I'm 60 but my wife and I purchased LTHC a few months before turning 60. The reason for buying it now is that if physically you are in good shape, don't take the gamble that you'll be as healthy in a year. Should you get a heart attack or some other illness between now and then, you might not be ineligible and if you are eligible, your premiums will be much higher.
Look into the viability of the company and their track record over many years. You may want to get financial rankings using AMBest.
Although the policies are supposed to never raise their prices, the weaker the company the greater chance they will raise the prices.
We chose to get inflation protected policies which will increase with the rate of inflation forever to a maximum of 5%/year. Most companies have the same waiting period for home health care as nursing home care (30, 60 or 90 days, whatever you choose) except GenWorth which starts the day you need it for home health care. GenWorth is sold by AARP (they used to carry MetLife). Suzi Orman recommends this type of policy from GenWorth, but you should check everything yourself.
My problem with adding additional coverage later when you need it is that the price will probably be higher then and your health probably won't be as good, giving them a reason to charge you more than they would now.
You're really buying peace of mind and hopefully will never need to use it. I think that is the attitude you should have rather than how long it will take you to get back your investment once you need it. You'll sleep better at night knowing you won't be wiped out financiall in the first few months of nursing care, and maybe you can give some of your lifetime savings to your survivors rather than a nursing home.
Hope this helps,
Unfortunately you made what appears to be a number of ill-advised choices in the purchase of your policy. The number one reason most people are disenchanted with LTC insurance is due to cost. Just as with homeowners and automobile insurance, if you underinsure yourself YOU WILL pay for it in the long run if you have a claim. People can not underleverage themselves when it comes to paying for protecting their nestegg and it seems that you did just that.
Don't forget that you can still get a policy to supplement your existing one if you feel that it is not enough, and if you do get another policy be sure to think long and hard about how truly important it is to protect your lifesavings and to not go cheap or your family and nestegg will pay the price.
And BTW, it isn't a gamble when you buy LTC insurance when you have the 'refund of premium' rider because that will pay your estate back every dollar you paid into it if you didn't need the care. Sure its a costly rider, but you get what you pay for...
Yikes! That's quite a situation you seem to be in. Sure the current crisis is effecting most of us, but when making this decision please do not forget to look back on what you stated youself, "current state of the economy." This is just that, current and will not last for very long becasue there is too much greed in the capital markets, and ya know what... greed will never sit too long on the sidelines. You, me, everyone on this forum, mutual fund managers, state pension funds, etc., etc we all want to (get back) and make more. Some more than others, but the fact of the matter is that this is a current issue that will one day phase out and people will pour their wealth back into the stock market.
So with that said, what will you do if you drop your policy (that you are quite lucky to have gotten in the first place) and then a few years from now the markets have recoupped their losses and you have an extra $4k a year in your pocket and you, God forbid, need full blown custodial nursing care at $100k/yr?
I think the answer is clear. Keep the policy and hope you #1 never need it, and #2 be thankful that you even have coverage as I know alot of people who are declined for silly things that underwriters for insurance companies will not cover. Be thankful and keep that policy; that's my $.02.
All the best...
I am 49 and looking into LTC insurance which I feel is more important than life insurance. I am getting quotes from highly rated firms on the AM BEST and Fitch systems. Mass Mutual is A+++ for financial stability. Also Metlife and John Hancock are highly rated. Be careful you dont get insurance with a B- company. Most of my info has come from suzeorman.com insurance kit. Its very informative and you can access it free using PeopleFirst as the passcode. Hope this helps
The biggest uncertainy with LTC insurance is that it's private. There is no guarantee the carrier will be there when you need it. Thus, it is best to do a LOT of research (there are many great articles on the web) for this is one of the most complex insurance products ever sold. Many policies aren't worth the premiums, frankly. One of the most important things is to check with your state regulatory agency and find out which carriers of LTC insurance have the most complaints filed against them. Remember that there are companies with multiple divisions - Conseco, which recently exited from LTC insurance, had 4 different company names when you included their subsidiaries.
That said, I firmly believe in it. Unless you have the money to self-insure, I know very few people who have the liquidity to pay for nursing home costs, let alone home health services. And home health services are a separate rider from licensed facilities, as is compound inflation protection.
I personally don't care about return of premium. I find it costly and if you get your LTC policies before 50, your premiums can be very reasonable. An even better idea is to see if your state has an LTC partnership program - this has great tax advantages should you make a claim - and of course, with our extended life expectancies the chances of your making a claim are getting better all the time. I view LTC insurance the same way I view having sufficient life insurance, an umbrella liability policy, and homeowners/auto insurance. It's all part of overall financial planning.
