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Bronze Conversationalist

Re: Long Term Care Plans

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Message 1 of 12

I don't have a long-term care insurance policy yet but I plan on purchasing one soon. I would like to commend you though on your openmindedness in knowing more about this people-repelling insurance. Hear's to hoping that the majority of the population be like you, embracing a fact before throwing judgment down. If there is however that you need to learn about ltci, it is the idea that long-term care insurance is not the key to a successful retirement plan but merely an element to make it successful. 

I'm a blogger at www.lifeandmess.com for www.completelongtermcare.com, an active member of Red Cross, and an animal volunteer
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Treasured Social Butterfly

Re: Long Term Care Plans

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Message 2 of 12
gfd098 wrote:
Does anyone have a comparison of LTC policy coverage and costs?

I thought I might find something by Googling, but it's probably a very complex subject because you have to be careful not to wind up comparing the proverbial "apples & oranges". I did find what might be a helpful article on Motley Fool, on how to compare TLC plans:

http://www.fool.com/insurancecenter/longterm/longterm03.htm


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Re: Long Term Care Plans

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Message 3 of 12
Does anyone have a comparison of LTC policy coverage and costs?

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Conversationalist

Re: Long Term Care Plans

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Message 4 of 12

I don't have long term care insurance just yet but I am keen in having one. I've seen how it works through my parents and I am satisfied with its benefits. They're not that well-off and they only have enough funds to maintain their lifestyle but since they have this policy, they are free from financial trouble and not a burden to me or to my siblings.

Planning ahead is definitely the key in having a financially stable life after retirement especially now that 70% of Americans who are 65 years old and above will require long term care. Since this type of care is expensive, everyone is encouraged to buy coverage for this. Planning for long term care is not something you should put off because this can help you make the right decisions that can satisfy your future needs. Here's a guide to help you get started: http://www.ltcoptions.com/planning-for-long-term-care/.

However, long-term care insurance is not for everyone. Some may self-insure because they will only need long term care for a limited time while others will greatly benefit from this policy since they will need long term care for an extended period of time. In order to find out whether this policy type is for your or not, better consult a care planner that can help you determine your needs.

I hope this can help you make the right decision and shape your future right.

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Regular Social Butterfly

RE: Long Term Care Plans

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Message 5 of 12

In Response to RE: Long Term Care Plans by retiredtraveler

>> contrary to what many people think, that only a small percentage of people go to LTC in the first place, and a smaller percentage actually "languish" in LTC for a long period of time. >>

Here is the problem with statistics: This statistic you're quoting is probably based on the WWII and prior generation. Insurers look at both short-, medium- and long-range actuarial assumptions when pricing policies.

In insurance, only twenty-year actuarial statistics are truly validated. Any other statistics based on shorter periods are forecasted trends.

Most of the pre-Boomer generation have a fear of the idea that "you go to a nursing home to die". Family was considered the 'ideal' caretaker situation. Any scan of the discussion threads on Caretakers, whether at Dave's Garden, Gardenweb, TIAA-CREF, BoomerWomen, or AARP, shows Boomers struggling with elderly parents that need more care than they can effectively give, who refuse to go into licensed care facilities or even assisted living.

Therefore, for the WWII generation, that statistic of needing little licensed care was valid. There was family to take care of them, everybody thought. But the reality is that for the first time, Boomers were the generation that encountered the 'sandwich' effect - as their parents aged, with the improvements in mortality that are fairly recent in origin, they became not only parents taking care of teenaged and young adult children, many of whom still need financial assistance - but also of the elderly who don't die of diseases that were once killers, such as heart disease, stroke, cancer and diabetes, but are becoming gradually increasingly infirm.

Social Security and Medicare are in financial difficulties for a basic reason. In 1957, the average claimant lived 7 yrs past retirement age 65. Today, anyone who has reached age 65 has an extremely good chance of living into their late 80's. We all know people who 25 yrs ago, would have died after experiencing serious heart attacks, strokes, or cancer.

Instead, many of them are still alive. This is a good thing - but it also is an expensive future, from a medical healthcare viewpoint. Medicare itself has noted that 80% of its costs are spent on 20% of its supported clientele.

We have owned LTC policies for ten years, buying it when we were in our late 40's. We assumed premiums would rise (they can be increased only for the entire class of business, which means either a petition to the state Dept. of Insurance or a new carrier taking over the portfolio of active policies) over time, and budgeted for this. We have seen two increases in premiums, which are now almost double what we started paying.

Why did I believe premiums would go up? Because with improvements in mortality, this does not necessarily mean one remains at the mental/physical peak. In fact, it means the opposite - one faces a post-retirement picture of different levels, based on declines in one's mental/physical health.

Those declines may be gradual, or they may be sudden. But for the majority of us, they WILL happen. It is merely a question of when, and for how long.

Insurers must guess as to how to price a product that will be profitable yet affordable, for circumstances that are 10 - 30 yrs in the future. Actuaries determine this bottom line, and they pay very close attention to health and mortality/morbidity statistics. If they think the long-term trends indicate increased costs, premiums will be set at a higher rate, and vice versa.

Therefore, for example, term life insurance costs have dropped dramatically within the last five years - because mortality has improved and is improving every year. But disability, health and long term care insurance premiums are rising - because insurers see a growing group of the elderly (every industrialized nation is facing the 'graying' of their citizens; the fastest growing group are people over 80+ years) who will need, in a greater proportion than today, increased care costs.

Part of it is as simple as basic math. When my maternal grandmother needed a place to stay, she had eight children, all of whom were alive, married, had multiple children (I have 23 cousins), and owned a home. She did, in fact, get moved from house to house, each sibling taking care of her for a few years. My mother, OTOH, had four children - when she was 80, one of them was dead of ovarian cancer, three were married (two later got divorced), but only one had children, for a grand total of two grandchildren for the next generation.

