Should I continue paying for LTC?

[Jheroine]

Hi Folks,

I recently retired at 55.25 with a small pension (would have been much bigger if I stayed working til 62 or 63 but circumstances forced me and others I was working with to leave). Earlier than I had planned but no regrets.

Last week, I received a letter from Genworth, that they will be raising my LTC premiums from about $3300 to $4500 a year. I have been paying for this policy since I was 32 so I've paid a lot of premiums into it. It started at $1800+ but they raised it to $3300 over the past 10 years and I still paid. Now I'm thinking of just letting the policy lapse. It just feels so wasteful to have paid for 23 years. If the market doesn't tank, I should have enough to self fund, I think.

Any thoughts on the pros and cons of keeping it or letting it go?

 

[rk911]

I'm followimg this thread as I have the same situation and decision to make. My premium has skyrocketed but it is still a very small fraction of our net worth. I'll be 75 in August and if I let it lapse I'll never get another policy. OTOH, I can easily afford the premium. Decisions. Decisions.

 

[TickTock]

It doesn't matter if you paid $1 or $1,000,000 in the past to fund the policy; it only matters what you pay going forward vs. what you expect to receive.

It may or not be wasteful to have paid premiums for 23 years. Doesn't matter.

Ask yourself, "Would pay this premium today, and risk future premium increases, for what the policy promises to pay?". And then research if the insurer will pay what's promised. From previous discussions on these boards, some folks have received the promise and others haven't.

 

[COcheesehead]

No, self insure.

 

[RunningBum]

Dismiss what you've paid in the past. What matters is whether LTCI is a good choice for you going forward. Personally I am self funding. From what little I've looked into them, there are limitations on how much it will cover. I also don't like what you've run into, that premiums can soar.

 

[COcheesehead]

Lots of gating points for payment, then how much will they really cover and lastly, can you cover 3+ years on your own. Usually more than enough.

 

[badatmath]

Hi Folks,

I recently retired at 55.25 with a small pension (would have been much bigger if I stayed working til 62 or 63 but circumstances forced me and others I was working with to leave). Earlier than I had planned but no regrets.

Last week, I received a letter from Genworth, that they will be raising my LTC premiums from about $3300 to $4500 a year. I have been paying for this policy since I was 32 so I've paid a lot of premiums into it. It started at $1800+ but they raised it to $3300 over the past 10 years and I still paid. Now I'm thinking of just letting the policy lapse. It just feels so wasteful to have paid for 23 years. If the market doesn't tank, I should have enough to self fund, I think.

Any thoughts on the pros and cons of keeping it or letting it go?

Does yours come with the option to get the amount you have paid in as a credit? I forget what it was called but that was an option for me in my last increase letter (not from Genworth). . . I mean it isn't a refund but it is still "banked" even if you cancel the policy going forward. (I didn't do it).

 

[Jheroine]

No, my policy doesn't give any credit. Thanks for pointing out it doesn't matter what I paid in the past, I need to consider going forward whether it's worth it or not. My policy covers 2 years but I can easily self fund 3 or more years so I think that helps me make up my mind.

 

[Koolau]

Couple of things I think of:

My mom had a policy and it's the only reason she didn't run out of money toward the end of her life. She ended her life in a facility.

The insurance companies are not allowed to just raise premiums without review by state insurance "commissions" or what ever they call them. It "feels" like they're trying to make people drop out, but the state commissions would not allow that. They look at the numbers and allow increased premiums based on the costs of the company due to their pay-out experiences (suggesting that the premiums are likely "worth it").

I too have seen significant raises in premiums. Both parents ended their lives in facilities. So I can't speak for anyone else, but believe my LTC insurance is valuable to me.

Only you can decide if you should self insure. BUT I caution you not to let the "sunk cost" be the reason you stay. Consider the "value" that the continuing premiums bring to you.

Good luck on making your decision. It's a struggle because it's not cheap - either way.

 

[Fermion]

I vote no, but that is because I will not go to a LTC facility. My wife will not either, she made me promise that she would never be put in one.

 

[Koolau]

I vote no, but that is because I will not go to a LTC facility. My wife will not either, she made me promise that she would never be put in one.

Generally speaking, care at home is more expensive - especially 24/7 care. Here is hoping that none of us here ever need LTC. I'll be happy if my LTC premiums are wasted!

 

[Cayman]

That's a hard decision, I suspect. Such policies are hard to come by now. I'd likely let it lapse and self insure. Primarily because soaring LTC premiums are common, and getting payment can be tough. I have married friends (82 and 81) who pay their LTC premiums. Last year their combined annual premium was 9k+. They may need their policy any day, as he has moderate dementia now...they are glad they kept paying their premiums. I on the other hand, am glad that I self insure.

 

[WWDog]

Facing the same here. A 10% increase this year and a 20% increase next year. I am for dropping it but the wife wants it to continue. My father had a policy with the same company years ago. He had a little problem getting them to pay at first but the agent intervened and it paid out eventually. My experience is that they will try every trick in the book to not pay what they say they will. I think it is wasted money.

 

[harllee]

I am dealing with LTC insurance right now for my mother. She is 94 and has Alzheimers and is in skilled nursing that costs $11,000 per month. Her LTC is paying about half of that, it was a 3 year policy, she has used 2 years and has another year of insurance payments to go. Dealing with the insurance company has been a real pain. I have spent hours and hours and hours trying to get them to pay even though she clearly qualified. I finally had to hire an attorney to get them to start paying. Even now 2 years in I have to call them every month because they lose him claim or some other nonsense. My mother would have been much better off if she had put the premiums in a savings account. Personally I would never buy LTC insurance, it is a rip off. I live in a Type A Continuing Care Retirement Community that does not take LTC insurance.

