Is there a time you didn't buy insurance and it came back to bite you?

[QuarterMillionMan]

On the last screenshot about how LTC can fracture relationships rings true with my brother's MIL and the MIL's sister who both fought over the house when the MIL's mom needed to go to a nursing facility. The relationship is damaged beyond repair because the MIL's mom didn't have a living revocable trust. It was a messy ordeal and sad to see family members fight over the house but it was the MIL's fault for not planning ahead and leaving the sisters to fight like that.

[kork13]

QMM, interesting figures. My grandmother is 96 y/o, still living in her own small home, a simple single-wide in a 65+ community, where she's lived for at least 20+ years. However, maybe 4-5 years ago she had an above-the-knee amputation (skin cancer followed by a flesh-eating bacterial infection), dramatically limiting her mobility. My aunt moved in with her, and they're drawing on a small LTC policy my grandmother has to cover periodic nurse visits. She's still generally healthy & as active as a one-legged gal her age probably can be. But I guess her situation is less common as far as LTC claims go. Were it not for the lost leg, she likely would not have started a LTC claim for years to come.

We're hoping that she makes it at least to 100 y/o, as her mother did before her. Though her mobility limitations are definitely starting to take a toll in her general health by being less able to walk around & get basic exercise.

[QuarterMillionMan]

Disneysteve was right about LTC insurance premium increases. Genworth said the next premium increase will be 200% if I choose to keep my current policy. Or I can choose a cash payout with a severely reduced benefit and no annual premium or other options with annual premiums which will also have 200% increases as well. Bummers but since I can afford the 200% increase I'll keep my policy status quo. They keep reducing the benefits and increasing the premiums seems every 3 years.

[disneysteve]

Disneysteve was right

I know things

[LivingAlmostLarge]

Are you sure QMM it's worth keeping? By the way stay in the mainland. In Hawaii th cost of assisted living is double what it is in hawaii. This i know for a fact. Too many of my mom's friends are talking about it. The pricing is shocking.

[QuarterMillionMan]

LAL, I only saw your post today. You're right, it is not worth keeping Genworth having to pay $3000 a year annual premium. I'll take the settlement of $10,000 cash payment and $5000 credit for future coverage which isn't much but $15,000 is the exact amount that I've paid into Genworth all these years and I've been mulling over whether I should keep it and pay the 200% increase or get out of Genworth. I'm getting out. Today I got a quote from Mutual of Omaha and this would be my new LTC coverage but I still need to get approval from the underwriter. Higher benefits and lower premiums.

[LivingAlmostLarge]

How much will your new premium be?

[QuarterMillionMan]

Annual premium $2290.04.

[LivingAlmostLarge]

that's cheaper and a price you are willing to pay? Have you figured out if it's worth paying?

[QuarterMillionMan]

Yup LAL if I'm approved by the underwriter I'll get it. And with the Genworth's $10,000 cash settlement that'll pay for another 4 more years unless Mutual of Omaha increases their premiums as well but it is to be expected that increases will be forthcoming.

[ua_guy]

Dang. My great aunt's homeowner's policy was just dropped in California. Safeco is apparently exiting stage left on all homeowners policies in the area or maybe the state. She's 95 years old and my parents are trying to find a new carrier for her. It sounds darn near impossible. Her home is in really good shape but it was built in the 50's so basically nothing is modern code. Every insurer they've contacted so far wants multiple multiple inspections before they'll even consider it.

[LivingAlmostLarge]

Yup LAL if I'm approved by the underwriter I'll get it. And with the Genworth's $10,000 cash settlement that'll pay for another 4 more years unless Mutual of Omaha increases their premiums as well but it is to be expected that increases will be forthcoming.

Are you sure it's worth buy LTC?

[QuarterMillionMan]

100% positive LAL. I had an uncle in Hawaii who stayed for years in Maluhia hospital (SNF) on Hala drive who didn't have LTC and who didn't have the funds to pay. So they put a lien on his house for him to get the care he needed. After he died his son was not able to repay Maluhia so the house got sold in order to Maluhia. You & I are both from Hawaii so this chart show SNF cost $14,000/month, so $150,000 a year. My uncle stayed maybe 3 years at Maluhia which would probably cost $450,000. Compare that to $2250 a year for LTC. At 58, let's say I live another 30 years x $2250 = $67,500 (for ease of calculations not factoring premium increases every 5 years or thereabouts). Or course, on the flip side I may never use a SNF and lose the $67,500 but with any insurance that's the gamble.

[srblanco7]

100% positive LAL. I had an uncle in Hawaii who stayed for years in Maluhia hospital (SNF) on Hala drive who didn't have LTC and who didn't have the funds to pay. So they put a lien on his house for him to get the care he needed. After he died his son was not able to repay Maluhia so the house got sold in order to Maluhia. You & I are both from Hawaii so this chart show SNF cost $14,000/month, so $150,000 a year. My uncle stayed maybe 3 years at Maluhia which would probably cost $450,000. Compare that to $2250 a year for LTC. At 58, let's say I live another 30 years x $2250 = $67,500 (for ease of calculations not factoring premium increases every 5 years or thereabouts). Or course, on the flip side I may never use a SNF and lose the $67,500 but with any insurance that's the gamble.

For what it's worth, the future value of a $10k initial investment plus $2250 annually for 30 years with an assumed 8% rate of return is $375k. Roughly equivalent to your $360k policy limit and if you don't need LTC it's your money.

edit: Someone please check my math.

Sensitivity analysis for additional context: @7% rate of return, future value is $303k and @ 9% rate of return, future value is $467k.

[QuarterMillionMan]

Not sure how your math got to $375,000 at 30 years. Also, not sure about your $10,000 initial investment so I'll omit it. But for simplicity of calculations let's say 10%.

$2250 x 10% = $225 which comes to $2475 for 1 year. Multiply $2475 x 30 years = $74,250. No where close to my policy limit of $360,000. And let's say I need to file a claim at age 63 in 5 years (I'm 58 now), I'd only have paid $2250 x 5 years in premiums and would still reap the max $360,000 policy (if needed). Your calculations would only have me at $2475 x 5 years = $12,375 total.