whole life with LTC rider

[livingalmostlarge]

Anyone here have whole life insurance? Why did you buy it? At what age? Why did you buy it? And are you happy you did? And did you buy it for a LTC rider?

We have a LTC policy and i am not thrilled with it. Thank you WA. But I'm looking at a small whole life policy with LTC rider which will be more but cheaper than the LTC policy we have. So that's the background.

I just have never wanted to do whole life before but the situation we're in means i'm definitely looking at it.

 

[disneysteve]

Whole life is a rip off 99.9% of the time. If you want LTC coverage, find a better policy. Don’t get roped into whole life.

 

[Qs Laptop]

Anyone here have whole life insurance? Why did you buy it? At what age? Why did you buy it? And are you happy you did? And did you buy it for a LTC rider?

We have a LTC policy and i am not thrilled with it. Thank you WA. But I'm looking at a small whole life policy with LTC rider which will be more but cheaper than the LTC policy we have. So that's the background.

I just have never wanted to do whole life before but the situation we're in means i'm definitely looking at it.

I bought a whole life insurance policy when I moved out of my parents house at age 23. It was a continuation of a life insurance policy they had bought for me for some reason when I was a child. My dad recommended I keep it going, so I did.

When I had kids in my late 30's I increased the insurance amount. It was a 20 year level policy. I figured I would keep it until they got through college and then reassess my situation.

I regretted buying it several years later. It would have been better to buy a term insurance policy. After my kids graduated from college I cashed it out. I currently don't have any life insurance. I did not and likely will not buy LTC insurance.

 

[COcheesehead]

LTC insurance is very expensive.
Whole life is not recommended.
I have neither and instead funded a deferred annuity through Fidelity. Tax deferred. No RMDs. Almost all the same investment choices as a brokerage account. I pay .25% a year in expenses. I can take the money out anytime without penalty or if I reach 95 it will start to pay regular annuity payments. I look at that as our LTC fund. If we don’t use it for that, we can use it for anything else. We have about $300,000 in it right now. It’s almost doubled since we bought it about 7 years ago. We hopefully won’t tap it for 20+ years.

 

[MarieIG]

I bought one when I first started working. After a few years of zero value I terminated it and replaced with a term policy, putting the remaining monies into savings and subsequently retirement savings.

Full disclosure - DH and I no longer have term. His was the last to go. I cancelled his after his rate was no longer locked in and the cost multiplied by 10X. He does however have a pension and annuity with the 100 percent joint and survivor exercised and will be postponing SS until age 70.

I do have a small annuity which I had initially intended to trigger upon retirement, but will probably postpone as long as possible as an income booster for later in life.

I have also considered, but not pulled the trigger on a 100% joint and survivor QLAC.

 

[Montecfo]

If you need LTC dollars, I think a whole life (first or second to die) policy makes a lot of sense.

You know the cost upfront, it has cash value if you decide to cancel and it will pay off 100% of the time.

With a LTC policy you do not know your cost, you are likely to drop the policy, the policy has no cash value, and most folks end up not getting money from LTV even if they end up in a LTC facility (due to elimination periods and other qualifications).

I self insure for LTC but if i wanted to buy insurance I would look at whole life.
And the LTC rider adds cost. I would carefully consider whether that is needed given the ability to borrow against the policy and that it can replenish other assets used for LTC.

Whole life may not be cost effective for young folks. I always bought term ad still have a term policy on myself.

But for estate planning and similar issues such as LTC, it makes a lot of sense in my view.

 

[kyzymurgist]

My spouse and I have a hybrid joint life policy with a LTC rider through State Life. The rider includes unlimited LTC coverage after the life insurance pool is exhausted plus 5% inflation adjustment. The unlimited coverage was important to us after witnessing a friend develop Alzheimer's requiring over a decade of care.