 

[mf15]

Oh boy Genworth just had large increases over the last few years, have not gotten this years letter yet. The court settlement from 2 years ago was a waste,did not accept it. State insurance commissioners seem to rubber stamp increases. But I will keep paying. At least we have a ryder, if one spouse dies, no more premiums for the other.
oldmike

 

[aja8888]

Look up Nord's and Harlee's experiences on this board with LTC policies for their parents. Not always a slam duck when it comes to collecting.

 

[MichaelB]

Dismiss what you've paid in the past. What matters is whether LTCI is a good choice for you going forward.

What he said.

No, my policy doesn't give any credit. Thanks for pointing out it doesn't matter what I paid in the past, I need to consider going forward whether it's worth it or not. My policy covers 2 years but I can easily self fund 3 or more years so I think that helps me make up my mind.

A LTC policy and self funding are not mutually exclusive. You may need both, depending on how much you can self-fund.

 

[athena53]

I vote no, but that is because I will not go to a LTC facility. My wife will not either, she made me promise that she would never be put in one.

That's a huge "ask". You don't know what the future holds. Dad went into self-pay LTC for 18 months before he died and my SIL felt awful that they didn't take him in- they lived nearby, she was a retired RN and she'd been wonderful to my Mom in her last few months in hospice care at home- but Dad was incontinent, his short-term memory was shot, he'd lost his ability to work with tech (even his phone) and he couldn't get between the bed and the wheel chair without help. It really would have done her in. Instead they could still sail on the weekends, get to church on Sunday and have their grandchildren visit, while visiting Dad almost daily. My Aunt tried to keep my Uncle at home after he developed Alzheimer's but he was starting to get violent (not like him at all) and she had to sleep in a recliner in the front room because otherwise he'd get up and wander around the neighborhood at night. I'm not sure that even 24/7 home health aides could work in those cases.

So- I am planning on needing and funding my own LTC if the worst happens. Never bought coverage and, at 72, likely never will.

 

[Dtail]

It doesn't matter if you paid $1 or $1,000,000 in the past to fund the policy; it only matters what you pay going forward vs. what you expect to receive.

It may or not be wasteful to have paid premiums for 23 years. Doesn't matter.

Ask yourself, "Would pay this premium today, and risk future premium increases, for what the policy promises to pay?". And then research if the insurer will pay what's promised. From previous discussions on these boards, some folks have received the promise and others haven't.

Excellent post.

 

[Closet_Gamer]

My observation is that people who need LTC insurance can’t afford it … and people who can afford LTC insurance don’t need it.

Compound this insurance company greed and bureaucracy, which would happen when we are older and less capable of fighting with them.

We’ve decided to self-insure. In our case we moved $250k out of our “retirement” assets and into a separate account. We don’t include that money in calculating our SWR. As we are only in our early 50s it’s invested 100% in equities but I will shift that to a more conservative AA when we’re in our 60s.

 

[REWahoo]

I've been exactly where you are. Here's an option you might want to consider:

In 2020 I received notice of a 64% increase in my LTCi premiums. This followed an increase of 50% in 2014 and another 30% in 2018.

Rather than pay the increase, I was offered and accepted the option to modify my LTCi policy to remove the 5% annual benefit increase provision, freezing the maximum benefit amount to what it currently was. This reduced my annual premium from what would have been $1,870 to $570, where it has remained (so far) for the past five years.

 

[Aerides]

A friend of my mom's recently passed after spending several years using her LTC to stay in her home.

The plusses:
They paid (many don't, or make it very very hard).
Premiums were no longer required once she was receiving care.
The care she received allowed her to stay in her home until the very end (converted to hospice), and with her pets (they were arranged for after she passed).

The minuses
She didn't have much choice in providers. Since she had in-home care, they'd rotate nurses. She'd get to like one of them and then they'd be gone. Sometimes the nurses couldn't lift her, which was important as her only exercise the last few years was swimming in her pool, but she needed help getting in and out.
She was lucid and had no mental issues, and spent a fair amount of time 'dealing' with the insurance.

So, my advice would be what determine what care do you want, how much would that cost, and can you afford that for 3-5 years?

Or, drop the policy now, and decide in another 10 years if you want one then. It will be more expensive, but so too might your existing one.

The funds you've paid in are irrelevant, see "sunk cost fallacy" and just dismiss that from your thoughts.

 

[ncbill]

LTC insurance for me after watching mom spend the better part of a decade bedridden, unresponsive, requiring complete care simply due to the progress of her dementia (no co-morbidities)

I got to visit plenty of nursing homes along the way so I'd much rather stay at home or in an ALF for as long as possible even if it's more expensive.

It's easier to qualify for LTCi via a lump sum paid into a whole life policy/annuity with LTC rider.

Which is probably what I'll have to do given some pre-existing health conditions.

Type A CCRCs are a nice alternative, but the entry fees are so steep most won't be able to afford that option.

 

[Dash man]

We bought a group policy through my former employer while I was still working. Every three years we get an option to increase the coverage for inflation. It covers LTC, AL and home care. It caps the daily cost (~$625) and lifetime benefit, but is pretty generous at about $1M.
I plan on keeping both of our policies. We’ve had two parents in AL Memory Care and one moved into a Nursing Home for five years before she died at 95. We can handle the combined $9k annual premiums. We’ve had the policies for 24 years.

 

[Dtail]

Haven't figured it all out yet, but will not buy a policy.