Long Term Care Insurance

[QuarterMillionMan]

I just spoke w/my insurance guy to look at lowering my $2700/year premium for LTC insurance of $10,000 a month coverage to maybe reducing it in half. He'll email me the quotes later. He also spoke about a hybrid model called Index Universal life which he'll also email me the quotes. Example $100,000 coverage w/a 4% LTC ryder which would cover $4000/month and also pays an accelerated death benefit or can take loans against it. Anyone know about it please educate me.

[myrdale]

Annual premiums by age group. The longer you wait the more expensive it gets.

I found one site that indicated it was higher for women than for men. I guess it is based on life expectancy.

[QuarterMillionMan]

Annual premiums by age group. The longer you wait the more expensive it gets.

[disneysteve]

I discovered yesterday that I have been submitting my mom's LTC claims incorrectly all this time. I get a monthly invoice from the agency and upload it to the LTC company, but just realized that the invoice lists the weekly charges, not the daily charges. If the weekly charge was $130, insurance paid $110 (her daily policy limit) and she had to pay the other $20 out of pocket, which wasn't a huge deal, but in reality, it was $130 for 2 days and she shouldn't have had to pay anything. Totally my mistake.

I got in touch with the agency today and they are now going to send invoices broken down by day, not week, so this stops happening going forward. I sent in the corrected December invoice today.

Fortunately, it didn't go on that long. She's only been collecting for a year and for much of that time, the rate was lower and still under her policy limit even the wrong way. It wasn't until they raised their rates a few months ago that it became an issue.

[QuarterMillionMan]

My policy has a $120,000 lifetime max benefit, $164 daily benefit for 2 years ($164 x 730 days = $120,000), which isn't much for nursing care needs but it's better than nothing.

[LivingAlmostLarge]

How can they do these things?

[QuarterMillionMan]

I see, thanks.

[Like2Plan]

In 2019 Genworth cut in half my long term care benefits. I chose to go with plan C the least expensive as you can see. Can someone explain what the limited paid up coverage would have entailed if I had chosen it ($10,115 paid up policy benefit). I believe that is the total amount that I had paid up to that date. If I had chosen that option is that the amount Genworth would have reimbursed to me and basically cancel my coverage?

]

They only pay out if you have a LTC claim in accordance with your original criteria.
So, assume you’ve met the criteria, they would pay out the original per day amount until they reached the 10,115 amount and then they would be done.

[QuarterMillionMan]

In 2019 Genworth cut in half my long term care benefits. I chose to go with plan C the least expensive as you can see. Can someone explain what the limited paid up coverage would have entailed if I had chosen it ($10,115 paid up policy benefit). I believe that is the total amount that I had paid up to that date. If I had chosen that option is that the amount Genworth would have reimbursed to me and basically cancel my coverage?

[LivingAlmostLarge]

Long term care can involve years of services. You could definitely burn through 600K, especially if you go into an extended care facility. And you may have outpatient services for months or years before you end up in the nursing home. It's not just end-of-life stuff unless by that you mean the last 5 or 10 or more years of life.

So this is why my mom said pass and buy minimum. Because a lot of care won't qualify for LTC insurance depending on the policy. It might be you want to stay in home and have caregivers everyday for an hour or two. Or it might be that you want and assisted living facility that isn't covered. There is less flexibility.

I agree that it makes sense at least for us to get the minimum policy and then reevaluate more. I really don't think we'll be retiring here so then it doesn't make sense to pay in a lot of money. It does make sense to get something portable and potentially disposable.

[Like2Plan]

I'm not saying LTC policies are bad.... I just prefer the idea of self-insuring through it, and I think that's totally feasible if planned out properly. IMO, that planning (and achieving those planning goals) would totally eliminate any concerns about LTC.

