LTC insurance with a long waiting period - 12 months

[Big_Hitter]

my parents have a 100 day elimination period

my dad is frustrated he has to stay there but I found one thing out during this process - if you can't get up and down off of a toilet it is an immediate sentence to LTC

 

[youbet]

I've been waiting years for a LTCI policy with a 2-3 year elimination period. Haven't seen one yet.

Yeah, me too. The possibility of a policy with a long elimination period was discussed here on several threads some time back. At that time, there was consensus that they don't exist.

I'd love to have that kind of policy if it were priced accordingly (cheap) and I thought I could trust the insurance company to come through if we needed to collect. In our case, it would provide catastrophic coverage. For us, a policy that would cover years 4, 5 and 6 would be ideal. We can pay for the first 3 years without impoverishing the survivor and the chances of needing coverage beyond year 6 are very small.

 

[joeea]

if you can't get up and down off of a toilet it is an immediate sentence to LTC

Actually, if you can no longer perform two activities of daily living, you may be eligible for long term care benefits. Not one.

 

[Big_Hitter]

Actually, if you can no longer perform two activities of daily living, you may be eligible for long term care benefits. Not one.

not being able to get up and down off a toilet also means you can't transfer, so that's two - transferring and toileting

 

[samclem]

I, too, have wondered frequently why LTCi policies with long elimination periods aren't offered. Maybe the market is just too small (folks on this board are not a representative sample of the population), or perhaps there is even some sort of law/"consumer protection" rule against a policy with a long elimination period.

I'd be most interested in a shared benefit (i.e. "first to need it" between DW and I) policy with an elimination period of about 18-24 months, and covering about 4 years of care, with inflation protection. If priced according to the actual risk involved, it would seem that it might be a lot more economical than the existing alternatives. But, I've never seen such a thing.

 

[joeea]

not being able to get up and down off a toilet also means you can't transfer, so that's two - transferring and toileting

Maybe. I think you are reaching.

 

[WestUniversity]

I realize this is a personal choice and a lot of thought and planning can go into it. That said one of my parents spent several years in a facility and the monthly cost was about $4,500. Needless to say that chewed through a lot of cash. From what I have read the average stay in a long term care facility is about 2.5 years. That meshes with my experience. My goal is not to have the policy pay for all expenses, but rather reduce the cash outflow.

That said and in light of the stats in the articles in the links below it seems to me this is something that could be easily over bought or under bought so I'm thinking a 3 year benefit period would be the sweet spot. Likewise a spousal plan with DW and shared benefits would minimize the premium cost and yet still provide coverage. Additionally the likelihood that both of us would need long term care seems much more remote than simply one of us being affected. Lastly the premium estimates I have received so far are very doable in our financial plan.

All of that said any thoughts, comments, insights from the group? I have several months before my next birthday to make a decision before any associated premium increases...

https://www.kiplinger.com/article/i...-how-to-minimize-long-term-care-premiums.html

40 Must-Know Statistics About Long-Term Care

https://www.kiplinger.com/article/r...crets-to-buying-long-term-care-insurance.html

 

[Chuckanut]

I just ran some numbers on LTC insurance after getting some information.

The policy I am looking at costs 2,400 a year, has a 90 day elimination period, and would pay $3000 a month after that. This is for a single person. Based upon Mr. REWahoos chart posted in #16, most people don't spend more than 18 months in a care facility.

Assuming I use the benefit 10 years from now, I would have paid in $24,000. $24,000 would cover eight months of payments. Add in the 90 day elimination period and there would be another three months I would be paying for. Therefore, I would be paying for the first 11 months myself. Assuming I lasted the full 18 months, that would only be another 7 months I would have to pay for. That doesn't seem to be much of an incentive to get the insurance.

Granted I could be one of those people who needs care for many years or needs it immediately after I get the policy rather than 10 years in the future. Other than that what, if anything, am I missing?

