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I am a 62 year old female and planning on retiring at 65. I am married (husband is 70) no children and totally debt free. I have been maxing my 401K, have my Roth IRA's, some mutual funds and too much savings that I will be investing soon. But in my financial planning I have been in a dilima as to whether to purchase long-term health care insurance. Today I am in excellent health, never had any serious illnesses or operations. I will soon be 63 and want to make the dicision before then. I know the premiums are expensive, probably over $1,000 a year. Hopefully I will not need any assisted care for over 20 years. I dread the thought of a nursing home and hope I die before that. My thought is that $1,000 invested over 20 years would give me a good return that I could pay for any home care that I might need in my old age. I know insurance is not investing but it is part of my overall financial planning for retirement. It is difficult to find information on this subject and much of it is conflicting. Any feedback would be appreciated.
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But in my financial planning I have been in a dilima as to whether to purchase long-term health care insurance.

I can't offer great wisdom, but I can offer some information. TMF Pixy did a series on long-term care. Here's a link: http://www.fool.com/retirement/retireeport/2000/retireeport000306.htm

TMF ExRO
Phil Marti
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Hi Oldsis,

There was a cogent article in Money magazine (I know some people look down their noses at this magazine, but occasionally it does have some useful material) in the August 1999 issue, page 52. The title was: "Stocks vs. Insurance - Why a long term-care policy may not make sense."

The article written by Henry Weil covered many of the basics about long term care, but I found the following quotes from that article to be the most interesting:

"If your assets approach $1 million, you can afford nursing-home care with plenty left over for a spouse to live on. If your assets are closer to $100,000, you probably can't afford the premiums, in which case a nursing home could cost everything you've got. But once you are broke, Medicaid will pick up all subsequent costs. … It seems to me that long-term care might make sense if your assets are in the middle six figures."

If these quotes interest you, a trip to the library may be in order to read the complete article.

Hope this helps, Alan
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Regarding columns in back issues of Money magazine --

I am a big advocate of using public libraries whenever possible, but in the case of Money magazine, they do (at least currently, August 2000) provide access to lots of their content, online, free, and (I believe) without requiring registration.

Here's a link to the August 1, 1999 column cited:

www.money.com/money/depts/retirement/retirement/archive/9908.insurance.html

And if you visit www.money.com and search for "long term care", you'll find some more recent references as well.

Enjoy!
Phooley
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... in the case of Money magazine, they do (at least currently, August 2000) provide access to lots of their content, online, free,...

Ron,

Thanks for the Money link.

Alan
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I know insurance is not investing but it is part of my overall financial planning for retirement. It is difficult to find information on this subject and much of it is conflicting. Any feedback would be appreciated.

oldsis,
Your local Health Insurance Counseling & Advocacy Program (HICAP) is a volunteer group that can assist you with unbiased advice. Also your local Area Agency on Aging can assist and advise without costs.
One other thing to consider, if available in your state, is a Partnership Long Term Care Policy which provides some asset protection by partnering with private insurance and Medicaid.


Frank(Good Luck with planning)
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To "oldsis" -
62 isn't really so old nowadays.
"dilima" Do you mean "dilemma"?
-
About a year ago I looked at long-term care insurance from a provider of excellent repute.
In one policy the total benefits were limited to about $200,000; another policy provided unlimited benefits,
at a much higher premium (natch).
-
It seems to me that if you can afford to self-insure, that is the simpler way to go. You avoid all the hassle of forms to fill out, and you don't need to worry about the insurance company going broke.
-
There is also the hope that Medicare will be expanded to include long-term care.
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To Latinus:

In response to your message about Long term Care Insurance, you state that you looked into LTC protection about a year ago - I know you must not have looked the Largest LTC company out there to date which is General Electric Capital Assurance because your misinformed. First off most people don't have assets to cover this hugh cost(depending on where you live) you could be looking at 40,000 or up to 100,000 a year for home care or facility care. What about a couple that maybe on of them have a disease like Alzheimer's in the family history, HOW are they going to pay that for maybe 10-15 years? As far a wealthy person it only makes sense to transfer that risk as they do all risks!
You also state that there are forms to fill out, well with the GE plan there is a cooridnator that arranges for all home care, (someone to perpare meals,dress, bath,use the bathroom, shower,shave,move your body from place to place and much more) or if you need to be at a facility (assisted care or nursing home care).
Also this person fills out the cliams forms for you and will come to your home no matter where you live in the US. Granted some LTC insurance sompanies are now up for sell, but if you look at GE in business for 25 years and recently buying 90% of A Travelers company I don't think you have to worry about GE going BROKE! This company wrote over 594,000,000 worth of LTC insurance last year alone. Last to say-Medicare/caid DOES NOT pay for LTC now for a reason THEY CAN"T AFFORD TO, and in the future when the over 25 million baby boomers hit LTC how is medicare going to pay for this then- What planet do you live on? There is so much more information about LTC you should do better research on this matter before you gamble - If you do gamble get together at least 500,000 per person and find a VICTIM to arrange all your care for 4-5 years.
thank you.
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Since I'm in the process of looking for LTC insurance, this stuff is very timely. My experience so far with Allstate and a few other carries is pretty miserable. They all seem to use the same vendors, and all of them have the same mistakes on their quotation forms. I think that really means that there is only one vendor writing this stuff in California.
Do you have website or contact for GE Capital Assurance ?
Thanks..
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To: Geneinca
Before you commit yourself to an LTC policy, consider TIAA-CREF.