I don't think LTC policies are great, either (even though both DH and I have them). Mine has been adjusted twice over the course of 16 years. IIRC, I think I started out with 5% inflation factor and that was adjusted down to .9% inflation factor on the last adjustment (I had a choice of a reduced inflation factor or a huge premium increase). So, how much is that going to be worth if and when I need it?
My two concerns with LTC insurance are--inflation will greatly erode the benefit or they adjust the premium to the point where I can no longer afford it (after paying for it for many, many years). Maybe three concerns--that the LTC actually pays up when if the time comes (I have also heard of folks having trouble with that, too).

Self insure has its risks, too. We've already covered impoverishing the surviving spouse. But, what if you get to the point where you can't manage your assets anymore and your future heir(s) (not speaking necessarily of your children) are more concerned with preserving your estate than to spend the money you have set aside for your LTC on LTC? (I sometimes see these types of questions being posed on other financial boards.) At least with the LTC insurance, it has to be spent on LTC.

There was a recent movie on Netflix called "I Care A Lot". Which you might think this story line is really out there, but...

https://www.vera.org/blog/the-question-of-guardianship-how-the-elderly-lose-their-rights

Conventional wisdom from financial planners used to recommend buying LTC insurance in 50's-60s's. So, not something most people thought about until later on. I don't know if this is something is going to shift. But, I suppose LAL could purchase the minimum required policy now and re-evaluate in the future.

[Like2Plan]

This is from the article I linked above.
2.5 years: Average number of years women will need long-term care.
1.5 years: Average number of years men will need long-term care.

But, these are averages. My Mom's Mom was very healthy and fit her whole life. By the time she reached 96, she needed more help. She was still fiercely independent. My aunt found her a situation where she still had her own apartment, but had meals served in a dining room. As time went on, she needed more help and moved to the nursing home section for the last 2 years of her life (she lived to be 100).
Grandma was a role model for me in terms of looking after her health (as well as financial management). She had money set aside to take care of these costs (which I have no idea--how much that was or how much to expect in the future.)

[QuarterMillionMan]

LAL, you were correct.

[kork13]

Would that be in addition to what you plan to cover your expenses? Say, you decide you need 1 million (at retirement) for your retire expenses plus 600k? (Or, would the 600k be included in the 1million?) Would that be sufficient to cover both spouses?

DH and I both have LTC ins. I am assuming our potential need for LTC will not occur until more years down the road and inflation will take a toll on our coverage amount. (Also, it would only be partial coverage right now). We will have to fund any shortfalls out of savings. It is one element of retirement planning that still leaves me a little uneasy.

Not necessarily retirement + LTC, but if your want to be totally secure, then sure. It approaches a point that if you have enough, simple investment returns will cover any LTC required. Especially for the second spouse, everything you have is on the table. It's going to be personal, guided by your own perspective & risk tolerance & knowledge of your family's health history. But if pressed for a number, I'd go with the amount you need for living expenses plus LTC for the 1st spouse (so in your example, $1.3M).

I'm not saying LTC policies are bad.... I just prefer the idea of self-insuring through it, and I think that's totally feasible if planned out properly. IMO, that planning (and achieving those planning goals) would totally eliminate any concerns about LTC.

Long term care can involve years of services. You could definitely burn through 600K, especially if you go into an extended care facility. And you may have outpatient services for months or years before you end up in the nursing home. It's not just end-of-life stuff unless by that you mean the last 5 or 10 or more years of life.

Certainly, 5-10 years in LTC is possible. But it's improbable. As I said (wish I had the source, but can't dig for it right now), research strongly shows LTC typically only goes for <3 years, typically costing up to roughly $300k. And when it does go longer like that for 5-10+ years, it's typically in a more permissive environment (ex: in-home assistance) where a lower level of care (and associated cost) is required. Sadly, institutional LTC (and the medical/health conditions that require it) simply is not statistically correlated with a long life expectancy.

[disneysteve]

LTC is basically an end-of-life expense, it really shouldn't need to be outrageous.

Long term care can involve years of services. You could definitely burn through 600K, especially if you go into an extended care facility. And you may have outpatient services for months or years before you end up in the nursing home. It's not just end-of-life stuff unless by that you mean the last 5 or 10 or more years of life.