Another long term care insurance question

[bclover]

I did not want to hijack the other thread so I apologize if this is redundant.

Yesterday I met with an insurance agent about Long term care insurance. basically just wanted to get some quotes, doing my annual "state of the affairs" thing.

Anyhoo, a couple of things left me squirming.

1) agent wanted my entire financial history. assets (can I get a copy of statements. humm no) copies of current life insurance policy. I just didn't understand why she would need all that to give me a quote.

2) I'm 57 and the premiums, I thought were pretty high. ranging from 380.00 month to 1200 a month.

3) she suggested a "hybrid" policy where I would pay 10K for 10 years.
that would get me 7500 month for 24 months. total maximum of ~176K but if I didn't use it, it could be used as a life insurance policy.


so my pea brain started thinking if I were going to spend 100K, why not get an annuity that would grow a little cash, I could direct the funds myself and cut out the middle man.

pitfalls/thoughts.

 

[Blue Collar Guy]

3) she suggested a "hybrid" policy where I would pay 10K for 10 years.
that would get me 7500 month for 24 months. total maximum of ~176K but if I didn't use it, it could be used as a life insurance policy.



pitfalls/thoughts.

So you would get 180k worth of coverage for 100k. Im not capable of doing the calculations but at 57 years old, putting 10k a year into a 70/30 portfolio might come out ahead by the time if/when you need the nursing home. IDK but its a thought. One of the smarter than me folks can run this for you.


Does this policy have a 90 waiting period? that makes a big difference too?

 

[Senator]

Does this policy have a 90 waiting period? that makes a big difference too?

Most of them do. Medicare covers most of the expenses for the first 90 days. 100% of the expenses for the first 30 days.

 

[MichaelB]

Most of them do. Medicare covers most of the expenses for the first 90 days. 100% of the expenses for the first 30 days.

The OP is asking about long term care. Medicare only covers a nursing home if it follows a minimum 3 day hospital stay and skilled nursing is required.

1) agent wanted my entire financial history. assets (can I get a copy of statements. humm no) copies of current life insurance policy. I just didn't understand why she would need all that to give me a quote.

My guess is all that financial data is needed so the agent can determine what else she call sell to you.

 

[mathjak107]

the hybrids are poor deals for a lot of reasons .

as michael kitce's found:

Executive Summary
As traditional long-term care (LTC) insurance becomes more and more expensive, and interest rates remain at ultra-low levels, planners and their clients have become increasingly interested in so-called “Hybrid LTC” policies that match together a life insurance or annuity policy with LTC coverage, especially with a more favorable set of tax rules that took effect in 2010. For many, though, the primary appeal of hybrid policies is the simple fact that, unlike their traditional LTC insurance brethren, the premiums really are guaranteed and cannot be increased in the future. Given some of the extraordinarily large premium increases that traditional LTC coverage has experienced in recent years – especially for some of the early policies issued in the 1990s and early 2000s – a cost guarantee is remarkably reassuring.

Yet the reality is that the guarantee of LTC premiums in a hybrid policy may be entirely offset by the fact that the insurance company controls the cash value, and is under no obligation to pay a going rate of return, especially if interest rates rise. In other words, it doesn’t really matter that the insurance company can’t increase the premiums on the policy by $4,000/year, when the company can simply under-pay on the interest rate by $4,000/year to accomplish the same result! And while the cash value of a hybrid LTC policy generally does remain liquid, taking a withdrawal to reinvest to get better, higher rates would entail surrendering the policy and forfeiting the LTC coverage! In fact, for some types of hybrid LTC policies, the arrangement contractually provides no rate of return to the client at all, and is essentially the equivalent of the client selling a call option on interest rates to the insurance company, where the more rates rise the greater the company wins at the expense of the client!



https://www.kitces.com/blog/is-the-...-annuityltc-insurance-policies-just-a-mirage/

 

[rodi]

My guess is all that financial data is needed so the agent can determine what else she call sell to you.

That was my first thought, also.

 

[Senator]

The OP is asking about long term care. Medicare only covers a nursing home if it follows a minimum 3 day hospital stay and skilled nursing is required.

My father went into a nursing home after a stroke, so that qualified for the 90 days of medicare.

When he was in the nursing home, he attempted to walk out and go home. He fell down the stairs and went to the hospital. He got another 90 days.

So, there is an alternate plan for someone wanting to get the 90 days of assistance. Fall down the stairs. Ideally, every 3 months.

 

[Blue Collar Guy]

My father went into a nursing home after a stroke, so that qualified for the 90 days of medicare.

When he was in the nursing home, he attempted to walk out and go home. He fell down the stairs and went to the hospital. He got another 90 days.

So, there is an alternate plan for someone wanting to get the 90 days of assistance. Fall down the stairs. Ideally, every 3 months.

LOL, I wonder if the teach this tactic at the medicaid for millionaires seminar?

 

[meierlde]

My father went into a nursing home after a stroke, so that qualified for the 90 days of medicare.

