Due to family circumstances been thinking about this more and more.

What are the ins/outs, options, and expected cost for a policy, etc?

Years ago a financial advisory said the one thing that might really get me is long term care (LTC) for my mom. However, he also said if you're concerned then save and invest to cover it vs. buy insurance. That was in 2003 and I covered my mom's long term care on my own back for quite some time. His advice was correct.

And for myself, I'm doing to same thing in saving and investing to cover the potential costs. One thing that really astounded me was the difference in LTC options out there in the world. My mom ended up in a Residential Care Home for her last months and it was phenomenal. What's even better is the cost was (and I imagine still is) much lower than traditional LTC facilities.

For a mid 40s dude about how much are we talking per month for a solid policy that will cover things for several years?

steer clear of traditional LTC insurance due to rising premiums and no death benefit. The only positive of this path is relatively low premiums for dollar of benefit on day one. But as I mentioned you can count on the premiums going up over time or the benefits going down. You are also going to have a reimbursement plan meaning the insurance company won't let you use the benefit amount on anything other than approved expenses.

If you have or will have enough to self insure but are concerned about leaving less money for heirs or charity etc then you could look at second to die insurance as a solution. Typically more leverage on your money with this solution.

You could consider individual permanent policies with chronic care riders as well. More expensive premium but more certainty of no rising premium and guaranteed death benefit and long term care pool of money to spend with indemnity feature. Meaning once you qualify you can spend money however you please.

Avoid traditional policies. The premium creep gets you as you age closer to actually needing the policy.

Lincoln has 2 hybrid policies that I don't hate, both on universal life chassis. Depending on age, risk tolerance, and how you want to fund (over time or lump sum, as another investment or as an alternative to cash) one may make more sense than the other. One is fixed (Elect a 3 or 5% inflation rider), the other is variable (invest in sub accounts a la variable life). There's a death benefit value and a multiplier for LTC benefit, plus a residual DB. You know your total premium up front (1 pay, 10 pay or anywhere in between).

I hate selling product, but these don't suck IMO.

BoDog said:

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For a mid 40s dude about how much are we talking per month for a solid policy that will cover things for several years?

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Anyone have a ballpark on $$$?

BoDog said:

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BoDog said:

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For a mid 40s dude about how much are we talking per month for a solid policy that will cover things for several years?

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Anyone have a ballpark on $$$?

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Tons of variables: age, health, length of coverage (number of years/months it will pay), beginning date (60, 90, 180 days after the coverage qualifies to pay), comprehensiveness of the coverage, how much daily/monthly/annual benefit you purchase, inflation coverage, spousal discounts, etc.

BoDog said:

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BoDog said:

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For a mid 40s dude about how much are we talking per month for a solid policy that will cover things for several years?

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Anyone have a ballpark on $$$?

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LTC has many variables, I wouldn't expect or trust any answer you get here. Not to mention, anyone (licensed) who answers this in this forum would be violating all sorts of rules. Contact an advisor or insurance company for a quote.

BoDog said:

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BoDog said:

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For a mid 40s dude about how much are we talking per month for a solid policy that will cover things for several years?

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Anyone have a ballpark on $$$?

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They're going to be all over the place based on plan design.

For a measuring stick from my personal experience... When I was a 34 year old married male in Texas targeting $9500/m of LTC indemnity at age 85 (assuming 7.0% gross returns on the variable product) with a 0 day elimination period was in the $17k neighborhood for premiums paid over 10 years (less if a shorter pay period).

Mrs. was 20-30% more expensive.

cjsag94 said:

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Prince_Ahmed said:

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BoDog said:

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Do to family circumstances been thinking about this more and more.

What are the ins/outs, options, and expected cost for a policy, etc?

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The current financial advisors on here will probably disagree with me, but as someone who sold it (along with all sorts of other financial planning services) for half my career - it's more of a cash cow for the agent than anything.

If you can afford to put a meaningful amount of coverage in place and keep it in force indefinitely at an age when premiums aren't astronomical, then you're better off just investing that money and saving it for LTC or whatever else you need at that age. And if you can afford to buy it at a later age, at higher premiums... you don't need it.

I'll hang up and listen to everyone else

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You can say this about every type of insurance.. that's what insurance is all about. The distinction with long term care is that it is probably one of the highest probability risks you can insure for, specifically in the event of not leaving a surviving spouse severely depleted.

I've never seen someone end up in a bad situation because they bought LTC insurance, but many family's I've seen devastated by the absence of it. It's not always about the mathematic victory.... Sometimes it's just about catastrophic risk avoidance.

If you need it you'll wish you had it even if you can pay for it yourself.

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And there it is.

