain if the annuitant passes before it begins to pay out.

It is also little help if it is needed at 68.

Apologies if I am missing something.

I think life insurance may be a better bet here.
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