The selling feature of the hybrid approach for us was the guaranteed LTC coverage for both of us with no possibility of premium price increases in the future. And if we never need LTC, our heirs will get back significantly more than our cost. The 3% internal return is no longer as attractive as when we purchased the policy several years ago but still ok.

This policy will cover the cost of a nice assisted living facility but not full nursing home care so we are partially self insuring in that case.

 

[youbet]

I self-insure for LTC.

As was fairly common at the time, my folks purchased some WL insurance for me when I was a child. That's not something I would have done, nor did I do it for my son, but at this point it's a sunk cost.

Rather than cash out the policies and invest the money, I've chosen to have the dividends pay the premiums and the excess to purchase additional paid-up insurance. Until the recent surge in inflation, the payout value of the policies more or less has kept up with, or exceeded, inflation and currently totals about $55k. I view this as a conservative backstop for DW in handling the first year or so following my death and I don't have to allow for that in my portfolio structure.

 

[easysurfer]

Had a traditional policy years back but couldn't deal with the heads I lose, tails I lose feeling of the premium and coverage changes. Decided to get a hybrid. At least now I know my premium is paid up. My not be a better deal but I grumble less.

 

[COcheesehead]

My spouse and I have a hybrid joint life policy with a LTC rider through State Life. The rider includes unlimited LTC coverage after the life insurance pool is exhausted plus 5% inflation adjustment. The unlimited coverage was important to us after witnessing a friend develop Alzheimer's requiring over a decade of care.

The selling feature of the hybrid approach for us was the guaranteed LTC coverage for both of us with no possibility of premium price increases in the future. And if we never need LTC, our heirs will get back significantly more than our cost. The 3% internal return is no longer as attractive as when we purchased the policy several years ago but still ok.

This policy will cover the cost of a nice assisted living facility but not full nursing home care so we are partially self insuring in that case.

I had a policy like this awhile back. The devil was in the details. You had to not be able to perform two of the seven functions of daily living before the policy would pay. So pretty far along. No provisions for in home care and it wasn’t cheap.

 

[easysurfer]

What I'd like to know if there is a comparison between how easy/difficult to collect from a LTC Hybrid policy vs a traditional LTC policy.

In other words, does one LTC policy type make you jump through hoops more or are they pretty much the same.

 

[COcheesehead]

What I'd like to know if there is a comparison between how easy/difficult to collect from a LTC Hybrid policy vs a traditional LTC policy.

In other words, does one LTC policy type make you jump through hoops more or are they pretty much the same.

It’s all in the fine print. I learned a lot about LTC policies when I was researching them years ago. You pay a lot, you may not get a lot and they make it hard to make a claim as well. The hybrid whole life policy I had, you would have almost had to be a vegetable to collect and in reality, your time on this earth was going to be short at that point. I think I read the average stay in LTC is less than two years. Self funding is likely the best way to go.

 

[harllee]

I do not know anything about the whole life/LTC policies but I have learned way too much about regular LTC policies. It is impossible to collect on a LTC policy. I am trying to collect on the mother's policy. She is age 92 and has alzheimers and heart failure. I have been trying to get her policy to pay for 5 months now with absolutely no success. I am afraid she will never see a penny from the policy for which she has paid in $100,000 in premiums. What a rip off.

 

[Montecfo]

^^^^ in contrast, a whole life policy pays 100% of the time and getting a loan against it is easy.

 

[livingalmostlarge]

I should have emphasized I am required by law to have LTCI in Washington state and they are voting if it's going to be annually checked. I bought some that the premiums have gone up and I'm a bit pissy about it. If I do have the LTCI i will be taxed by the state. So this is not an option.

I do NOT want either but I am FORCED by the state law to have it. So now i"m thinking of getting out of our LTCI policies and getting a whole life with LTCI rider which will qualify.

This is again not a choice but an enforced decision. It's a payroll tax otherwise. We got the exemption DH and I by buying LTCI. However now 2 years later, I wanted to drop it since we got the exemption letter, but they are deciding now if we are required to show our coverage annually if it makes more sense to buy a whole life insurance policy.

