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My DH and I took out term life policies when our kids were 2 just in case.

They just turned 22. Our term policies expired. The price went from $350/6 months to $1800/6 months. We said HECK no!

Our financial planner said that at our age (54) and with our now healthy net worth we don’t need life insurance for the kids anymore. She said we could get a new type of insurance which combines life insurance and long term care insurance in that if you need a nursing home before you die you can get part of the payout ahead of time.

Anyone heard of this? Opinions? Haven’t seen the numbers yet.
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Our financial planner said that at our age (54) and with our now healthy net worth we don’t need life insurance for the kids anymore. She said we could get a new type of insurance which combines life insurance and long term care insurance in that if you need a nursing home before you die you can get part of the payout ahead of time.

Anyone heard of this? Opinions? Haven’t seen the numbers yet.


Since you don't need the life insurance, I would suggest doing this only if it's less than a stand-alone long term care insurance policy with the same benefits, and you were actually going to buy a long term care policy anyway.

AJ
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They just turned 22. Our term policies expired. The price went from $350/6 months to $1800/6 months. We said HECK no!

Good decision as you no longer need life insurance. Our FP actually recommended that we cancel our term insurance a few years ago as the kids were out of college and we no longer needed it even though the policy had a few more years before it would expire. Instead, we put that money into the market.

Our financial planner said that at our age (54) and with our now healthy net worth we don’t need life insurance for the kids anymore. She said we could get a new type of insurance which combines life insurance and long term care insurance in that if you need a nursing home before you die you can get part of the payout ahead of time.

If you don't need life insurance at all, why would you want any product that included it? Does your FP sell this type of product?

I would opt for the LTC policy as a stand-alone product.
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StockGoddess,

You wrote, Our term policies expired. The price went from $350/6 months to $1800/6 months. We said HECK no!

I cancelled my term life policy right after my divorce. My daughter insisted on marrying her boyfriend and my son was in junior college. I figured no one would be depending on me shortly and if I died the next day my kids would still wind up with a few grand from the estate, my 401(k) and my IRAs, so they would still have more money to deal with those early years than I did when I was their age.

My father was an insurance salesman, so I was indoctrinated in the industry at an early age. Of course he was quite "sold" on life insurance and maintained a policy. But I became an software engineer so I had gone through the value-prop of life insurance many times and reached the conclusion that you should only insure against risks that have consequences that you can't in good conscious live (or die) with.

If you can live with the consequences, just putting the money in a savings account or CD would probably produce a better outcome in most cases. Investing those savings could (eventually) help make you rich or let you retire early. Or both.

As for long-term care insurance? I figure being rich should mostly take care of that. Also if I become senile like my father did? Well, I'm probably not going to remember ... or care. Also he only lasted another 3 years or so after he reached the point where I would have had him put in a home. And my mother actually only had him in one for about a year. But even at 3 years, his care would have only cost at most about $250,000. I think my estate could to cover that. And if not? Medicaid is always an option. But YMMV...

- Joel
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"My DH and I took out term life policies when our kids were 2 just in case.

They just turned 22. Our term policies expired. The price went from $350/6 months to $1800/6 months. We said HECK no!

Our financial planner said that at our age (54) and with our now healthy net worth we don’t need life insurance for the kids anymore. She said we could get a new type of insurance which combines life insurance and long term care insurance in that if you need a nursing home before you die you can get part of the payout ahead of time.

Anyone heard of this? Opinions? Haven’t seen the numbers yet. "

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Is your financial planner planning a cruise?

Howie52
If you have real concerns about long-term care - and folks do - taking steps to
provide insurance may be worth the cost to you. This tends to be an individual
situation and while you can put estimates on the cost/benefit - so far the
predictability of the benefits has been less than clear to me.

Read the prospectus and policy closely and try to know under what circumstances
the policy may be revised.

Good luck.
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I am 72 and have never had life insurance in my life.

I explored long term care insurance in my fifties and concluded that if I took on the premiums, my risk would shift from "maybe going broke later due to care expenses" to "maybe going broke from paying LTC premiums". I decided to self insure this risk since no one in my family since 1800 has ever needed LTC.

Just saying...
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I think long term care insurance is most useful to those who want to protect assets of the surviving spouse when one enters a nursing home. But we do hear the insurance companies issuing the policies have underpriced them and are now raising prices to try to catch up. Hence, expect premiums to continue to rise. And some may become unaffordable.

Some life insurance policies get paid up over time. If you reinvest the dividends they are tax free and you continue to build more life insurance value. Once paid up, these policies are relatively painless. Of course, a clever investor might do better cashing them in and investing the proceeds.

