Hello,I'm trying to determine if buying long term care insurance is a good decision for me. About nine years ago I read an article with statistics of how long the average person uses long term care before death, about a year, and also about the qualifying circumstances necessary for payment that a lot of policys have.(have to be pretty sick). I am also concerned that a lot of my fellow baby boomers will be needing long term care and the stess on the policy issurers might send them into bankrupcy leaving me holding the bag. I know I can check the Moodys rateing, but with recent events this is not very reassuring. What does anyone think are the basics to consider for long term care insurance?
fredamorris writes,I'm trying to determine if buying long term care insurance is a good decision for me. About nine years ago I read an article with statistics of how long the average person uses long term care before death, about a year, and also about the qualifying circumstances necessary for payment that a lot of policys have.(have to be pretty sick). I am also concerned that a lot of my fellow baby boomers will be needing long term care and the stess on the policy issurers might send them into bankrupcy leaving me holding the bag. I know I can check the Moodys rateing, but with recent events this is not very reassuring. What does anyone think are the basics to consider for long term care insurance? You've listed most of the reasons I wouldn't buy LTC insurance. I'm just going to save and invest the money I'd lose to premiums and pay for my own care.intercst
Probably one of the smartest things my mom did was to buy long term care insurance. I guess it all depends on whether you have to use it, or not.Hedge
My Husband and I both have LTC insurance through John Hancock(since 2002). We based our decision to buy on the fact that we both had one parent who required Nursing Home care. Our Policies also provide for in-home care, something my mother could use right now if we/she could afford it. It is expensive, but it does give us some peace of mind - like all insurance.If we never have to use it I won't be disappointed.Pat
My mom is in an assisted living, however, is getting much of it paid by her LTC which is also with John Hancock. I thought she was wasting money on the premiums, however, it is now paying off. The best plan of course is to earn enough wealth to take care of yourself, however, if you are at a point where you think you won't be able to do that, LTC may make a difference. Pam
Author: fredamorris | Date: 5/20/05 12:03 AM | Number: 46206 Hello,I'm trying to determine if buying long term care insurance is a good decision for me. About nine years ago I read an article with statistics of how long the average person uses long term care before death, about a year, and also about the qualifying circumstances necessary for payment that a lot of policys have.(have to be pretty sick). I am also concerned that a lot of my fellow baby boomers will be needing long term care and the stess on the policy issurers might send them into bankrupcy leaving me holding the bag. I know I can check the Moodys rateing, but with recent events this is not very reassuring. What does anyone think are the basics to consider for long term care insurance?Another thing that the insurance companies don't make very clear is that they can raise your payment at any time. It's not a fixed payment.I'm with intercst on this one. My wife and I are 58, and our premiums would be over $1000 a month, so if I just put that amount away for 20 years, we should have enough for a year or two each in a nursing home. If not, well, there goes my son's inheritance.Russ
Both Consumer Reports and Suze Orman agree that if you're going to buy LTC insurance you should wait until your very late fifties or early sixties to do so. If you're younger than that, they would advise against it because you'd be paying premiums for too long a period of time.My 'wealthier' friends, with nesteggs greater than $2M, are all self-insuring. My own nest egg won't ever be that large, so I too have to make this decision at some point. I'm going to wait until I'm 63 or so, do a lot of comparison shopping and rating checks, then taking into account the cost of the premiums, sharpen my pencil and decide whether or not the cost is worthwhile in my individual situation.Since most boomers don't have large enough nest eggs to cover their medical deductibles for one major illness, there might be a good chance that medicaid will go bankrupt before the LTC insurers. Just a thought...2old
Suze et al may be right about that timing. My mother didn't actually start buying it until she was in her 70's and is now 87 and using it. Pam
If you're thinking about it, do it before 60. There's a price change once you past that.I squeezed in right under the date and saved some money.IMHO I like the peace of mind that DW and I won't wipe out the other if something tragic happens.Good Luck,JimPS: I also have John Hancock. Found them to be no pressure and very accomodating while I was doing comparisons between companies.
You've listed most of the reasons I wouldn't buy LTC insurance. I'm just going to save and invest the money I'd lose to premiums and pay for my own care.How about looking at it from this perspective. I think estimates are something like those over 65 have a 40% chance of needing Nursing Home care of some kind. Average need is something like three years at average $50k/year.So something less than a 40% chance that you will need $150k or so. An example for a 65 year old:65 year old wants $150k for care if needed. Assume he is living off a retirement portfolio greater than $150k. If that portfolio is large enough to be equal in value to $150k in 2005 dollars until age 85 or 90, he will probably have enough to cover care. This assumes that the retiree is not concerned about a legacy. Many use LTC to protect a legacy which is a different use for the insurance really.So if he doesn't have all the $150k needed, instead of paying for LTC, he can reduce his withdrawal by approximately the LTC monthly cost* and may (he should do some calculations on this to satisfy himself) come out ahead. After all, he may not live to 85 and he may not need LTC at all.Also, annuitizing the $150k or whatever is available at those ages can yield a high return.But, if he doesn't have near the $150k value in the portfolio over the 20 or so years, LTC may have to be considered. Many, I suppose will just rely on medicaid if they spend down their assets. California (other states?) does not count a home or a car when calulating assets so that should be considered.It would be interesting if someone knows how to handle the actuarial and probability math to look at this.JG*Article in paper last week said that a 65 year old can expect to pay $150/mo for LTC. It also expressed concerns about rising premiums, the viability of some LTC providers, and the need to read contracts very carefully to see what the benefit will be.
