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Long Term Care insurance policies cost

Both my husband and I have long term care insurance through Prudential. For the past 3 years they have raised the premiums 11.8% per year. We will be paying $1,200/yr for my husband's policy - he is 68 yrs old.

 

Is this a relatively standard price?  The policy does have a built-in Cost of Living Adjustment Rider.

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Regular Contributor

yes--premium increase are common and regular with LTC. There is nothing that you can do about it.  Switching to another company will be the same problem AND will probably increase your cost right off the bat as you are 3 years older. 

It's insurance which means that you may exercise and eat right and for you, there are 6 obese people who could care less how much they will cost YOU by their irresponsibility.

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Spot the deliberate mistake?

 

"Turning Tax-Deferred into Tax-Free"

 

No way!  Someone has to pay the taxes on this!  In this case, it's the insurance company (and, ultimately, of course YOU).  They accomplish this with burdensome early withdrawal penalties.  Remember, they are in this business to make a profit, and they will, with the smoke and mirrors of annuity contracts.

 

Beware before you dive into something like this.

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Periodic Contributor

We are currently examining a plan where we pay in a certain amount of our savings (say $50K) for each of us.  The insurer is offering a payout of up to 4x times what we put in ($200K).  The rules for what they will pay for, when, and up to how much, seem reasonable.  After 3 years, if we change our mind, we can get our $50K back (but no interest).  We think this will work for us, as we have substantial savings, and military and federal pensions (but no survivor benefit on those).  So we are looking for something to supplement what we have, and not bankrupt the person who isn't in the facility. 

 

Has anyone experience with a plan such as this?

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I would be leery. Sounds too good to be true.
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Periodic Contributor


@petie111 wrote:
I would be leery. Sounds too good to be true.


As you describe it, sounds like an annuity plan. They are loaded with commission expense. And “up to” is a salesman term not at all a guarantee of anything. AARP and others including consumer reports have lots to say about these instruments. Mostly be cautious 

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Periodic Contributor

As you describe it, sounds like an annuity plan. They are loaded with commission expense. And “up to” is a salesman term not at all a guarantee of anything. AARP and others including consumer reports have lots to say about these instruments. Mostly be cautious 

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Periodic Contributor

We have had a policy since 2000.  We locked it in for both of us at 140 a month.  I was 49 and my husband 59 both in good health.  Now our health has declined but we still have the policy.  They reduced the benefit from lifetime to 4 years and raised the price to 180 for both of us.  Otherwise the policy has remained the same.  At this point we need this and continue to pay as we would be underwritten with our health and age.  Lock it it early and don't let go.  Three of our 4 parents spent time in nursing homes so we know this can happen.

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I began LTC many yearsa go when it was offered at work.  I pay the full premiums, but since I started when I was younger, they ahve tsyaed within reason - about $1700/year at present.  I have some inflation protection and the coverage is roughly what the local costs are for full nursing care. Since my retirement is pretty well balanced and a good portion guaranteed, I feel confident that I won't go bankrupt or end up on Medicaid.  Given the cost of one month in even assisted living care, the premiums are well worth it.

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Periodic Contributor

It's interesting that the benefit period was arbitrarily cut.  You would do well to consult your state insurance commission to see whether that is allowed.  Read the policy thoroughly for guidance also. When you started paying, you bought future benefits and cutting them means you are not getting what you paid for.  Rate increases are different - they are almost certainly spelled out in the contract. What it says is  that "we guarantee you that rates will never be raised unless they are raised for all policies in your category/class".  Sounds pretty good, like a no raise guarantee. So -- they simply raise all the rates in your category and the guarantee ain't much.  What you do get is protection that your individual policy won't be raised while others are not..which, again, ain't much.  .  

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We signed up for CNA long term care insurance, about 10 years ago. We thought it would be an excellent idea, because we have an only child. We didn’t want to bankrupt her with that kind of cost. The policy states whatever the market rate is for monthly nursing home care. Yes the cost has increased over the years, but by the time we are ready for that it should be over $10,000.00 a month. It’s at $7,000.00 now. We are both covered the cost per year is $2,800.00. I am 68 he is 62. We are very healthy, I have retired, my husband will retire at age 66. 

Jacki Oliver
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Honored Social Butterfly

@jo78203842

Read your CNA LTC policy.  CNA hasn't sold LTC in a long time.

 

New York Time 06/07/2013 - Fine Print and Red Tape In Long-Term Care Policies

 

ALTERNATE PLAN OF CARE Some policies have provisions for what they call “alternate plans of care,” which experts said implied a certain degree of flexibility. “People read those and say, ‘Look, it says they will do this,’ ” said Ms. Burns. In reality, “they will consider something different, but the insurer makes the ultimate decision.”

