Long Term Care Insurance

[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.

[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]

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

[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]

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.

[kork13]

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.

Lol ... Well lookie there, universal life insurance being suggested as the solution to a non-life-insurance problem .... What a great deal....

I guarantee that your insurance guy would LOVE to sell you on something like that ... It'll make him a boatload.

[myrdale]

I guarantee that your insurance guy would LOVE to sell you on something like that ... It'll make him a boatload.

This was my thought as well.

I suspect you'd do far better to invest the money you would have paid him into the market.

[QuarterMillionMan]

My insurance guy said that I may need to go thru the entire application process again for a reduce coverage LTC policy which I'm fine with. Sometime next week I'll get the quote which I'll post here. The hybrid sounds to complex and gimmicky so not interested in it.

[myrdale]

The hybrid sounds to complex and gimmicky so not interested in it.

I'm a proponent of purchasing the correct tool for the job at hand. If you want to purchase a LTC policy, that is exactly what I would do.

Another item that is at least worth considering is what is the life expectancy in your family, and how were they physically. On my Mother's side, my Grandmother and Greatgrandmother made it to 92 and 95. My grandfather died in his mid 70's. On my Father's side, he died of cancer at 62. His father and mother were around 65, from Luekemia and diabetes. His sister was under 70 as well.

[QuarterMillionMan]

This is my current policy which is very good but $2700 a year is costly and I would suffice for half the coverage & premium. Anyone who says self-insure vs LTC coverage cannot come close to a lifetime max of $360,000.

[kork13]

This is my current policy which is very good but $2700 a year is costly and I would suffice for half the coverage & premium. Anyone who says self-insure vs LTC coverage cannot come close to a lifetime max of $360,000.

Actually ..... How long do you realistically expect to be paying into a LTC policy before needing to use it? At $2700/mo & invested into the S&P500, earning an easy 6% real return (8-10% nominal, the historical average), my math says you build up $360k within about 8.5 years. Beyond that, you're building up even more, beyond what your policy would provide.

[QuarterMillionMan]

Kork good try but try agains using $2700 a year, not $2700 a month, and report back with the same calculations.

[kork13]

Lol

Yup, totally misread that. More like 35-40 years then. So why do you say $2700/yr is too expensive?

[QuarterMillionMan]

I feel as though $350,000 lifetime max benefit at $2700 per year is overkill and a reduced amount at half that amount would suit my needs.

[kork13]

I'm of a split mind .... My first inclination is still to just self-fund, save whatever you can, and be confident in your ability to flexibly cover whatever life throws at you. Plus if you self-fund, you don't have to worry about making insurance claims -- you're just pulling from your own assets, which as you approach the end, only need to last until that ultimate expiration date.

However, if you have a reasonable expectation of needing LTC (ex: parents/siblings all needed it toward end-of-life), then at its face this policy seems pretty reasonable. You live in CA, so I'll use those numbers (more expensive by double relative to elsewhere, FYSA) .... Current statistics say that a nursing home in CA typically runs between $10k-$15k, and the typically stay is 1-2 years. Your policy has a cap that would provide for roughly 2.5 years at $12k/mo .... 2 years at $15k/mo.

So realistically, the size of your LTC policy really seems to be pretty appropriate. And while $2700/yr ($225/mo) is noteworthy, but also not unreasonable in any way. Reduce your Vegas/other trips a bit & you're set.