So what I'm hearing you say is, it may not make financial sense, but the insurance industry has ways of making you feel good about this purchase, which you're so likely to use that you're basically pre-paying for it rather than getting any value (other than the security of having prepaid for it, by restricting assets you would have otherwise been able to use for something else).

If you're in such a poor position that you're devastated you don't have it... you probably couldn't have afforded it anyway.

It's very different than life insurance. With life insurance, you're often insuring the risk you die during your working years before having the opportunity to accumulate wealth for retirement, and the cost to insure that risk is pretty low during working years. This is more like a whole life play where you're basically forcing yourself to save, but at terrible rates and without the added benefit of tax-advantaged savings.

OP, I know you keep asking about cost, but it's going to vary widely. You can google LTC quotes and find calculators where you can plug in a few fields and get an answer, but if you think it would give you peace of mind, you should probably find a broker to go through the process with.

Does Prince_Ahmed carry home, auto, disability, life, or health insurance?

mosdefn14 said:

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Does Prince_Ahmed carry home, auto, disability, life, or health insurance?

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And those are all for catastrophic needs you can't really plan for. I mentioned life already, but consider health insurance. You don't buy it for the expected needs of going to the doctor or breaking an arm - you buy it to insure against the very unlikely chance you'll have a catastrophic expense.

Same thing with home - you don't buy it to cover a roof replacement, even though it will cover that. If that was all you were worried about, it would make more sense to set those premiums aside and have plenty to cover a few roof replacements over the lifetime of your house. You buy it to insure against the small chance of catastrophic expenses.

All those make sense because the insurance you're purchasing is to cover large events with a low risk of occurring. but for the handful of people that do need it, the premiums of the many cover the expenses of the few.

LTC is entirely different. Many people will need it, so the premiums of the many cover the expenses of the... many. Yes, most people (or at least households) will need it eventually, which means the insurance company has an extremely high expectation purchasers will use it... without even taking adverse selection of people who seek it out into consideration.

So, if I'm an insurance company and need to make this proposition profitable, then I basically need to charge enough that I can pay out a benefit for almost every person who enrolls. Do the math on that, taking into account a healthy margin for agents, the insurance company, and market risk for their pool of assets.

Everyone wins except the consumer.

cjsag94 said:

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Interesting.. you say that like it's a bad thing (insurance makes you feel good). Let's say a married couple, net of LTC premium, had $250,000 net worth, and pull $10000 income per year. Spouse 1 developes parkinson's/Alzheimer's and spends 7 years with increasing levels of care capping out at $7000 of additional monthly expenses.

No LTC, surviving spouse is likely broke. With LTC, likely cost some, but retained most assets. Spouse dies, down to 1 social security..LTC prevented devastation. No idea why you don't see beyond the black and white of fully able to fund whatever covers their way versus the huge group of people in the middle that are better off insurimg a risk.

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That's only half the equation. What's the opportunity cost of those LTC premiums? Total spend on her LTC (not just the cap at 7k/month)?

It's incredibly easy to create numbers to make it look like the insured member wins in every scenario you run. An entire industry has perfected this in all their illustration tools and advertising over the last 30 years. But it makes since for a very narrow band of middle-income people, and inside that band an even smaller percentage of them come out on top - and those that do come out on top don't win by much. Simple logic says that if everyone is going to use it, then it's little more than forced savings for money you'll spend later.

It's more comparable to something like the extended warranty on a car or appliance than home or medical insurance, or maybe like overpaying your taxes to mitigate the risk you'll have a large tax bill next year.

I usually advise saving and investing the would-be LTC premiums on your own, but everyone is different.

I do that for my clients because it's my job to make sure they have a plan that makes sense and are disciplined in following it. But most people without that kind of help won't be disciplined enough to save and invest the would-be premium consistently over a long term timeframe. So in that case LTC insurance makes sense.

Another reason would be if LTC needs came much sooner than expected.

cjsag94 said:

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Prince_Ahmed said:

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BoDog said:

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Do to family circumstances been thinking about this more and more.

What are the ins/outs, options, and expected cost for a policy, etc?

---

The current financial advisors on here will probably disagree with me, but as someone who sold it (along with all sorts of other financial planning services) for half my career - it's more of a cash cow for the agent than anything.

If you can afford to put a meaningful amount of coverage in place and keep it in force indefinitely at an age when premiums aren't astronomical, then you're better off just investing that money and saving it for LTC or whatever else you need at that age. And if you can afford to buy it at a later age, at higher premiums... you don't need it.

I'll hang up and listen to everyone else

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You can say this about every type of insurance.. that's what insurance is all about. The distinction with long term care is that it is probably one of the highest probability risks you can insure for, specifically in the event of not leaving a surviving spouse severely depleted.

I've never seen someone end up in a bad situation because they bought LTC insurance, but many family's I've seen devastated by the absence of it. It's not always about the mathematic victory.... Sometimes it's just about catastrophic risk avoidance.