My DH and I each have a 90-day waiting period (self-insuring for that time, IOW), then an unlimited length payout, daily benefit with compound inflation protection (5%/annually), home health services at 50% daily benefit (new policies have 100% home health payment, but our policy is an older one, unfortunately). Currently our daily benefit is $216/daily and will go up each year. Disability definition is 2 of the 6 ADLs.
We don't expect this to pay everything. Insurance is to MITIGATE risk, it does not eliminate it. What these policies do is help protect each spouse from getting socked in an unexpected crisis. We don't have enough assets to self-insure, but we have just enough that if we don't do anything, the remaining spouse could really take a financial hit. We want to try to prevent that in the most cost-effective manner.
Our policies were purchased through a partnership with my DH's union, so please don't ask for our carrier's name because it wouldn't be available to anyone else outside the state. And if you are with any state agency that is part of the CalPERS system, I urge you to look into the LTC partnership program (and as stated, there are other states who also have similar programs) as it makes a lot of sense.
From what I have read, if you assets are in the $200,000 to $2,000,000 range, it is generally considered a good idea to have this type of insurance. If you have less money, you probably can't afford it. If you have more, you may consider that you have enough money to self-isure yourself if/when you need long-term care (genrally a few years of it according to sale people).
I don't know who to buy it from. My mother and grandmother had policies years ago with stable premiums for a few (~5?) years, then were hit with tremendous premium increases unrelated to their health. I have purchased other insurance from one of the huge companies, but the sales person lied to me. I went through lengthy arbitration and eventually got my premiums + interest back from the years I had the policy. I am very hesitant to buy or recommend LTC insurance because I don't feel there is any guarentee that any insurance company won't do either of these things in the future.
Yes, unfortunately very few people know how to buy insurance. For one thing, different agents specialize in different lines of business. The 'one size fits all' doesn't work well in insurance, where the reasons for risk mitigation differ depending on what you're buying insurance FOR.
Just as there are agents who specialize in homeowners or life insurance, there are agents who specialize in healthcare or long term care insurance. Buyers need to recognize that they are talking to a salesman - not that there is anything wrong with that! But what you want is a salesman who has experience in this line of business and can help you compare one company's policy versus another company's policy.
Not just price; but policy restrictions/limitations/exclusions/definitions. You, as the buyer, should have done your homework BEFORE talking to any agent, by Googling the Net and reading everything you can find on how to buy what is the second most complex insurance product sold (the most difficult being annuities). A good agent wants to work for good companies, so a consumer needs to do some hunting to find which agents have the strongest recommendations from customers and their own peers.
Every single state Dept. of Insurance has a record of how many complaints an insurance company has generated. It's a huge tip-off also when an insurer has multiple smaller companies so they can hide complaints behind many different names. Conseco was famous for doing this until the Pennsylvania Dept. of Insurance finally forced them into a settlement and Conseco withdrew all its companies from the LTC market.
Although it's useful to use $$ denominations in deciding whether you need LTC insurance or not, like all general guidelines it is not an absolute. This is where it either takes some personal expertise, or you may need the assistance of a good independent advisor, to decide whether you should consider the purchase of LTC insurance.
I foresee premiums for LTC insurance rising over time because the stats on 'needing it for just a few years' are based on the previous generation, not on Boomers. The relatively rapid rise in mortality virtually ensures that some sort of long-range assistance is going to be needed by huge numbers of aging Boomers, whether it's home-based or facility-based. Therefore, when we were doing our budget for retirement we had already received one class-wide premium increase (we got the insurance in our late 40's) and were not surprised when last year we received another increase (also class-wide, the only way premiums can be increased).
Nonetheless, the premiums remain affordable and ten years of paying premiums for both of us, works out to less than 6 mos. in a licensed facility for just one of us. We are not in the same health as we were 10 yrs ago and if we tried to get the insurance now, it would be difficult and possibly even unaffordable. We think it was one of the smartest purchases we ever got, and it gives us both the peace of mind that disability to one is not going to bankrupt the other.
Many people forget, when they are totaling up their assets - if they are a couple, those assets have to be divided! Medicaid rules are very strict and geared towards those who live in low-cost areas. Their limits of what's allowable to the other spouse would be unworkable and unlivable here in the San Francisco Bay Area, which has always been a notoriously high-cost region. With LTC insurance, we can stay within reach of friends and family, as well as having more options. Many CCRCs, for example, offer lower-cost plans for those with LTC policies.
