No. of Recommendations: 5
I was never a fan of LTC insurance, feeling that the policy was full of loopholes (for the insurer) that I didn't understand, and just a general feeling that when the time came, they would find a way not to provide the expected benefit. As the premiums increased, I gritted my teeth but held on -- not because I thought it was worthwhile, but because my wife believed in the value of having the policy; my family has a solid history of Alzheimer's or dementia. When my wife died, I dropped the policy like a lead balloon.

Now, all that said, my financial situation suggests that I can self-insure on this. And as my adult children establish themselves, I believe they would be wiling and able to supplement anything I might not be able to cover. This would not be true for everyone, of course.

Finally, your sunk cost is completely irrelevant to your decision. It sucks, of course. But there's no sense throwing good money after bad, if you decide that the way forward is to drop the insurance.
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The worst part is reading online reviews of the company that
we are with has a high rate of not paying claims.
(Maybe those with favorable experiences don't their post positive
comments)


I've also have LTC coverage purchased over 25 years ago. Would you mind sharing the link to the review/s you mention?

Thank you,

Bill
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No. of Recommendations: 2
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They can increase your premiums at will, and your only options are to either pay up or abandon the policy?

Not sure why anybody would have signed up for such a thing.
How could you have overlooked such an obvious pitfall?

This is on par with the Indexed Universal Life (IUL) policies where the company can reduce the ceiling on the investment return you get credited with at their sole discretion. Never could see how anybody would agree to that, either.

And now, after 20 years of paying premiums they've got you in the "sunk cost" trap. (I assume you don't get any money back if you abandon the policy, right?)


Hate to drop the policy now, but being 74 you just never know...
It won't help you now, but have you run the figures of how much money you would have if you had saved or invested all the premiums you paid into your own personal "LTHC fund"?
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They can increase your premiums at will, and your only options are to either pay up or abandon the policy?

Not quite, but close enough that it feels that way. BTW, your Medicare Supplement likely works the same way.

They generally can only increase by age bands. That is, everyone age 74 would pay the same rate based on what they actuarially determine the cost should be (or most recently was) for that age-based risk.

Basically, insurance companies have been jacking up the price because 1) they greatly underestimated future expenses under these policies and 2) greatly overestimated default/cancellation rates - leaving them on the hook to pay more benefits. People cancel their life insurance all the time. They rarely cancel their LTC policy. Insurance companies assumed LTC policies would have similar cancellation rates.

New rules have rolled out for new policies but the older policies operate(d) under a loss ratio of 60%. Meaning, that 60% of all premiums had to go to cost actual care. The other 40% was gross profit. So, the drastic increases someone might see on an old policy are still limited by that upper limit - which means that those policies are indeed going up in cost because costs are actually higher.

The new rules cap any premium increases to 85% loss ratio (only 15% can go to gross profit) - but only if your state participates in the new rules. Thankfully, the vast majority do.
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Have the same issue. Our LTC insurance was dropped by my employer (company didn't do anything but deduct premiums from check, we paid all of premium, no matching). We were allowed to continue with the LTC company, but premiums increased 100%. Kept with them b/c they were still cheaper than every other company out there. After a few years, was thinking of stopping b/c of expense and reviews of LTC companies in general. Had my financial planner look into the benefits again, compared to other companies, and he said we had a great deal on premiums and benefits compared with other companies. So we are still with them. But I am constantly expecting another doubling of the premiums any time. Saw my mom need nursing care for almost a decade. That is the main reason I keep it. She was on Medicaid and we got pretty decent care for her but she had to be destitute to get the aid.
JK
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But I am constantly expecting another doubling of the premiums any time.

You might live in a state that has started to regulate price increases on old policies.

I know just enough about this topic to be dangerous on a message board so if you have concerns, I would encourage you to check with your state Dept of Insurance to find out more details and either put your mind at ease, or know that you indeed have a reason to be concerned.
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And now, after 20 years of paying premiums they've got you in the "sunk cost" trap. (I assume you don't get any money back if you abandon the policy, right?)

