No. of Recommendations: 2
Do all you folks who think LTC is a bad investment feel the same about term life insurance? That's a similar product that you may pay on and never use, but I'd still rather have it to ensure that I have provided for my family

Just my view, but....

With term life insurance, you pay as you go. Each year, most of your premium goes towards the "cost of insurance"...that is, the amount the insurer has to pay out in death claims for that year, while a much smaller part goes to the insurer for overhead and profit. But because this is such a simple concept, its easy to understand and therefore highly competative in the marketplace, hence, reasonably priced.

The exact opposit is the case for LTCI. Only a tiny part of your premium goes to the Cost of least in the early years. The bulk of your premiums, as I'd mentioned previously, goes into long term capital reserve accounts...where insurers have complete and essentially hidden control.

Also, LTCI is not at all like property, casualty (auto and home for consumers) and life insurance. With these, you hope you never have a catestrophic loss and the insurer hopes you don't either....its a shared interest. But this is not how LTCI is perceived. Insurers have gone to great lengths to show us, thru any number of "white papers", that most of us will spend out last days in some obscenely expensive nursing home, spending our estates to insolvency, etc, etc. Most buyers of LTCI accept this and see their policies as cost-sharing schemest they will most likely use...kinda like dental insurance.

And sorry to be a nitpicky stickler, but true insurance is not an investment....its a hedge....a transfer of the risk of a potentially catestrophic loss to an insurer in exchange for the "known loss" of the premium.


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