... you may consider that you have enough money to self-isure yourself if/when you need long-term care (genrally a few years of it according to sale people).
I don't know who to buy it from. My mother and grandmother had policies years ago with stable premiums for a few (~5?) years, then were hit with tremendous premium increases unrelated to their health. I have purchased other insurance from one of the huge companies, but the sales person lied to me. ... I am very hesitant to buy or recommend LTC insurance because I don't feel there is any guarentee that any insurance company won't do either of these things in the future.
My concern is the large increases in medical care costs that have occurred in past and are ongoing. We have seen 10% increases for many years. So, if I buy a LTC policy that pays $100 per day with 5% increase per year, I will consistently lose ground every year that I live. Say that I live for 20 years, my $100/day policy will provide $36,500 per year towards a nursing home bill of $120,000 per year??? Still leaves a lot of out-of-pocket costs.
I am betting that the money is better placed in my bank and I will self insure for as long as it lasts. After that, who knows but this will occur whether I have LTC insurance or not. With our aging population bubble (boomers), the government will have to come up with some method of housing all of the older invalids. Otherwise, we are all in trouble as I really don't think that LTC insurance will pay enough to help much.
First of all, ANY insurance policy does not eliminate risk or liability from your life. It REDUCES it. The consumer has to balance risk vs cost to figure out where the "sweet spot" is - where the policy is affordable but reduces/mitigates risk and liablity to a reasonable level.
Ever made a few auto or homeowners claims? I'll bet the policies didn't pay for everything, did they? Last time you bought a prescription medicine or had a root canal, the medical staff asked for a co-pay from you, probably.
Let's take an actual real-life example of a LTC policy held for 11 years - mine and my DH (separate policies). We started in 1999 with $130/day. Total annual premiums were less than $2K (in our late 40's).
That 5% compound inflation rider as of January 2011, will bring the policy up to $233/day, or $85,000/yr. I can go into a really, really, nice nursing home for that amount.
We have a home healthcare rider, as well as a lifetime benefit period. The latter is something many companies are eliminating as unprofitable, but we will keep it as long as we can. The definition of disabled is 2 ADLs, not 3 as Medicare/Social Security require.
As detailed in my previous posting, even with two class-wide premium increases, buying in our late 40's was a huge money-saver. Total premiums for 11 yrs are still less than the current cost of six months in a nursing home, especially since there is simply no way we could qualify for affordable premiums any longer. Annual cost for both our policies totals about $4K/yr.
Keeping it in perspective, our earthquake insurance costs us more...and we'd still have a huge co-pay if The Big One happened, in the region of $75-100K of our own $$.
I'm new to the community, and my wife and I are still a number of years away from retirement but starting to consider many of the decisions and issues we will have to deal with. One of those of course is shopping for LTC insurance. Quite frankly I would rather be beat with a stick than undertake this, but I do recognize the necessity of it. The postings in this forum have been very beneficial in providing information as well other's experiences. I do have a few questions I wanted to pose myself. My apologies if they have already been covered elsewhere, but I didn't seem to come across them.
First, in most things you read about LTC coverage, it's recommended that you get a benefit period of at least three years. Not to sound morbid, but does this mean that the actuaries have determined that most people needing to use the coverage are likely to die during this period? Are there any statistics anyone knows about concering the number of people who use the coverage and then return to their normal day-to-day lives?
Secondly, although I'm healthy at the moment, will family history possibly disqualify me? My father died of ALS (Lou Gehrig's disease) and my grandfather died of brain cancer. I am concened that this will count against me.
Third, although I know something this important probably necessitates meeting face-to-face with an agent, I would really prefer to do as much shopping and research online as possible. I came across a site adverstised in a personal finance magazine -- LTCQ.net -- that appears to function as an independent agency for LTC policies. Has anyone out there had experience with this or other online resources -- positive or negative.
Thanks in advance for all feedback. I have enjoyed reading others' opinions and experiences.
>>..it's recommended that you get a benefit period of at least three years. Not to sound morbid, but does this mean that the actuaries have determined that most people needing to use the coverage are likely to die during this period?>>
No. It's based on the actuarial statistics with the WWII generation in nursing homes. Short term actuarial statistics are showing that with people now living longer with degenerative diseases, the degree and length of care needed will increase substantially in future years as the Boomers begin to require care in large numbers. Thus, some companies are exiting the LTC business while others feel their products are priced appropriately and there is still room for a profitable market niche.
What you are looking for is a policy with either a generous 'cap amount' or a longer-term benefit. There are many 'hybrid' products entering the market - life insurance/LTC and annuity/LTC products - and it's very hard to compare the 'apples to the oranges' when including a plain-vanilla LTC policy for comparison.