 

[CardsFan]

I just ran some numbers on LTC insurance after getting some information.

The policy I am looking at costs 2,400 a year, has a 90 day elimination period, and would pay $3000 a month after that. Based upon Mr. REWahoos chart posted in #16, most people don't spend more than 18 months in a care facility.

Assuming I use the benefit 10 years from now, I would have paid in $24,000. $24,000 would cover eight months of payments. Add in the 90 day elimination period and there would be another three months I would be paying for. Therefore, I would be paying for the first 11 months myself. Assuming I lasted the full 18 months, that would only be another 7 months I would have to pay for. That doesn't seem to be much of an incentive to get the insurance.

Granted I could be one of those people who needs care for many years or needs it immediately after I get the policy rather than 10 years in the future. Other than that what, if anything, am I missing?

Curious if that is for one, two, or first to need it.

In any event, I am kind of in your camp of self insurance, given what is offered. I don't need to insure the first 3-5 years, I need insure years 5-20, should it last that long.

I find it interesting that the advertisers are more than happy to tell you that x% of seniors need LTC for 3-5 years, and they will sell you a policy for that. What they don't say is: But after that, you are on your own!

 

[meierlde]

Actually, if you can no longer perform two activities of daily living, you may be eligible for long term care benefits. Not one.

Chances are pretty good if you can't get up and down to the toilet you can't dress yourself either or wash.

 

[WestUniversity]

I just ran some numbers on LTC insurance after getting some information.

The policy I am looking at costs 2,400 a year, has a 90 day elimination period, and would pay $3000 a month after that. This is for a single person. Based upon Mr. REWahoos chart posted in #16, most people don't spend more than 18 months in a care facility.

Assuming I use the benefit 10 years from now, I would have paid in $24,000. $24,000 would cover eight months of payments. Add in the 90 day elimination period and there would be another three months I would be paying for. Therefore, I would be paying for the first 11 months myself. Assuming I lasted the full 18 months, that would only be another 7 months I would have to pay for. That doesn't seem to be much of an incentive to get the insurance.

Granted I could be one of those people who needs care for many years or needs it immediately after I get the policy rather than 10 years in the future. Other than that what, if anything, am I missing?

Sound logic. Thanks for the insight. So in your example we would in essence be prepaying our own benefit. That of course assumes that we won’t be an outlier in terms of our future needs.

I guess the memory of paying $4,500 a month for my moms care still stings a bit...

 

[justakrusen]

I've checked into this some.

Here are many of us who would be far more interested if we could use a good chunk of our own money first (high deductible, long waiting period), and then have a policy kick in that is much cheaper for those very rare extremely long stay cases. Long waiting period might be preferable as perhaps les documentation required than a high deductible.

As it stands, there isn’t much incentive to buy a policy if you have, say, an extra $400K sitting around that could cover either spouse - whichever needed LTC first. This matches the payout cap on many policies sold today. This is assuming also that the rest of the assets are available to cover any LTC needs for the second spouse. Some folks use LTC insurance to shelter inheritances for their heirs.

These policies are not rationally priced today, and there is already a lot of fallout.

I've looked into this some for my mother who is 83 years old. In her hometown, there is an assisted living place that will not kick you out when you run out of money. It's a nonprofit that has a foundation that will cover the cost if you run out of money. You pay by the month. I believe it's about $2,800 give or take for a studio. 3 scare meals a day and all the amenities.

They will help you find a place if your needs outpace their ability to care for your needs. In my opinion, the best way to do that would be for you both to move into there (in a bigger unit than a studio) that I believe would protect the one left behind should you run out of money.

The average stay in an assisted living facility I believe is about 2 years nationally. They have one resident that has lived there for 10 years.
I may be missing something. Someone that has a different experience might share something I haven't thought off.

I would move into the place tomorrow if it was me. We'd be 20 years younger than pretty much everyone in the place though. So I wait... Stowing more $. I'm having a hard time spending the Disability I'm collecting let alone the $ that DW brings home every two weeks.

