Sustitutes for a LTC policy

[samclem]

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.

 

[Scuba]

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.

 

[Chuckanut]

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.

 

[Chuckanut]

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.

 

[Montecfo]

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.