If you need it you'll wish you had it even if you can pay for it yourself.

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Very well said.

Spurswin5 said:

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cjsag94 said:

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Prince_Ahmed said:

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BoDog said:

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Do to family circumstances been thinking about this more and more.

What are the ins/outs, options, and expected cost for a policy, etc?

---

The current financial advisors on here will probably disagree with me, but as someone who sold it (along with all sorts of other financial planning services) for half my career - it's more of a cash cow for the agent than anything.

If you can afford to put a meaningful amount of coverage in place and keep it in force indefinitely at an age when premiums aren't astronomical, then you're better off just investing that money and saving it for LTC or whatever else you need at that age. And if you can afford to buy it at a later age, at higher premiums... you don't need it.

I'll hang up and listen to everyone else

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You can say this about every type of insurance.. that's what insurance is all about. The distinction with long term care is that it is probably one of the highest probability risks you can insure for, specifically in the event of not leaving a surviving spouse severely depleted.

I've never seen someone end up in a bad situation because they bought LTC insurance, but many family's I've seen devastated by the absence of it. It's not always about the mathematic victory.... Sometimes it's just about catastrophic risk avoidance.

If you need it you'll wish you had it even if you can pay for it yourself.

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Dealing with this right now with in-laws.
My FIL (class of '60 EE, learned and spoke fluent German, built transmitters around the world for NATO and communicated with our nuclear subs) can't even find the bathroom in his room at his Alzheimer's unit. He is in excellent shape and could possibly live 5-10 more years.
This financial drain is being covered in part by LT care insurance which is paying 53% of the $5700/month costs.

My in laws have plenty of money in theory but what if both of them ends up In LT care for an extended period of time ?

Sometimes it's not just about picking the option with the "winning" math problem solution.

Piece of mind counts for something too.

And investing doesn't always ensure that the money will be there when you need it. I remember the "lost decade" of the 00's in the stock market.


Conversely, I have no idea if the policies offered today are as good as the one my in laws have.

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Prince_Ahmed said:

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cjsag94 said:

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Prince_Ahmed said:

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BoDog said:

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Do to family circumstances been thinking about this more and more.

What are the ins/outs, options, and expected cost for a policy, etc?

---

The current financial advisors on here will probably disagree with me, but as someone who sold it (along with all sorts of other financial planning services) for half my career - it's more of a cash cow for the agent than anything.

If you can afford to put a meaningful amount of coverage in place and keep it in force indefinitely at an age when premiums aren't astronomical, then you're better off just investing that money and saving it for LTC or whatever else you need at that age. And if you can afford to buy it at a later age, at higher premiums... you don't need it.

I'll hang up and listen to everyone else

---

You can say this about every type of insurance.. that's what insurance is all about. The distinction with long term care is that it is probably one of the highest probability risks you can insure for, specifically in the event of not leaving a surviving spouse severely depleted.

I've never seen someone end up in a bad situation because they bought LTC insurance, but many family's I've seen devastated by the absence of it. It's not always about the mathematic victory.... Sometimes it's just about catastrophic risk avoidance.

If you need it you'll wish you had it even if you can pay for it yourself.

---

And there it is.

So what I'm hearing you say is, it may not make financial sense, but the insurance industry has ways of making you feel good about this purchase, which you're so likely to use that you're basically pre-paying for it rather than getting any value (other than the security of having prepaid for it, by restricting assets you would have otherwise been able to use for something else).

If you're in such a poor position that you're devastated you don't have it... you probably couldn't have afforded it anyway.

It's very different than life insurance. With life insurance, you're often insuring the risk you die during your working years before having the opportunity to accumulate wealth for retirement, and the cost to insure that risk is pretty low during working years. This is more like a whole life play where you're basically forcing yourself to save, but at terrible rates and without the added benefit of tax-advantaged savings.

OP, I know you keep asking about cost, but it's going to vary widely. You can google LTC quotes and find calculators where you can plug in a few fields and get an answer, but if you think it would give you peace of mind, you should probably find a broker to go through the process with.

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No. What you're hearing him say is what you want to hear.

What he's saying is that insurance NEVER makes financial sense until you need it. That's why insurance companies make money. Odds are you could pay out of pocket for all of the fender benders you have in your life and save by not carrying liability, but you still carry it. Mostly because you have to, but it only takes one serious accident for it to be worth the cost. Total the wrong car or put someone in the hospital and you're ****ed.

You can choose to try to cover LTC yourself by saving and investing, or you can pay for insurance. The saving and investing route gives you more control, access to the money at all times, and let's you keep it if you die suddenly, but it comes with risk and caveats. You do not know upfront how long you may need LTC, and you do not know the costs and market conditions during that time frame. You could end up in LTC for 15-30 years. That is a long time for a principle to last while you incur significant costs. You WILL have significant, uncuttable, regular costs, so market downturns will hit your principle hard. In the kind of time frame possible for LTC, that is a significant possibility. If you have a spouse not needing LTC, you're burning through their retirement fund as well as yours.