Again thanks to everyone on this forum that has helped me get to this point.

 

[joeea]

The policy I am looking at costs 2,400 a year, has a 90 day elimination period, and would pay $3000 a month after that. This is for a single person.

Assuming I use the benefit 10 years from now...

Other than that what, if anything, am I missing?

Inflation.

Most LTCi policies have an inflation factor in them. 3%, 5% ?
What is the inflation rate in your policy? (Mine uses 3%, that might be low)

You are using today's dollars in your calculations. But over 10 years, the costs for care will certainly be higher - perhaps much higher.

most people don't spend more than 18 months in a care facility

Most don't, but some do.
Most people's houses don't burn down. Still, it makes sense to purchase insurance.
Most people don't die young. Still it makes sense to purchase life insurance.

We buy insurance for the cases where it makes financial sense to transfer the risk to another party, not for the "most people" cases. It may or may not make sense for you to purchase this insurance, but relying on what happens to "most people" shouldn't be the determining factor.

 

[CardsFan]

We buy insurance for the cases where it makes financial sense to transfer the risk to another party, not for the "most people" cases. It may or may not make sense for you to purchase this insurance, but relying on what happens to "most people" shouldn't be the determining factor.

Which brings us back the OP's original question. Is there an insurance product that allows one to accept limited risk (paying 1 to 3-5 years) while insuring against the highly unlikely, but potentially catastrophic, risk of a 20 year stay in a nursing home?

Based on what I have read here the answer seems to be: there may be a product out there, but none of us have seen it.

 

[Huston55]

I just ran some numbers on LTC insurance after getting some information.

The policy I am looking at costs 2,400 a year, has a 90 day elimination period, and would pay $3000 a month after that. This is for a single person. Based upon Mr. REWahoos chart posted in #16, most people don't spend more than 18 months in a care facility.

Assuming I use the benefit 10 years from now, I would have paid in $24,000. $24,000 would cover eight months of payments. Add in the 90 day elimination period and there would be another three months I would be paying for. Therefore, I would be paying for the first 11 months myself. Assuming I lasted the full 18 months, that would only be another 7 months I would have to pay for. That doesn't seem to be much of an incentive to get the insurance.

Granted I could be one of those people who needs care for many years or needs it immediately after I get the policy rather than 10 years in the future. Other than that what, if anything, am I missing?

Not a thing. You have described the ‘typical’ LTCi policy accurately in a nutshell: prepaying for a time/dollar limited potential future benefit. This just makes the evaluation of LTCi a simple NPV or NFV analysis, which is likely to disuade one from buying it. This post covers it nicely.

https://www.caniretireyet.com/long-term-care-insurance-why-we-arent-buying-it/

Which brings us back the OP's original question. Is there an insurance product that allows one to accept limited risk (paying 1 to 3-5 years) while insuring against the highly unlikely, but potentially catastrophic, risk of a 20 year stay in a nursing home?

Based on what I have read here the answer seems to be: there may be a product out there, but none of us have seen it.

I think the answer is pretty clearly NO.

 

[Chuckanut]

Inflation.

Most LTCi policies have an inflation factor in them. 3%, 5% ?
What is the inflation rate in your policy? (Mine uses 3%, that might be low)

You are using today's dollars in your calculations. But over 10 years, the costs for care will certainly be higher - perhaps much higher.

I thought about the inflation issue. The policy has an inflation factor of 3%.

But, the money I don't pay in premiums would be invested and I hope it will grow at at least 3% on the average. So will the money I already have saved up. I see that as a wash.

 

[Chuckanut]

I'd love to have that kind of policy if it were priced accordingly (cheap) and I thought I could trust the insurance company to come through if we needed to collect. In our case, it would provide catastrophic coverage. For us, a policy that would cover years 4, 5 and 6 would be ideal. We can pay for the first 3 years without impoverishing the survivor and the chances of needing coverage beyond year 6 are very small.