My dad passed about 3 years ago, he had a policy and used it.Be certain that any policy you get will provide in-home care. He would never have willingly gone to a nursing home, and fortunately the family never had to confront that issue since he could get in-home care. Taking care of a relative who is of sound mind, but failing body can be exhausting and the care was a great blessing.Be sure a policy contains an inflation adjustment provision. If you buy it now and need it in 20 years, it will not be adequate, if it does not have this.DW and I have policies, both to protect a legacy, and to make the decision of bringing in an outside caregiver easier. Withouat a policy, the temptation will be to not bring someone in due to cost, even if it is an affordable cost. This will ultimately put great stress on the spouse who is in good health.
The biggest problem I see with LTC insurance is whether you can afford it long enough to actually use it. I read so many cases where people have paid premiums for ten years or more and then suddenly get hit with a premium increase of 50% or more which they can't afford. They end up dropping the coverage just as they approach the stage in life where they might actually need it. And all those premiums which could have been invested are gone.There are probably good companies that protect against this but you need to do some serious investigating. My friend who is a Prudential rep assures me they pool their LTC policies in some way that avoids those huge increases down the road. It sounded good but since I wasn't planning to buy LTC, I really haven't analyzed it.
I know this is going to sound like common sense, but I'm going to say it anyway. Things to consider when purchasing long-term care insurance:1. Will you be able to afford premiums when you retire? There's no sense buying a policy while you're employed and then not be able to keep it in force when you retire.2. Even if you are financially secure, are you okay with relatives making decisions as to where you should stay based on economics. I know this sounds harsh, but what if you have greedy kids who stand to inherit whatever is left over after you die. Can you trust them to put you in the best home possible, knowing that it will take away from their inheritance. A LTC policy takes care of this problem.3. Strength of the insurer. It won't do you any good to pay premiums for years and years if they are not around when you need them. This is a scary prospect because we have seen seemingly big insurers face big troubles. 4. Do you need an inflation rider. Healthcare costs will most assuredly rise in the future. If you buy a policy in your 50s, it might make sense to get some sort of inflation rider - for an added expense, of course. 5. Should you wait until you are older to buy a policy? The risk you run in waiting is that you may not qualify at a later date. I like the idea of buying a policy in your 50s. Sure, you will pay more in premiums over the years, but you are most likely going to be able to qualify for coverage.Those are just a few thoughts I have on the topic. I DON'T SELL long-term care insurance.JLPhttp://allthingsfinancial.blogspot.com
LTC ins is a long term promise, you are correct in questioning their promises. In theory there are state guarantee funds that back up the LTC ins, so you will have to blow through that before the policies give out completely.The real danger, assuming a high rated company, is the US$ collapses in value. Insurance companies promises are often backed by US gov bonds.Also remember that if the US gov will pick up your expenses, then your only consideration is if you have assets that need protecting. There may be other ways to protect your assets.
Two words "Get it!"I have two long time friends whose wives are totally incapacitated from osteoporosis. One has been in this condition for 10 years; the other for one year. Neither had a LTC policy when the incapacitation became total. Both husbands are trying to cope by maintaining their wives at home, with home healthcare help, because a nursing home would liquidate their retirement savings in a relatively short number of years.How are they doing? Well, one is a CPA and still works part time. He's in his 80's. The other is still "adjusting." Every day has fresh challenges, new emegencies, additional expenses. I have been taking him out, sometimes just for a drive, or lunch to break the stress. He can't get use to having an outside care giver around for 24 hours every day in their apartment, for example.Look, this happens to a lot of people. Both my parents ended up in a nursing home from medical conditions. Two people in a nursing home exhausted their life savings in 3 years. Yes, then there was Medicaid. But can you count on it with the large number of people going into retirement in coming years.There's also a whole issue of what kind of a nursing home you can get into with limited resources and predictable Medicaid dependence. The bottom tier of nursing homes that take anybody -- well, you can smell them from the parking lot.With my parents experience, I enrolled in a LTC plan in my 50's (I'm 70 now). That's one way of keeping premiums down, and it makes it easier to afford an inflation adjusted policy.I think I've said enough. Just "do it."
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