Try http://www.tiaa-cref.org
and look for
"How can you design a Long-Term Care policy to meet your needs? Decide what options you want, then use our calculator to estimate your premiums."
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I did as you suggested. Unfortunately, I was not part of the education establishment, and that insurance is only available ro retired teachers, etc. OR to anybody 18-84 in certain states. I live in California, and it isn't one of those states, so I'm not eligible. Nice try, though..
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To GeneinCa
I live in California, and it isn't one of those states, so I'm not eligible.
-
On the TIAA-CREF site it says "If your state isn't currently on the list, check back with this site periodically, as approvals are pending in many other jurisdictions."
Ask them on their 800 number how the approval is getting along.
-
The real issue on this board is whether or not to self-insure.
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I did, and California still isn't on the list.
I have already decided that self-insuring is too risky.
I appreciate your input..
Thanks,
Gene
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For GeneinCa (and others) -
I just found this -
MONEY TALK by Jean Sherman Chatzky
Long term care insurance
Jean answers your personal finance questions.
http://www.money.com/depts/investing/moneytalk/archive/000922.html
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Geneinca

Consider this:

The average life span in a nurseing home is about 3 years for a women

Average cost per year is $45,000.

If you have lots ($500,000) you do not need TLC.

If you have little (less than $100,000) you do not need TLC.

TLC is nothing more than life insurance, only in a different form.

If you want to leave money to someone, give it to them now while you are alive, or

Buy term life insurance.
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Dear sensen, you wrote:
Geneinca

Consider this:

The average life span in a nurseing home is about 3 years for a women

Average cost per year is $45,000.

If you have lots ($500,000) you do not need TLC.

If you have little (less than $100,000) you do not need TLC.

TLC is nothing more than life insurance, only in a different form.

If you want to leave money to someone, give it to them now while you are alive, or

Buy term life insurance.

...

I'm having some trouble with the logic.
Based on the above, I should spend $135,000 out of my wife's inheritance, rather than pay for LTC.
Probably less, since I'm a male.
Am I missing something?
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Greetings, Geneinca, and welcome. You asked:

<<Am I missing something?>>

Maybe, but then again maybe not. It's a tough decision. For some thoughts on the matter, go to the weekly column archives at http://www.fool.com/retirement/retireeport/2000/retireeport2000.htm?ref=LN and read the 6-part series I did on the topic. Start with the article "The Spectre of Long-Term Care" on 1/31/00 and end your reading wwith the article "Long-Term Care Finale" on 3/6/00. Those six missives may help you out somewhat.

Regards..Pixy
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Geneinca asks,

I'm having some trouble with the logic.
Based on the above, I should spend $135,000 out of my wife's inheritance, rather than pay for LTC.
Probably less, since I'm a male.
Am I missing something?


You're missing two things. "How much is the LTC insurance premium?" and "What's the probability my wife or I will end up in a nursing home?"

Your insurance company has a reasonably good idea of the answer to both of these questions and sets the premium high enough to cover all contingencies, the insurance company's overhead, and a very healthy commission for the agent that sold you the policy.

If you have enough in assets, you'll invariably come out ahead self-insuring for this risk. Your estate will inevitably be larger if you can eliminate the insurance company's overhead and agent's commission from the equation.

intercst
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Dear intercst, you wrote..
You're missing two things. "How much is the LTC insurance premium?" and "What's the probability my wife or I will end up in a nursing home?"

Your insurance company has a reasonably good idea of the answer to both of these questions and sets the premium high enough to cover all contingencies, the insurance company's overhead, and a very healthy commission for the agent that sold you the policy.

If you have enough in assets, you'll invariably come out ahead self-insuring for this risk. Your estate will inevitably be larger if you can eliminate the insurance company's overhead and agent's commission from the equation.

....

I read your response to my wife (a former underwriter for a Life Insurance company), and she said you are most likely correct.
Thanks for the heads up..
Geneinca
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