+1
Well said. I think you have stated my case and that of many of us very well. We need catastrophic coverage.

 

[Chuckanut]

Not a thing. You have described the ‘typical’ LTCi policy accurately in a nutshell: prepaying for a time/dollar limited potential future benefit. This just makes the evaluation of LTCi a simple NPV or NFV analysis, which is likely to disuade one from buying it. This post covers it nicely.

https://www.caniretireyet.com/long-term-care-insurance-why-we-arent-buying-it/

I think the answer is pretty clearly NO.

Thanks for the link. I must agree that so far the case for LTC in my situation is still rather iffy.

 

[capjak]

I think the Whole Life plus LTC riders are probably the closest. You pay for whole life and pay for a rider that includes LTC plus inflation adjustment and single premium or over 10 years/20 years or life

You receive/use the life insurance first than the LTC rider kicks in for the rest of the time.

Could probably be used to pay a portion of LTC and reduce the big financial event of one or both entering LTC for decades (obviously at a young age).

 

[audreyh1]

I've looked into this some for my mother who is 83 years old. In her hometown, there is an assisted living place that will not kick you out when you run out of money. It's a nonprofit that has a foundation that will cover the cost if you run out of money. You pay by the month. I believe it's about $2,800 give or take for a studio. 3 scare meals a day and all the amenities.

They will help you find a place if your needs outpace their ability to care for your needs. In my opinion, the best way to do that would be for you both to move into there (in a bigger unit than a studio) that I believe would protect the one left behind should you run out of money.

The average stay in an assisted living facility I believe is about 2 years nationally. They have one resident that has lived there for 10 years.
I may be missing something. Someone that has a different experience might share something I haven't thought off.

I would move into the place tomorrow if it was me. We'd be 20 years younger than pretty much everyone in the place though. So I wait... Stowing more $. I'm having a hard time spending the Disability I'm collecting let alone the $ that DW brings home every two weeks.

Again thanks to everyone on this forum that has helped me get to this point.

Assisted living is not the same thing as long term care.

Long term care is to cover skilled nursing and potentially a nursing home. It might cover some aspects of assistance with daily tasks, but won’t generally pay the monthly expenses of an assisted living facility. It will pay for a nursing home.

A lot of elderly will move to assisted living where they don’t have to maintain their own home/apartment or cook their own meals anymore. They just need a little help. It’s a bit more like room and board plus some supervision. I don’t believe most LTC policies will cover that.

Seniors can live in independent/assisted living for quite a long time. It’s not nearly as expensive as a nursing home or memory unit for Alzheimer’s victims. The high costs people worry about are those expensive nursing facilities.

 

[meierlde]

One thought is you might see if there is a local agent who represents LLyods of London who are supposed to insure anything for a price, and ask to see if they would write a policy.

 

[Huston55]

I think the Whole Life plus LTC riders are probably the closest. You pay for whole life and pay for a rider that includes LTC plus inflation adjustment and single premium or over 10 years/20 years or life

You receive/use the life insurance first than the LTC rider kicks in for the rest of the time.

Could probably be used to pay a portion of LTC and reduce the big financial event of one or both entering LTC for decades (obviously at a young age).

What are the premium costs? Is there an optimum time to buy? Have you done a NPV/NFV (or other financial) analysis of this product? I’m interested in how this product would compare to similar analyses of classic LTCi policies.

 

[ncbill]

I think the Whole Life plus LTC riders are probably the closest. You pay for whole life and pay for a rider that includes LTC plus inflation adjustment and single premium or over 10 years/20 years or life

You receive/use the life insurance first than the LTC rider kicks in for the rest of the time.

Could probably be used to pay a portion of LTC and reduce the big financial event of one or both entering LTC for decades (obviously at a young age).

Do plain-vanilla whole life policies offer a LTC rider?