Insurance is meant to take on that risk. If you cost them money by living until 120 in a nursing home, that's their problem. They make money by knowing the odds and playing many, many times. You only get one chance to play. Ultimately, whether it is a good idea to insure LTC is not a, "Does it make financial sense?" question, but a, "Do I think I'll be the catastrophic case, and am I prepared for that?" question. THAT'S what he's saying.

Whenever LTC insurance is discussed, I always tell people that it is just a financial tool... It won't make what your are dealing with easy. You highlight several of the issues you can't insure away, it's a tough time to go through for sure.

I think hospice is a form of assisted suicide, under the guise of keeping you comfortable with morphine. But you have to go through a lot before that happens.

I struggle with the hybrid LTC policies. They were created to address the objection to the issue of I get nothing if I don't use it. They are necessary for the insurance company because the total premium is very reliable. The premium outlay is high, however, because insurance knows they are either paying LTC (multiple of premium paid over time) or Death benefit (return of premium all at once). Therefore, the premium had to be enough such that they can generate enough earnings to support claims of all policies.

Hopefully the increase in interest rates will begin to positively effect premiums on these policies.

Flo, That Limey Lizard, Jake from State Farm and that deep voice guy from Allstate do not work for free.

My parents purchased LTC insurance in their late 60's. Dad died at 95 and never qualified. Mom died at 98 and we received 3 months of benefit payments which were about half the actual costs of assisted living/memory care.

Looking back they had enough assets to cover their LTC costs and did not need the LTC. Of course hindsight is 20/20.

I'm 67 and my wife and I do not own LTC. We have enough assets to cover those costs should they occur. What I've learned from observing my parents' lives is that moving to a nursing home is the last thing you'll do and it won't be for long. There are exceptions of course.

OldArmyCT said:

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As a 28 year FA who had a mom with a LTC policy I have a lot of thoughts.
-Check your parents finances, I found out about my mom's policy after she died. It paid nothing despite her having paid monthly for 25+ years, even if we had known the barriers to start paying were huge.
-A reverse mortgage is a good way to generate cash to generate income. You lose their home but you're probably going to anyway,
-Gain access to parents finances before they're unable to give them to you. Using their money for lTC is preferable to using yours.
-A poster above mention Lincoln as a LTC option, one time pay. If possible these are the best plans out there, you ALWAYS get back at least what you put in. Remembers, my mom got nothing back from her plan except a bunch of excuses.
-This may turn some people off but there are states that allow assisted suicide. Its that better than descending into the depths of Alzheimers? I have no idea but I wonder why the Dems aren't pushing for this to be universal. My body, my choice and all. My wife and I have talked a lot about the what-ifs of becoming dependent on our kids versus taking a trip to Oregon. And we have plenty of money to self-insure for a long time.
-A pre-paid burial is better than a LTC monthly pay plan iMO. Especially if you're getting cremated. And military vets and wives get free burial at national cemeteries, you just have to pay for body disposal. My wife went first and is in a niche that already has my name on it.

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This is something that should be legal in Texas, IMO. I've seen it a couple times. One was long and drawn out with my grandmother and alzheimers. I can guarantee she would have preferred assisted suicide over the way it played out. In fact, my mom was dead set on going to Florida for this reason had she gotten alzheimers. Unfortunately, she got cancer and when it got terminal and she was put on hospice I saw it play out with her. Thankfully, she wasn't suffering for long, think she was in hospice for a week or so. But her condition deteriorated quickly. She was basically a shell laying in bed that we force fed pain meds to so we could hopefully keep her out of pain. Not sure why you should have to extend a life in condition like that out 5 + days.....

TxTarpon said:

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Flo, That Limey Lizard, Jake from State Farm and that deep voice guy from Allstate do not work for free.

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Don't insurance companies just do all that advertising because they can then charge higher premiums since the advertising costs go in with the claims on their statutorily limited recoupments? I think that is the case for at least some of the types of insurance.

I'm late to this party, but I help families utilize their LTC. It is a pain in the ass, and they make it VERY hard to get your money back.

My advice....go get a quote. Whatever the premium is, put that that premium monthly in a separate account and let it grow....put it in savings, something else more creative, but watching these poor people not qualify for LTC when they obviously need it....or have to wait 90/120 days when that is too long is brutal to watch when they've paid all that premium for years.

Doesn't Medicare pay for the initial 100 days of care?

DrewAg27 said:

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Doesn't Medicare pay for the initial 100 days of care?

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Not for home care

Home Health, yes