LTCI policy goes up and nothing to show for it. I don't even know how ours really works. I don't think we'll use it. When we stop working we will cancel it but I'll have paid it a good amount for nothing. Well avoiding payroll tax.

 

[livingalmostlarge]

https://www.ltcinsuranceconsultants.com/news/taxes/wa-state-long-term-care-tax/

explains the payroll tax

 

[disneysteve]

I do not know anything about the whole life/LTC policies but I have learned way too much about regular LTC policies. It is impossible to collect on a LTC policy. I am trying to collect on the mother's policy. She is age 92 and has alzheimers and heart failure. I have been trying to get her policy to pay for 5 months now with absolutely no success. I am afraid she will never see a penny from the policy for which she has paid in $100,000 in premiums. What a rip off.

I'm sorry you've had such trouble. My mom is 93 and has had her LTC policy for years. Last year when she reached a point where she needed some help at home, we opened a claim and they started reimbursing for the home health aide she now has (and her waiver of premium kicked in so she doesn't have to pay any more). The process was quite easy. We just had to send in the required documentation. Each month, the home care agency sends me a statement and I upload that on the LTC company's website. They direct deposit the payout to her checking account. The only thing that could be easier would be if the agency would submit the bill themselves but I don't mind being the middleman. The LTC policy has been very helpful because my mom never would have agreed to help if she had to pay for it out of pocket.


There was a 90-day waiting period but other than that, everything has been great.

 

[harllee]

I'm sorry you've had such trouble. My mom is 93 and has had her LTC policy for years. Last year when she reached a point where she needed some help at home, we opened a claim and they started reimbursing for the home health aide she now has (and her waiver of premium kicked in so she doesn't have to pay any more). The process was quite easy. We just had to send in the required documentation. Each month, the home care agency sends me a statement and I upload that on the LTC company's website. They direct deposit the payout to her checking account. The only thing that could be easier would be if the agency would submit the bill themselves but I don't mind being the middleman. The LTC policy has been very helpful because my mom never would have agreed to help if she had to pay for it out of pocket.


There was a 90-day waiting period but other than that, everything has been great.

Right now I am still fighting the LTCI over the ADLs. They claim she can do the ADLs but she cannot. What company was your mother's policy with?

 

[COcheesehead]

The ADL’s rules were always the point in policies that made me pause and frankly why I stopping paying on my hybrid policy. What if I wanted some assistance at home? They are not going to pay for it unless I had at least two ADL limitations and I figured at that point my life is pretty limited anyway and I will have to be housed in a care facility.
For years I saw folks on here say they were self funding. Now I am one of that group as well.

 

[disneysteve]

Right now I am still fighting the LTCI over the ADLs. They claim she can do the ADLs but she cannot. What company was your mother's policy with?

She is with John Hancock.

 

[Lstansbury]

LTC insurance is very expensive.
Whole life is not recommended.
I have neither and instead funded a deferred annuity through Fidelity. Tax deferred. No RMDs. Almost all the same investment choices as a brokerage account. I pay .25% a year in expenses. I can take the money out anytime without penalty or if I reach 95 it will start to pay regular annuity payments. I look at that as our LTC fund. If we don’t use it for that, we can use it for anything else. We have about $300,000 in it right now. It’s almost doubled since we bought it about 7 years ago. We hopefully won’t tap it for 20+ years.

Wow, No RMDs? I thought all annuities had RMD provisions -- whatever you are getting from the annuity each year IS the RMD. I'm going to need to look this up, it sounds very interesting. If you don't make it to 95, does your beneficiary get any refund of cash value or premium?

 

[COcheesehead]

Wow, No RMDs? I thought all annuities had RMD provisions -- whatever you are getting from the annuity each year IS the RMD. I'm going to need to look this up, it sounds very interesting. If you don't make it to 95, does your beneficiary get any refund of cash value or premium?