I got caught in the increasing costs of my LTC policy when the insurance company quit writing new policies. After notice of a large increase I decided to cancel the policy rather than continue holding on to something that would end up costing me more than I could afford in retirement.

Upon canceling I was surprised to learn that all the premiums that I had paid in would still be available to me as a LTC benefit should I need it. Of course it doesn't earn anything and never increases in value, but being able to draw out the premiums I paid in if I needed LTC was better than not being able to.

I don't know if all LTC policies are like that or not.

These days I am not a fan of such policies.
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No. of Recommendations: 5
I was never a fan of LTC insurance, feeling that the policy was full of loopholes (for the insurer) that I didn't understand, and just a general feeling that when the time came, they would find a way not to provide the expected benefit. As the premiums increased, I gritted my teeth but held on -- not because I thought it was worthwhile, but because my wife believed in the value of having the policy; my family has a solid history of Alzheimer's or dementia. When my wife died, I dropped the policy like a lead balloon.

Now, all that said, my financial situation suggests that I can self-insure on this. And as my adult children establish themselves, I believe they would be wiling and able to supplement anything I might not be able to cover. This would not be true for everyone, of course.

Finally, your sunk cost is completely irrelevant to your decision. It sucks, of course. But there's no sense throwing good money after bad, if you decide that the way forward is to drop the insurance.
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No. of Recommendations: 1
There is a fundamental problem with LTC Insurance almost no buyer appreciates. The companies who sell it are life insurance companies. Unlike other companies it is almost impossible for a Life Insurance Company to go bankrupt.

That means the rate setters (state insurance commissions) will let the rates go up instead of forcing the companies to live with the errors in setting premiums too low.

The rational for not forcing bankruptcy is not unreasonable -- if the XYZ company goes belly up not only future claimants but those actually getting monthly checks today are hung out to dry.

The only thing approaching a real solution would be preclude any Board Member, Officer or Actuary from a company increasing premiums on existing policy holders form ever holding such a position at any insurance company for life.

Such high paid folk's understand their financial situations a whole lot more clearly than mere customer's situations.
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No. of Recommendations: 3
My bottom line is that if I pay for LTHC insurance,
I want to be sure that I can get what I am entitled to
when I need it (without long delays &/or an attorney to help).

But I guess that some companies will try to
fine print the daylights out of
a claim. IMHO.

Worst case: you pay, then you are sick, too bad...

Example:

https://www.classactionsreporter.com/consumer/john-hancock-l...
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My parents both had LTC insurance and for them it worked out very well. They both got benefits many times more than they paid in. Genworth took a big hit because of people like them. My mother was in a nursing home for 3 years; Dad was in for 9 years. You can’t buy the policy they had any more.
But there was no problem as far as their claims being approved.

Bill
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No. of Recommendations: 2
Wradical writes,

My parents both had LTC insurance and for them it worked out very well. They both got benefits many times more than they paid in. Genworth took a big hit because of people like them. My mother was in a nursing home for 3 years; Dad was in for 9 years. You can’t buy the policy they had any more.
But there was no problem as far as their claims being approved.

</snip>


The bolded part is the key point. Anyone using your parents' experience with LTC insurance as a model for today's policies is likely setting themselves up for a bruising.

intercst
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The bolded part is the key point. Anyone using your parents' experience with LTC insurance as a model for today's policies is likely setting themselves up for a bruising.

I've been paying into LTC for over 20 years and if I need it I fully expect the company to honor its obligations. Nothing I've read leads me to believe otherwise. They are well capitalized and have been paying high dividends on my life policies without fail even with low interest rates (my policies guarantee 4.5% return on dividends left to accrue). Years ago I had a fairly significant umbrella claim and it was also handled just fine.

Best,

Bill
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