long term care insurance

[QuarterMillionMan]

You're right they did give me the choice and I chose to keep the annual premium the same with the lower benefit. If I kept the benefits the same the annual premium would have doubled to $2500 from $1250 annually.

[LivingAlmostLarge]

QMM is it still worth it? Did you calculate the lower benefit?

[QuarterMillionMan]

To me it is still worth it. Not sure if this is correct but $120 a day x 1095 days max = $131,400. As of today I've had the policy for 12 years x $1250 a year = $15,000 is the total I've paid thusfar.

[QuarterMillionMan]

A 76 yr old guy showed me his LTC premiums for him ($1350/year) and his wife ($1150/year). She is 74 wih severe dementia and he no longer can care for her because she wanders off. I commended him on his astute decision to get those policies. And I pay $2700/year at 59, so his is a great deal.

[LivingAlmostLarge]

A 76 yr old guy showed me his LTC premiums for him ($1350/year) and his wife ($1150/year). She is 74 wih severe dementia and he no longer can care for her because she wanders off. I commended him on his astute decision to get those policies. And I pay $2700/year at 59, so his is a great deal.

I'm surprised it's so cheap. What is the max benefit? Does she qualify? How long did they pay for? How long have you been paying for and did you calculate if $2700 invested would have been a better deal? If you die and never use it then it'll be a waste. Versus investing that $2700 and the pot of money would be there for you.

[QuarterMillionMan]

When I asked about the max benefit the 79 yr old man didn't know. She qualifies. He got their policy when he was 50 and working as a cop. I got my policy at 45 (59 now). At 58, I settled with Genworth's class action lawsuit where they issued me a $10,000 settlement by issuing me a check for $10,000, and $5000 max benefit. That $15,000 was the exact amount that I had paid in premiums at $1200 a year for ages 45 - 58. Now at age 59, the premium is $2700/year w/Mutual of Omaha. My max benefit is $10,000 a month for 3 years. Let's say I pay for 20 years x $2700 = $54,000 for 20 years (not counting increases in premiums which is wishful thinking but for ease of calculation) and if I need nursing home placement at age 79, it'll be worth it. But should I die at age 79 and never use the policy, then I'd be out $54,000. But if needed per year the max benefit covers $120,000 for a max of 3 years for a total max of $360,000 worth of skilled nursing care. Self investing would only net $54,000 over 20 years (plus or minus gains or loses and inflation).

[LivingAlmostLarge]

But are you sure it's only $2700/year annually or will they increase it? I thought that it increases so it's not $54k. If you invested $2700 at 4% you'd have around $80,403 in 20 years. If you invested it at 6% it's $99k and you may last 3 years in a facility so you might not get your money's worth.

I think that the gamble with LTC is the increase in premium?

[QuarterMillionMan]

When and not if they raise premiums they usually give 2 options of either a premium increase or a lower benefit. I usually keep the premium the same and accept the lower benefit. Even with a lower benefit it is still more than I would be able to self-invest. It is more of a gamble to self-invest where you could run out of funds and run a risk of ruin. My uncle in Hawaii needed a nursing home for many years in the State's run Maluhia hospital on Hala Drive in Kalihi. The State put a lien on his home and when he died his cost for the nursing facility was $500,000. His sons had to sell his home in Waialae near Kahala mall and they are now renting as a result.

[QuarterMillionMan]

LTC insurance made the national news tonight with their drastic increases in premiums some as high as 300%. The news said Genworth miscalculated the premiums and had to increase their premiums. I experienced these hikes first hand. Luckily for me a class action lawsuit was filed and I got back $10,000 from Genworth. I now have Mutual of Omaha but premiums are still high but IMHO worth it rather than trying to self insure and save on my own for LTC coverage.

[srblanco7]

But are you sure it's only $2700/year annually or will they increase it? I thought that it increases so it's not $54k. If you invested $2700 at 4% you'd have around $80,403 in 20 years. If you invested it at 6% it's $99k and you may last 3 years in a facility so you might not get your money's worth.

I think that the gamble with LTC is the increase in premium?

The uncertainty in benefits coupled with the potential for escalating premiums as well as the potential that we may never use the policy made our decision to self-insure fairly straightforward. Although it's worth noting that three year LTC events for DW and I were included as part of our retirement expense forecasting.

[LivingAlmostLarge]

LTC insurance made the national news tonight with their drastic increases in premiums some as high as 300%. The news said Genworth miscalculated the premiums and had to increase their premiums. I experienced these hikes first hand. Luckily for me a class action lawsuit was filed and I got back $10,000 from Genworth. I now have Mutual of Omaha but premiums are still high but IMHO worth it rather than trying to self insure and save on my own for LTC coverage.

Are you sure about it? The premiums could end up esclating permenantly annually and at some point you can't afford it or won't afford it and then you lose the benefit.

[QuarterMillionMan]

I'm positive even with premium increases in the future that buying LTC insurance far outweighs trying to self-insure which cannot even come close to buying LTC insurance.

[kork13]

I would disagree ..... The whole point of actuaries is to churn data & determine what to charge people so that the premiums will cover any likely costs, whole also providing an acceptable profit to the insurance company.

I have no intention of ever doing LTC insurance, just using our assets to self-insure. I'm confident in our ability to do so. It's old data from like ... a decade back... But it said the average nursing home stay was <3 yrs & $300k. Sure, there will be medical costs beyond that as well ... But as I see it, entering the old-old age bracket (85+) with at least $1M (today's dollars) should be sufficient to cover most needs... And I fully expect that we'll have significantly more than $1M by then.

[disneysteve]

I'm positive even with premium increases in the future that buying LTC insurance far outweighs trying to self-insure which cannot even come close to buying LTC insurance.

My mom has been collecting on her LTC for the past 3 years. It's unlikely that she will ever live long enough to get back in benefits more than she paid in premiums over the previous 25 years.

[QuarterMillionMan]

My benefit would be $5000 a month for 36 months (3 years) = $180,000 lifetime max benefit. My annual premium is $1300. Keep in mind this is not a monthly premium. This is the amount I pay every year.


I'm 59 today, let's say I pay for 20 years and at age 79 need to go in a SNF ($1300 a year x 20 years = $26,000 in total payments that I would have paid).


$180,000 lifetime max benefit vs $26,000 in payments is no comparison. For ease of calculations, I'm omitting price increases in the policy in the future which is likely to happen but still you can see the difference here.