LTC policy like a deferred annuity - does it exist?

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Hebell
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LTC policy like a deferred annuity - does it exist?

Post by Hebell »

Are there LTC policies that kick in after 3-5 years of paying for such care yourself out-of-pocket ?

In essence, a LTC policy to remove tail risks? The premiums should be much less!
IowaFarmBoy
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Re: LTC policy like a deferred annuity - does it exist?

Post by IowaFarmBoy »

I don't think so. At least they weren't 10-15 years ago when I shopped hard for a LTC policy and I think the LTC policy landscape has gotten worse. The term you're describing is the "elimination period"- basically how long you have to pay before benefits kick in. At that time, the longest elimination period I could find was one year.

I was approaching this the same way you are hoping to- I felt like I could plan to cover a few years of expenses out of pocket but wanted protection against something that would require care for a long time. Essentially using it as insurance should be used, to protect against risks that are not certain and whose consequences are severe.
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Stinky
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Re: LTC policy like a deferred annuity - does it exist?

Post by Stinky »

Hebell wrote: Sun Dec 05, 2021 10:21 pm Are there LTC policies that kick in after 3-5 years of paying for such care yourself out-of-pocket ?

In essence, a LTC policy to remove tail risks? The premiums should be much less!
I don't believe that such a product exists, even though it would make a ton of sense.

And I don't know whether it's reluctance by insurance companies, regulators, or both that has kept such a product from the market.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
Rex66
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Re: LTC policy like a deferred annuity - does it exist?

Post by Rex66 »

Nope

Frankly if the insurance industry wanted to produce such a product they could lobby to get it done.

They don’t want to. They aren’t very good at predicting that long tail and thus don’t know how to price it or want the risk. If you notice, most of the newer products are capped.
WoW2012
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Re: LTC policy like a deferred annuity - does it exist?

Post by WoW2012 »

Hebell wrote: Sun Dec 05, 2021 10:21 pm Are there LTC policies that kick in after 3-5 years of paying for such care yourself out-of-pocket ?

In essence, a LTC policy to remove tail risks? The premiums should be much less!
Yes, there are two types.

1) There are traditional long-term care insurance policies that have elimination periods as long as 4 years. These policies are available in 42 states.

2) There are also hybrid policies which require a large, lump sum, single premium which works to fund the first few years of care and then the unlimited long-term care rider kicks in after that.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
adamthesmythe
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Re: LTC policy like a deferred annuity - does it exist?

Post by adamthesmythe »

WoW2012 wrote: Tue Dec 07, 2021 9:42 pm
Hebell wrote: Sun Dec 05, 2021 10:21 pm Are there LTC policies that kick in after 3-5 years of paying for such care yourself out-of-pocket ?

In essence, a LTC policy to remove tail risks? The premiums should be much less!
Yes, there are two types.

1) There are traditional long-term care insurance policies that have elimination periods as long as 4 years. These policies are available in 42 states.

2) There are also hybrid policies which require a large, lump sum, single premium which works to fund the first few years of care and then the unlimited long-term care rider kicks in after that.
OP (and, apparently a great many other people around here) wants to buy insurance for >3-5 years WITHOUT insurance for <3-5 years.
WoW2012
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Re: LTC policy like a deferred annuity - does it exist?

Post by WoW2012 »

adamthesmythe wrote: Tue Dec 07, 2021 10:06 pm
WoW2012 wrote: Tue Dec 07, 2021 9:42 pm
Hebell wrote: Sun Dec 05, 2021 10:21 pm Are there LTC policies that kick in after 3-5 years of paying for such care yourself out-of-pocket ?

In essence, a LTC policy to remove tail risks? The premiums should be much less!
Yes, there are two types.

1) There are traditional long-term care insurance policies that have elimination periods as long as 4 years. These policies are available in 42 states.

2) There are also hybrid policies which require a large, lump sum, single premium which works to fund the first few years of care and then the unlimited long-term care rider kicks in after that.
OP (and, apparently a great many other people around here) wants to buy insurance for >3-5 years WITHOUT insurance for <3-5 years.
Policies like that are available in 42 states.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Rex66
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Re: LTC policy like a deferred annuity - does it exist?

Post by Rex66 »

Number 2 is clearly not what people are looking for

I’d have to look at current examples of number 1
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Hebell
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Re: LTC policy like a deferred annuity - does it exist?