The insurers are very well aware that fewer children = more facility care. Add in improved mortality along with higher morbidity stats that no longer claim death, but instead promise increased medical costs to support a long period of gradual physical decline in living to a very old age, and it is only logical to conclude the risk mitigation of insurance is going to cost more in the future than it does now (or ten years ago).

Therefore, short and medium statistics warrant higher policy pricing. Because insurance is nothing more than risk mitigation - it is NOT, and should not be viewed as, an investment - it is up to you as an individual, to look honestly at your morbidity factors and decide whether you need to pay for risk mitigation in this particular area.

Your answer may be "no", and your financial circumstances may warrant you have sufficient assets to self-insure. Thus, you have no need for any risk mitigation.

Conversely, if you think you DO need risk mitigation, the first question is, what will that cost you? I pulled insurance quotes as part of my job responsibilities for an independent CFP for almost two years. He always sought to use reputable carriers but went with the lowest premium, as this was not a large part of his business so he offered it only as a convenience to his clients.

The majority of his clients were Boomers. Many could afford to self-insure, but about three dozen of them needed LTC quotes. Of that number, maybe half a dozen, or 20%, received a Preferred rating. Almost all the rest were rated Standard or lower; about 10% were declined outright by all carriers.

One of the options to consider is home healthcare services. This is THE fastest-growing segment of healthcare as more people try to stay in their own homes (which has been proven to improve mortality, thus requiring more care services, etc., and so on. See how something good turns into something more expensive for everyone?). This option, along with compound (not simple) inflation benefit, are the two most important additions to what you will pay.

They will also double your premium, no matter what elimination/exclusion period you select or what daily benefit you pick. But without them, the policy will not keep up with inflation itself, let alone healthcare inflation, which continues to rise faster than basic inflation, in every aging country, not just the US.

I realize this post is very long, and I apologize for its length. But this is a very complex and important aspect of financial planning, and I think it is crucial that people understand what kind of role insurance has in a holistic process. You do not buy auto, homeowners, earthquake, or health insurance with the idea you might get some of your money back on it. You buy it for risk mitigation, to reduce potential financial liability. One needs to look at LTC insurance in precisely the same way.

Now, actually buying it is a whole 'nother can of worms, because there's a lot of 'gotchas' in all that legal gobbledygook in the policy. This is one product you really have to be informed about, and you should never, ever rely on any insurance salesman's assurance, no matter if he's served you just fine for other lines of business for five decades.  But that's another post, for another day.

HTH someone!

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Treasured Social Butterfly

Long Term Care Plans

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Message 6 of 12

In Response to RE: Long Term Care Plans by retiredtraveler

Yes, there were examples with a lot of details, but don't forget every individual's situation might be slightly different.


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Trusted Social Butterfly

RE: Long Term Care Plans

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Message 7 of 12

In Response to REPORTING BACK - Long Term Care Plans by ASTRAEA

    Did they give you costs for these policies (which I assume go up every year as you get older)?


Just think. The world was built by the lowest bidder.
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Treasured Social Butterfly

REPORTING BACK - Long Term Care Plans

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Message 8 of 12

Let me preface this by saying that as a single person w/o children, I need & have no life insurance, so since I know little about it, forgive me it any of this sounds like that.

The presentation covered 2 basic types of long term care (LTC) insurance.

The conventional kind is where you pay a premium monthly or annually, and it pays out within the restrictions, if you actually need LTC. The downside is that you may die before requiring any LTC, or when you've only received a fraction in benefits, of what you paid in via premiums.

The other kind seems a better option, where you "invest" a larger lump sum of money, rather than paying premiums. Depending on your age when you take out the policy, your investment is leveraged into a much larger amount that will be available to you later on, for LTC. The example they gave was a 65 year old woman taking a $100K policy, which gave her 5x as much to be used for LTC if she needed it .. $500K. The upside, compared to the conventional policy, is that there is a death benefit to it. So based on the example, that would be worth $170K (more than she originally invested). If she died before needing LTC, her beneficiary would collect $170K. If she needed some LTC, but then died before reaching the $170K expenditure, the difference would go to her beneficiary.

That second scenerio seemed like a better deal. Even if the person at some point decided they'd rather have their money to spend as they wanted, they'd get their original $100K back .. albeit without any interest they might have made investing in something else. BTW, he just used the $100K investment as an example; someone could get a policy for as little as $25K, but that would obviously affect the amount paid out for LTC.


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Treasured Social Butterfly

RE: Long Term Care Plans

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Message 9 of 12

In Response to RE: Long Term Care Plans by retiredtraveler

Yes, I've heard that people have to be careful reading the proverbial "fine print," because there are restrictions/loopholes in LTC insurance, that can become very costly. Such as:

  • High deductible that you have to exhaust, befor their coverage kicks in,
  • Maximum daily rates that may not cover the entire cost of the facility you choose, and may also not have a COLA to cover the increases between now & when you need a facility

I'll report back later!

 


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RE: Long Term Care Plans

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Message 10 of 12

In Response to Long Term Care Plans by ASTRAEA

   Please post your impressions from the meeting. I looked into this and continue to think about getting some type of insurance. There are a great many negative articles about LTC insurance, mostly about the hefty price and the fact, contrary to what many people think, that only a small percentage of people go to LTC in the first place, and a smaller percentage actually "languish" in LTC for a long period of time.

    I can't say if this is the best approach, but I was interested in a less expensive, "X" $$'s a day reimbursement plan. That is, for every day in LTC, you're reimbursed some amount of money.  I saw 'sliding scale' plans some years ago --- don't know if they are still an option. I would be thinking about $100 a day --- half of what it would be, on average, for costs.

 


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