Just a few years ago I got a call from the local company agent who tried to sell me on converting my plain-vanilla whole life to a universal whole life w/ LTC rider.

Looking at the guarantee (not the agent projection) it blew up in my early 60s.

In my personal experience universal life products always collapse to the guarantee and "blow up" (premiums increase to the point of un-sustainability)

 

[capjak]

What are the premium costs? Is there an optimum time to buy? Have you done a NPV/NFV (or other financial) analysis of this product? I’m interested in how this product would compare to similar analyses of classic LTCi policies.

I can only tell you what I got quotes on 56 male and 55 female good health.

For 4500 per month (30 day wait) with 4% inflation and no limit on pay out (i.e. you can be in LTC forever) and it includes 2 people each get $4500 plus 4%. It also includes return of whole life (not the rider cost) and a death benefit $112,000 (but who cares no one buys it for the death benefit). One twist is that it pay 4500 per month the first 25 months than the inflation protected rider kicks in after 25 months.

The rider is what cost all the $$$, the whole life is $48,000 the rest is the unlimited benefit rider and 4% inflation

Cost is $8100 per year (guarantee never to increase) or 17800 for 10 years or 10419 for 20 years or 1 payment $151000. It can be lowered if you only want 3% inflation or you extend the the period pay out of 4500 from 25 to 33 months.

For a traditional LTC the cost quote for us was based on $6,000 4% inflation 36 months $216,000 pool each with sharing of benefits was 7,200 per year of course that can increase over time (Mutual of Omaha)

 

[Huston55]

I can only tell you what I got quotes on 56 male and 55 female good health.

For 4500 per month (30 day wait) with 4% inflation and no limit on pay out (i.e. you can be in LTC forever) and it includes 2 people each get $4500 plus 4%. It also includes return of whole life (not the rider cost) and a death benefit $112,000 (but who cares no one buys it for the death benefit). One twist is that it pay 4500 per month the first 25 months than the inflation protected rider kicks in after 25 months.

The rider is what cost all the $$$, the whole life is $48,000 the rest is the unlimited benefit rider and 4% inflation

Cost is $8100 per year (guarantee never to increase) or 17800 for 10 years or 10419 for 20 years or 1 payment $151000. It can be lowered if you only want 3% inflation or you extend the the period pay out of 4500 from 25 to 33 months.

For a traditional LTC the cost quote for us was based on $6,000 4% inflation 36 months $216,000 pool each with sharing of benefits was 7,200 per year of course that can increase over time (Mutual of Omaha)

So, a quick comparison (using financial calculator apps but, fairly accurate I think, if you accept my return assumption):

Case 1-Need LTC @ age 76/75; assume both need LTC & live to 96/95 & 4% inflation.
>Self Insure= ($151k)X1.07*20=$610k => 6yrs LTC for two persons

>LTCi= 20yrs LTC for two persons [WINNER]

Case 2- Need LTC @ age 86/85; assume both need LTC & live to 96/95
>Self Insure= ($151k)X1.07*30=$1,225k => 13+yrs LTC for two persons [WINNER]

>LTCi= 10yrs care for two persons

Case 3 (actuarial averages)-Need LTC @ age 79.5/78.5; both use LTC for 2.5yrs until 82/81 (note that I used an average of male/female longevity for simplicity).
>Self Insure= ($151k)X1.07*23.5=$779k => 8yrs LTC for two persons [WINNER]

>LTCi= 2.5yrs care for two persons

I think there are a few take-aways here:

1. This kind of policy would be effective for the worst-case, catastrophic situation (early onset of a long lasting debilitating disease for one or both partners).

2. Self-insuring is the better ‘financial’ decision in almost all cases except extreme ones described by #1 above.

3. You have to have an insurance product with predictable premiums (like this one seems to be), to even begin to do a NPV/NFV comparison, and that still leaves the uncertainty on the LTC cost side.