One common policy type is the veterans insurance all of us got in the military. It is possible to carry on the policy after you leave the service. And some speak highly of the paid up benefit.
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I think long term care insurance is most useful to those who want to protect assets of the surviving spouse when one enters a nursing home.

This would describe our reasoning. In fact, DH and I have had the conversation that we would expect to no longer need LTC when the first one of us passes. At least it would need to be revisited to see if it should be kept or not.

But we do hear the insurance companies issuing the policies have underpriced them and are now raising prices to try to catch up. Hence, expect premiums to continue to rise. And some may become unaffordable.,

I've seen this particular reasoning a lot on the boards, but we have not had this experience. We have our policies with Genworth, have had them about 10 years, and have not seen a premium increase at all. They could certainly raise the premium in the future, but to date, that has not happened.

Like life insurance that is not needed if there is no income to replace or survivors (spouse, children) to provide for, I think LTC is not needed if someone does not have a spouse who may be left impoverished should one of them require nursing home care.
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I think long term care insurance is most useful to those who want to protect assets of the surviving spouse when one enters a nursing home. But we do hear the insurance companies issuing the policies have underpriced them and are now raising prices to try to catch up. Hence, expect premiums to continue to rise. And some may become unaffordable.

For those that are attempting to accept the spouse's assets, you need to be aware that there are long term care policies that have time and/or benefit limits. And there are also ways to protect assets other than using long term care policies.

My aunt has been in long term care with Alzheimer's for 5 years. She and my uncle saw both of her parents live out the last several years of their lives in long term care facilities with Alzheimer's, so they knew it was a strong possibility for her. My aunt and uncle purchased long term care insurance, and he was able to put her into a very nice care facility (that doesn't accept Medicaid) when he could no longer care for her, about 5 years ago. She has deteriorated to the point where she no longer recognizes anyone, including him and their kids, and mostly lays in a fetal position all day. Their long term care insurance is approaching the end of the benefits that it will pay, so he's going to have to move her out of her current facility into a facility that accepts Medicaid, or pay for the care himself out of their assets.

He's choosing to move her into a facility that accepts Medicaid recommended by staff at the facility that she is currently in. It's also a nice facility, although not as nice as her current one. He's able to do this because he also protected their assets by putting them in trusts that protect assets from Medicaid claims in his state. If they had wanted to, they could have forgone the long term care insurance, but she would not have been able to stay in her current facility for as long as she has. The long care term policy did cost some of their assets, but not as much as putting her in that facility for 5 years would have cost them.

I would strongly recommend that anyone who is purchasing long term care insurance, especially those policies that have benefit limits (either time or dollar amounts) to also ensure that they also have their assets protected by trusts that will protect their assets from Medicaid claims in their state, if they believe that they will choose to use that option once the benefits are depleted. If they are willing to let Medicaid pay for all of the long term care, then they could choose to just set up the trusts.

AJ
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I have never heard of trusts that protect assets from Medicaid. Need to look at that.

Hmmmm

DH father died of ALS. Mine of a stroke at 69 after lifelong diabetes. My mom is still kicking at 84, his mom at 74. No Alzheimer’s yet. The ALS was 2-3 years.

I have thought about self insuring too. We will retire multi millionaires. It’s been slow going for decades but once you get enough in there to get some momentum moving it’s astonishing how fast it can grow.
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I have never heard of trusts that protect assets from Medicaid. Need to look at that.

They are state specific, as each state sets it's own rules on receiving Medicaid. The best resource would probably be an eldercare attorney from your state (or the state that you will retire to, if you're planning on moving).

AJ
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In the research I have done on protecting assets from Medicaid, I found two that seem simple enough to understand. One is a trust and one is an annuity.

The trust is an irrevocable trust (vs "plain jane" trust). The problem is that you have to give up control of the assets inside the trust. I guess this is fine if you trust your trustees to manage it for your benefit. And, there is still a 5 year look back should you need Medicaid within 5 years of setting up this kind of trust.

The "Medicaid annuity" - also sometimes called a period certain annuity - is probably the way I will go if my spouse precedes me to the nursing home. Once assets are placed inside this annuity, Medicaid does not count them for the purpose of eligibility. The annuity is set up with certain period in mind and the income spins off to the spouse not in the nursing home. The income is not the nursing home person, so Medicaid does not count it. As of a year ago, these did not have a 5 year look back and can be set up even after the person moves into a nursing home - of course the person's assets will be used for several months until a new eligibility review is completed.

Just a couple of thoughts on how to protect assets...

FWIW - we quit life insurance in our 30s (now 66). Made no sense to me.
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The "Medicaid annuity" - also sometimes called a period certain annuity - probably the way I will go if my spouse precedes me to the nursing home.

Why would you plan to go to a nursing home if you have a million in assets? There are better places, albeit more expensive, than a nursing home.

CNC
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