I remember reading something a while ago here, but I can't find the thread and I'll ask it.

What is the better option for LTC. I'm in my early 40's and wife is late 30's. 2 kids, kind of young. Got estimates for LTC policies that are about $500 a month. I think it was about 10 years to pay and it becomes 'funded'.

What's the 'better' choice? Just save the money myself or pull the trigger. I can change some things about it, but I think the overall lifetime benefit was $365k per person, 5 years duration and 90 day elimination period. Do get a spousal discount and this assumes I sign us both up at the same time.

Overall in decent/good shape. No medical issues for either partner. Just wondering if this is a sound decision or should I look at just 'self funding' the LTC. Thanks.

~egon

Maybe you've done the math already but a quick calc of 500/mo for 10 years then letting it ride for 20 years yields like 650k assuming 6% return. Obviously a very different thought process and risk assessment for that route though.

You're assuming you'll be of sound mind... or trust someone while you are not of sound mind... to handle that $650k vs it being with LTC insurance.

Edit: My parents both have it. Covers $635,000 total for both or it can be used up by one person. My dad has two brain injuries and doesn't know what decade it is let alone has the ability to control finances. We paid the 2 months up front and LTC will kick in sometime in December for him.

Feels good to know he's covered at least 6 years based on where he is/locked in cost.

Don't forget to calculate what the cost might be 40 years from now when you'll need it rather than compare it to today's cost.

And for my parents I urged them to consider a combo life/LTC policy vs a stand alone LTC policy. The price was a bit more but the assurance that they would utilize the policy one way or the other was definitely more appealing than paying for 20-30 years and then dying in your sleep thus not needing the traditional LTC policy.

I do have other life insurance policies in force.

Currently like 3 years of income for me and about 1.5 of my spouse. This is independent and not work related.

How does that figure into things?

~egon

Look at single pay LTC policies. The absolute worst you can do with most of them is get your original investment back. Less conditions to meet before they pay out too. Toss $100K into one and you might have a better deal than that $500-$1000/month deal.

In your 40s, I'd take a good look at a variable product on a hybrid ULL/LTC chassis.

There is also a new fixed product from a reputable company that you can buy as a couple rather than buying individual policies.

mosdefn14 said:

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In your 40s, I'd take a good look at a variable product on a hybrid ULL/LTC chassis.

There is also a new fixed product from a reputable company that you can buy as a couple rather than buying individual policies.

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That company also has a lifetime payout option

Not to hijack but this got me to thinking. For folks that might want to retire early, is their a policy (hedge if you will) to protect against rising health insurance prior to turning 65? We have an HSA but I'm just curious if there is some other vehicle around?

Hypothetically - a couple in early 40's wants to retire at 55. Biggest unknown is health cost from 55-65. Other than educated guess on retirement funding or HSA what else is out there? Something that you could possibly rollover in the event that you hit 55 and decide not to hang it up.

I'm a bit younger than you, but my hedge is our HSA. We pay for all medical expenses out of pocket to let the HSA grow. Assuming you started maxing out a HSA at 30 with 5% returns and a 3% increase in contributions each year you would have nearly $600k at 55.

You could withdraw $18 to 24K per year (3 to 4% withdrawal rate) for medical to supplement any needs at that point risk free. Realistically if you only needed the money as a bridge you could withdraw at higher rate to cover more costs.

Yeah, so we are little late and only one of us has the option so playing some catch up. Appreciate the thoughts and feedback.

I wrote a blog article on this back in 2017.
TL;DR - If you are poor or wealthy, don't buy it. If you're in the middle, it may make sense.

https://www.atxadvisors.com/accountable-update/2017/10/20/who-needs-long-term-care-planning

The "hedge" is to plan for $2k/m for health premiums in today's dollars for a decently healthy couple between retirement age and age 65...

Dollars are dollars, whether you spend them on healthcare or Wendy's. Obviously paying from HSA is tax advantaged, but so is letting that HSA double a few more times between 55 and 80.