 

Continental Casualty Company, a subsidiary of the CNA Financial Corporation, sold policies with a similar provision, which could potentially allow the insured to receive benefits for care, say, in the home instead of a nursing home, Mr. Kantor said. But since the CNA unit stopped selling the policies in 2003, he said they were making a habit of no longer honoring those provisions. “The insurance company is insistent that they have the right not to approve the plan,” said Mr. Kantor, who is representing a woman with Alzheimer’s disease whose request for an alternate plan was not even considered. “But it was not sold that way.”

 

more at the NYT link

It's Always Something . . . . Roseanna Roseannadanna
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My chidren think it is the best thing I ever did when I got my LTC insurance.  Granted i pay in each year a hefty amount, but I know that I can stay in my own home and be able to afford care.  If I don't use all the money I put in, my children can receive it as my beneficiaries.  And with my policy I don't have to have to go through an agency for home care, but I can hire someone local or even a family member.  Since I live alone, it gives me a feeling of security that I will not end up in a nursing home.

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Newbie

Hello,

I am interested in which LTC insurance you currently have. I like the benefits that you detail.Thank you.

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My wife and I are 78 years old and we both have long term care insurance. We took out the polices in 1996 (21 years ago) and the premiums were $180 per year, each. They are now $1,348/year each. Our long term care benefits started out at $100/day and increase $5/day each year and are now at $210/day, or $6,300 per month. This daily benefit will provide coverage in many nursing  care facilities at todays prices. Also, our benefit is for life time care coverage, with no number of years limit. The increases have been subatantial the last few years and I shopped around for alternative insurance coverage and found out that what we have, life time coverage, is not available any more and  all were much more costly. After looking at our annual cost of $1,348 compared to one year in a nursing home at $75,000, it appears we still have a good deal. The insurance company is Ameriprise River Source. Robert B.

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Periodic Contributor

That was a VERY good deal.  Not doable at your age today or better said, not doable for anyone today.  Our premium began 18 yrs ago at about $2,200, now $3,000+.  I don't know how much the benefits have compounded. But it's easy to call and find it.  As noted, the money is shared between me and spouse.  If I use 40%, spouse can tap into the other 60%.  When the fund is done, that's it.  Premiums are waived when we start taking benefits.  

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Conversationalist

When I moved into an independent/assisted living facility, my aim was to be able to transition from one to another, since I was living alone.  My financial advisor used the money from the sale of my home to put into an annuity.  The interest I earn goes from that into a fund to pay if I should need to move to assisted living.  I pay tax on this interest every year on the amount that goes to this fund.  If i pass away and do not need assisted living , the annuity stays and goes to my beneficiary or whatever amount is left if I did move to assisted living. Basically it's a win-win for me as I know I could not afford to buy long term insurance at my age.

Trusted Contributor

Just read an excellent article on long term health care.Here is link,if allowed by AARP.

 

https://investorresources.weissratings.com/not-properly-preparing-for-the-exorbitant-cost-of-long-te...

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Periodic Contributor

The question of whether the pricing is "standard" can't be answered without knowing the benefit level.

 

Our LT policy increases benefits at a compounding rate annually.  We had the choice of a simple interest increase but decided to pay more for the policy to take a compounding rate.  The premiums have also increased over time.  For years they remained the same but when the insurer changed hands, the new owners quickly set about boosting rates.  They're now more than 50% higher than when the policy was initiated.  

 

The policy gives us a "pool" of money shared between me and spouse.  Either or both can benefit until the funds top out.  

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Regular Contributor

Not knowing what benefits he has in his policy (e.g. cost of living adjustments, home care and facility care, term of benefits, daily benefit etc), $1200 annually seems reasonable.

The insurance companies have terribly underpriced long term care and many have lost money and no longer offer the policies.  Those that do continue to offer coverage need to increase their prices to avoid losses. For anyone who has not purchased, if you find a company that provides a fixed price (sometimes offered if you pay all of the premiums at once or agree to 10 fixed annual payments), then you avoid the cost increases.

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Honored Social Butterfly

Is this a relatively standard price?  The policy does have a built-in Cost of Living Adjustment Rider.

 

Based on the costs I have seen, you're paying a lot less than other policies costs.  It's difficult to say because we would have to know exactly what kind of coverage you have and compare it to other companies. You can find that info online.


"...Why is everyone a victim? Take personal responsibility for your life..."
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Consider yourself very lucky.  Last year UNUM tried to increase our LTC premium by 280%!  This is after a 20% increase in 2008 and a 30% increase in 2011 (we took out the policy in 2005).  Our policy had a 5% compound inflation rider but they offered to keep the premium the same (ie no 280% increase), if we reduced our inflation coverage to 3%.  My wife and I are now paying $1500 a year each.

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Can I ask how old both you and your wife are?

 

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I am 66 and she is 63.  We have a 5 year payout policy, right now about 8000 a month (each - compounding at 3% for the next few years, until they jack up the price again).

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