If you think an on-line agency can do this for you, that's fine. My experience with on-line term insurance is that they are merely referrals for regular agents. Nothing wrong with this, if you know EXACTLY what you want and what is best for your particular circumstances.
If you are concerned with your family history, the agent can 'pre-shop' your medical history to several carriers and they will advise whether you are insurable as a Preferred or Standard risk. There is no obligation and no discussion of premium cost with this.
Before investigating policies, you should know:
1) What's the cost for a good nursing home in your area?
2) What's the cost for 8 hrs/daily from a licensed home health aide? In our area a discounted rate is $300/daily. Yes, you can get 'gray workers' for less. Just put away all your valuables - I've known three people now who have reported thefts of personal possessions from long-term unlicensed aides they thought could be trusted.
>>Are there any statistics anyone knows about concering the number of people who use the coverage and then return to their normal day-to-day lives?>>
I know of no public release of such actuarial statistics, but that they exist I have no doubt. You have to realize that actuarial statistics are only considered valid if they cover at least a 20-yr period. Unfortunately, the increase in people who meet all three important factors: they have LTC insurance, go in (or out) of nursing homes, and are covered for home health care services - is statistically small, and not of sufficiently long past experience to be a firm 'rule of thumb' the insurers can count on, in order to price a policy with accuracy.
Thus, pricing for these policies varies because it's being done on the basis of short-term statistics, which as anyone can tell you, aren't 100% reliable. It could be a blip....or not.
Let's be specific about this news. MetLife, although a large player in the LTC market, is withdrawing from writing NEW policies. All 600,000 of their current book of LTC policyholders remain 'as is' and in force. MetLife has over 9 million policyholders total, so LTC was a very small part of their business overall.
There are still many good companies in the LTC business - Northwestern Mutual, New York Life, Genworth, and others.
I think the biggest difficulty with the new hybrid products is comparing them to a straight LTC policy, as it's "apples and oranges." Again, you have to know the labor costs in your area and apply them to your situation. If you needed care and had an expected 5, 10, or 15 yr to live, what will that cost in your area?
When we purchased our LTC insurance, about 20 years ago, I found that unlimited coverage was not that much more than the 3 year policy. That should tell us something. Be sure to get the inflation rider, as the costs are going up fast.
- "The partnership program couples the purchase of long-term care insurance with eligibility for Medicaid coverage for LTC services. With the purchase of a partnership policy, a consumer can become eligible for Medicaid coverage after using the insurance benefits without having to exhaust his or her own assets to qualify for such coverage. Assets equal to the amount expended by the insurance policy are not considered countable assets for purposes of Medicaid eligibility and are exempt from the Medicaid estate recovery provisions. (One significant caveat: Those with home equity exceeding $500,000 are not eligible for Medicaid even with a Partnership policy, although states may increase that ceiling to $750,000.) "
It's all very well to talk about long-term-care insurance as though it were something one could choose or not choose to pay for. I'd love to have it. My father sold it. But I have a pre-existing health condition--auto-immune problem--and he couldn't find a company that would insure me.
Yes, it's true that annuity/LTC combo policies aren't quite as rigidly underwritten as 'plain vanilla' LTC is. However, all companies underwrite differently. It's best to use a broker who specializes in LTC. Do not use your friendly life or auto insurance agent! These are complex policies, especially when you consider the higher fees/many restrictions on annuity products.
If your health is so seriously impaired you can't qualify for a regular LTC policy, then a combo policy may be your only alternative. Have the broker 'pre-shop' an application for you to multiple carriers, to give you an idea of whether you're insurable or not. Some may decine, some may rate you, some may be willing to accept you on a Standard basis.
From a July 2011 WSJournal article on combo LTC products:
"...those who buy combined products often pay a single upfront premium that can be steep. A healthy 60-year-old couple, for example, would pay about $100,000 to obtain about $4,500 per month in coverage for each, payable over a six-year benefit period, says Bill Comfort, owner of Comfort Assurance Group in St. Louis, which sells long-term-care insurance and consults to advisers.
...Other downsides include the fact that couples typically can't share their total long-term-care benefits.
In addition, those with combined policies can't qualify for the partnership programs several states run with private insurers, Mr. Comfort says. Under these programs, those who deplete their traditional long-term-care benefits can qualify for Medicaid and protect more of their assets than they would otherwise be able to.
Also, he says, many people who buy these policies fail to purchase inflation protection, a key feature that allows long-term-care payouts to increase over time."
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