People get confused about annuities. There are annuities that annuitize income - pay you an income stream and you forgo your capital likely forever- and those that defer taxes and shelter your funds. In my case the income would not start until 95, but I can take any money, all if I want, out prior and pay only income taxes. I pay a .25% fee for the privilege. I surrender nothing. Upon death the remaining balance is directed per my will.
Fidelity called them retirement annuities when I bought it. It was a way to stash more deferred funds when you maxed out IRAs, 401ks, etc. I am not sure what they call it today. Maybe a deferred variable annuity?

 

[pb4uski]

I should have emphasized I am required by law to have LTCI in Washington state and they are voting if it's going to be annually checked. I bought some that the premiums have gone up and I'm a bit pissy about it. If I do have the LTCI i will be taxed by the state. So this is not an option.

I do NOT want either but I am FORCED by the state law to have it. So now i"m thinking of getting out of our LTCI policies and getting a whole life with LTCI rider which will qualify.

This is again not a choice but an enforced decision. It's a payroll tax otherwise. We got the exemption DH and I by buying LTCI. However now 2 years later, I wanted to drop it since we got the exemption letter, but they are deciding now if we are required to show our coverage annually if it makes more sense to buy a whole life insurance policy.

LTCI policy goes up and nothing to show for it. I don't even know how ours really works. I don't think we'll use it. When we stop working we will cancel it but I'll have paid it a good amount for nothing. Well avoiding payroll tax.

Though doth protests too much. You are NOT required by law to have LTCI. You do have an option: buy LTCI or pay a tax of 0.58% of earnings. You are not forced by state law to have LTCI, so dial down the drama.

I understand that you don't like it that you are forced to either but LTCI or pay the tax, and I agree that it is ridiculous and egregious, but there is no need to misrepresent the situation. It is no different than how Obamacare works at one time for those who don't buy health Insurance, although the tax was later reduced to $0.

If it were me, I would probably choose to pay the tax unless I could buy a cheapo LTCI policy for less than the tax.

If you were earning $100k a year and you had to pay $580 state income tax you probably won't bat an eye, so get over it.

 

[Koolau]

Though doth protests too much. You are NOT required by law to have LTCI. You do have an option: buy LTCI or pay a tax of 0.58% of earnings. You are not forced by state law to have LTCI, so dial down the drama.

I understand that you don't like it that you are forced to either but LTCI or pay the tax, and I agree that it is ridiculous and egregious, but there is no need to misrepresent the situation. It is no different than how Obamacare works at one time for those who don't buy health Insurance, although the tax was later reduced to $0.

If it were me, I would probably choose to pay the tax unless I could buy a cheapo LTCI policy for less than the tax.

If you were earning $100k a year and you had to pay $580 state income tax you probably won't bat an eye, so get over it.

One of the nice things about this forum is that we can b**** and moan about anything that bugs us. Usually, folks allow us the grace to do this without too much judgement. I think it's fine to make suggestions of "a better way" but not make too big a fuss about someone else's opinions - especially about an "egregious" law. But I digress...


YEARS ago (maybe 30+) I bought a whole life policy that had a rider for LTC but it wasn't quite called that. I forget what. I was on an insurance "binge" at the time for some silly reason. SO, that particular policy is long since paid off and "someone" will eventually collect on it, I suppose. I don't particularly like whole life although it offers some flexibility if you need it.

I'd go with straight LTC insurance if you are "required" to carry it and then decide if you need some term life insurance - but that's just me and YMMV.


Or, you could move. I moved and it saved me a fortune in state/RE taxes. Not whay I moved, but...

 

[Brat]

My husband has 'booked' the 90 days on our LTC policy. His health care provider (actually the hospital social worker) filed a statement describing his inability to perform activities of daily living and some of those days were when he had PT at home. Benefits are not paid if the caregiver is a family member so Caring Angels was on my autodial.

While the contract pays for care at home scheduling care is a lot of work.


The paid up in 10 years policy is no longer offered...