When he was in the nursing home, he attempted to walk out and go home. He fell down the stairs and went to the hospital. He got another 90 days.

So, there is an alternate plan for someone wanting to get the 90 days of assistance. Fall down the stairs. Ideally, every 3 months.

Note the 90 days can be terminated early if it is determined that no progress is being made towards recovery. If the various therapists don't think progress is being made the Medicare funding stops.

 

[MichaelB]

I did not want to hijack the other thread so I apologize if this is redundant.

Yesterday I met with an insurance agent about Long term care insurance. basically just wanted to get some quotes, doing my annual "state of the affairs" thing.

Anyhoo, a couple of things left me squirming.

1) agent wanted my entire financial history. assets (can I get a copy of statements. humm no) copies of current life insurance policy. I just didn't understand why she would need all that to give me a quote.

2) I'm 57 and the premiums, I thought were pretty high. ranging from 380.00 month to 1200 a month.

3) she suggested a "hybrid" policy where I would pay 10K for 10 years.
that would get me 7500 month for 24 months. total maximum of ~176K but if I didn't use it, it could be used as a life insurance policy.

Do you need life insurance? If no one depends on you financially, it doesn't sound like something that has value to you. By offering this hybrid policy, you pay for something you don't need, and you can't clearly see the price for the thing you're interested in.

so my pea brain started thinking if I were going to spend 100K, why not get an annuity that would grow a little cash, I could direct the funds myself and cut out the middle man.

pitfalls/thoughts.

You're on to something here. If you can afford the $10K per year for the next 10 years, it does sound like you might have enough to fund your own needs, especially of your health is good. Is an annuity the right option? Probably not, because you cnnot control the timing. You might be better off with a lower risk allocation fund, like Wellesley, that will grow faster than inflation and allow you to withdraw based on your needs.

 

[Senator]

Note the 90 days can be terminated early if it is determined that no progress is being made towards recovery. If the various therapists don't think progress is being made the Medicare funding stops.

Maybe so, but the initial period already stopped because he was not gaining progress fast enough prior to the fall. He got the second full 90-days after the fall. Maybe it takes several weeks to determine if progress has stopped? Improvement doesn't actually have to stop, just not progress as fast as they want. His brain progressed for many years, just not physically.

After the fall, he had another 30 days free, and 60+ at $99 a day. His cost was ~$6K a month, so it saved ~$12K.

After the 12 month look back period to go into the VA nursing home was passed, he went to the VA home. The VA only had a 1-year look back period. Not the five years like medicaid. I waited about six months to put him on the waiting list, to make sure his number was not called prior to 12-months.

I asked my DGF is she wanted to marry my dad to avoid some of the asset forfeitures and look back period, and we discussed the ramifications, but decided against it. At the time, we were thinking the marriage would save ~$50K or more. Knowing my dad, he would have expected more... His GF at the time of the stroke was younger than me.

My main regret is that I did not buy my father a new truck before he went into the VA nursing home. He would have been able to make payments on that, and only pay what was left of his pension after the truck payment to the VA home.

 

[Scuba]

My father went into a nursing home after a stroke, so that qualified for the 90 days of medicare.



When he was in the nursing home, he attempted to walk out and go home. He fell down the stairs and went to the hospital. He got another 90 days.



So, there is an alternate plan for someone wanting to get the 90 days of assistance. Fall down the stairs. Ideally, every 3 months.

[emoji23]

 

[target2019]

The OP is asking about long term care. Medicare only covers a nursing home if it follows a minimum 3 day hospital stay and skilled nursing is required.


My guess is all that financial data is needed so the agent can determine what else she call sell to you.

My first thought as well, Michael.
I'd seek other agents and request quotes.

 

[gayl]

the premiums, I thought were pretty high. ranging from 380.00 month to 1200 a month.

3) she suggested a "hybrid" policy where I would pay 10K for 10 years.
that would get me 7500 month for 24 months. total maximum of ~176K ... so my pea brain started thinking if I were going to spend 100K, why not get an annuity that would grow a little cash, I could direct the funds myself and cut out the middle man.

pitfalls/thoughts.

I'm the last one who should answer this bc I'm self-funding for that reason ... $1200m (what I was quoted at a "luncheon") × 12 months × 10 yrs = 144k b4 compounding. And how would this benefit me?

 

[travelover]

..........I asked my DGF is she wanted to marry my dad to avoid some of the asset forfeitures and look back period...........

Aren't you the guy always railing against the abuses of the system by the poor?

 

[Senator]

Aren't you the guy always railing against the abuses of the system by the poor?

I doubt it. If the system exists, and people use it to their advantage, it's not the people's fault. I don't like systems I have to pay for, but it's not the people's fault.

I also take every advantage I can get.

 

[FREE866]

So, there is an alternate plan for someone wanting to get the 90 days of assistance. Fall down the stairs. Ideally, every 3 months.

LOL man that was good.....

To the OP Im so so dubious of any type of insurance products..the amount of hidden costs in those things is downright criminal