livingalmostlarge
Recycles dryer sheets
- Joined
- Feb 8, 2014
- Messages
- 334
Who has long term care insurance? When did you get it? What does it cost? What does sit cover? A friend ever suggests I get it today.
My husband and I purchased policies 5 to 6 years ago. The cost varies greatly based on the benefits selected and age at purchase. Our policies are for 4 years of care each with a 2014 reimbursement rate of $215/day, a 5 percent annual COLA increase and a 90 day elimination. We also have a rider granting flexible use of the benefits for in home care and even the ability to take 40percent payments with no receipts required once qualified. The premium stayed the same for 6 years-about $2,800/pp per year. We were 60 when we purchased them.
Since we purchased the policies most major insurance companies have stopped selling them including our issuer. This week I received a letter from the carrier informing us that our premiums would increase by 40 percent over the next three years, starting with a15 percent increase this year. The reason for the huge increase is the insurance companies gross underestimate of the volume of claims combined with historically prolonged low interest rate environment. State insurance departments require that insurance companies reserve a high percentage of premiums to guarantee the money is available to cover claims. Companies have to justify rate increases and get approval from State's before increases are levied. My insurance agent told me that a comparable policy on the market today would cost over $6,000 per person.
Is the maximum payout $215 X 365 X 4 = $313,900 (using today's dollar)? Not counting COLA just to make the math simpler.
If a 60 year old purchasing today and live a long life till 90, the premium would be $6000 X 30 = $180,000.
Is this how that works? If one thinks longevity is in the genes, it might be better just self-insure. At least that is my plan for now.
My husband and I purchased policies 5 to 6 years ago. The cost varies greatly based on the benefits selected and age at purchase. Our policies are for 4 years of care each with a 2014 reimbursement rate of $215/day, a 5 percent annual COLA increase and a 90 day elimination. We also have a rider granting flexible use of the benefits for in home care and even the ability to take 40percent payments with no receipts required once qualified. The premium stayed the same for 6 years-about $2,800/pp per year. We were 60 when we purchased them.
Since we purchased the policies most major insurance companies have stopped selling them including our issuer. This week I received a letter from the carrier informing us that our premiums would increase by 40 percent over the next three years, starting with a15 percent increase this year. The reason for the huge increase is the insurance companies gross underestimate of the volume of claims combined with historically prolonged low interest rate environment. State insurance departments require that insurance companies reserve a high percentage of premiums to guarantee the money is available to cover claims. Companies have to justify rate increases and get approval from State's before increases are levied. My insurance agent told me that a comparable policy on the market today would cost over $6,000 per person.
I stared a thread a few years ago about our LTC premium experience. Here is the most recent update - a 50% premium increase for the year: http://www.early-retirement.org/forums/f28/ltc-insurance-premium-surprise-49854-4.html#post1407573
I stared a thread a few years ago about our LTC premium experience. Here is the most recent update - a 50% premium increase for the year: http://www.early-retirement.org/forums/f28/ltc-insurance-premium-surprise-49854-4.html#post1407573
I'll let you be the judge. Here is the wording for the policy regarding premiums:... is the policy you purchased a level premium type or the type that is designed to increase as you age...
Guaranteed Renewable for Life/Premiums Subject to Change
Your policy will remain in effect during Your lifetime until the Maximum Lifetime Benefit has been paid, as long a each premium is paid on time. We cannot cancel or refuse to renew Your policy. We cannot change Your policy without Your consent. However, We may change the premium rates. Any change will apply to all policies in the same class as Yours in the state where the policy was issued.
I'll let you be the judge. Here is the wording for the policy regarding premiums:
I don't follow how that guarantee is of much value, if any.
The only guarantee I thought had substantial value was the initial 10 year guarantee of premium.
In every insurance purchase, you pays your money and you takes your chances. As I pointed out in the post linked above, the insurance continues to be worth keeping for now even after the big increase which amounts to an increase of 3% compounded annually over the 14 years we've had the policies. The new annual premium is still only $875, a real bargain when I see what others are paying for similar policies.
And as I also posted, our decision to keep the policies may change should the rates continue to climb or if our net worth stays healthy as we get older and we feel we can self-insure. Similar to dropping collision and comprehensive on an older vehicle...
That depends on the company, when Metlife raised my rates, the offered a LTC policy that would pay the amount of premiums paid to that time if one canceled. This I think was a good deal, sort of the equivalent of converting a whole life policy to a paid up one with lesser values if one were to stop paying the premiums. The insurance company still has both the time value of the money, as well as the chance you may not need the insurance, so its a good deal for them also.If rates go up and you decide to cancel, do you get any of your premiums back given that you filed no claims? Or is it all lost?
Very true. Far more likely a wage earner will become disabled than need long term care.The OP is young and has small children with one income supporting the household. Probably more important to have really good disability insurance on the wage earner rather than long-term care insurance at this point...