Post by Hebell »

WoW2012 wrote: Tue Dec 07, 2021 9:42 pm
Hebell wrote: Sun Dec 05, 2021 10:21 pm Are there LTC policies that kick in after 3-5 years of paying for such care yourself out-of-pocket ?
Yes, there are two types.

1) There are traditional long-term care insurance policies that have elimination periods as long as 4 years. These policies are available in 42 states.
...
Thank you, I had no idea there were policies with a 3+ year elimination period. I will look into that.
crefwatch
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Re: LTC policy like a deferred annuity - does it exist?

Post by crefwatch »

You might wish to investigate the percentage of LTC patients who actually require care for such long periods. There are many types of LTC, and it's worth mentioning that many excellent nursing homes are likely to agree not to refuse inadequate (for example ... ) Medicaid payments if a patient has already paid three, or even two years of full Private Pay. (They know, what the numbers are, in my first sentence.)

I wonder if you are, conceptually, thinking about "longevity insurance", which is available without the hot-button of LTC.

I'd make the further point that insurance protects against a specific risk. Investments are hoped to generate positive returns. They tend to be better as separate products. I refused an offer of Universal Life with LTC Rider, for example.
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Re: LTC policy like a deferred annuity - does it exist?

Post by nisiprius »

I don't think so. When we bought our LTC policies--at a time when the situation was better and there was a wider choice--the longest available deferral period was 12 months.
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randomguy
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Re: LTC policy like a deferred annuity - does it exist?

Post by randomguy »

crefwatch wrote: Wed Dec 08, 2021 10:52 am You might wish to investigate the percentage of LTC patients who actually require care for such long periods. There are many types of LTC, and it's worth mentioning that many excellent nursing homes are likely to agree not to refuse inadequate (for example ... ) Medicaid payments if a patient has already paid three, or even two years of full Private Pay. (They know, what the numbers are, in my first sentence.)

I wonder if you are, conceptually, thinking about "longevity insurance", which is available without the hot-button of LTC.

I'd make the further point that insurance protects against a specific risk. Investments are hoped to generate positive returns. They tend to be better as separate products. I refused an offer of Universal Life with LTC Rider, for example.
I think most people are trying to protect their portfolios from getting decimated by paying for LTC for a decade more than getting kicked out of the nursing home. For example if I am 80 with 1.5 million dollars and 40k/year of SS and I need a 120k/year of care. I want to cap my downside at say 500k (i.e. ~3 years of care which is likely far more than I need) in case I am one of those edge cases that spend 10 years in there. In theory a 3-5 year elimination period is what I want. Either I called the wrong company or am in one the states that doesn't allow it because I haven't seen a policy like that.

Longevity insurance is sort of a different issue. We don't see a lot of discussion of longevity annuities (i.e. the ones that don't start paying out til like 80+ to get a bunch of mortality credits). So far they haven't been very popular with consumers. It is a tough sell to buy something that might not pay off for 20 years. And it is also hard to figure out the value of your money in 20+ years.
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Re: LTC policy like a deferred annuity - does it exist?

Post by adamthesmythe »

Hebell wrote: Wed Dec 08, 2021 9:15 am
WoW2012 wrote: Tue Dec 07, 2021 9:42 pm
Hebell wrote: Sun Dec 05, 2021 10:21 pm Are there LTC policies that kick in after 3-5 years of paying for such care yourself out-of-pocket ?
Yes, there are two types.

1) There are traditional long-term care insurance policies that have elimination periods as long as 4 years. These policies are available in 42 states.
...
Thank you, I had no idea there were policies with a 3+ year elimination period. I will look into that.
OP, please come back with information about the policy you found, as we have a confident assertion that such policies exist.
WoW2012
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Re: LTC policy like a deferred annuity - does it exist?

Post by WoW2012 »

crefwatch wrote: Wed Dec 08, 2021 10:52 am You might wish to investigate the percentage of LTC patients who actually require care for such long periods. There are many types of LTC, and it's worth mentioning that many excellent nursing homes are likely to agree not to refuse inadequate (for example ... ) Medicaid payments if a patient has already paid three, or even two years of full Private Pay. (They know, what the numbers are, in my first sentence.)

I wonder if you are, conceptually, thinking about "longevity insurance", which is available without the hot-button of LTC.

I'd make the further point that insurance protects against a specific risk. Investments are hoped to generate positive returns. They tend to be better as separate products. I refused an offer of Universal Life with LTC Rider, for example.
I can assure you that 99.99% of the people who purchase life insurance policies with LTC riders are NOT buying it as an investment.
They are buying it as a hedge to protect their investments.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
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