LTC vs self insurance

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JackoC
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Re: LTC vs self insurance

Post by JackoC »

delamer wrote: Mon Dec 06, 2021 3:27 pm
cacophony wrote: Sun Dec 05, 2021 11:09 pm
delamer wrote: Sun Dec 05, 2021 10:45 pm
softwaregeek wrote: Sun Dec 05, 2021 10:14 pm
delamer wrote: Sun Dec 05, 2021 10:08 pm You’ll have less of what?
Cash. Insurance isn’t free.
Ah. True, as long as you are one of the people who doesn’t need the care that the insurance would have paid for.
Although I’m not sure what the insurance company’s profit have to do with anything.
The fact that an insurance company is profitable means that on average they pay out less than you would put in through premiums. That means that mathematically speaking, it's a poor bet to make, at least if you can afford to lose.
I just don’t see why averages come into play in this decision. Either you think your risk level justifies the premium or you don’t.
Again to my earlier point, the ratio of payouts to premiums is what matters, not the insurance company's profit. But assuming 'there's profit' is a rough way of saying 'the payout ratio is significantly less than 1' (though much or most of that is due to non-payout expenses rather than profit) I partly agree with your statement. Once everybody understands that the expected value of a LTCi policy is a negative to the tune of a significant % of the expected premiums, then the reason to buy it would be risk aversion to higher than expected LTC costs that the policy would pay. Like any (unsubsidized) insurance.

But first people have to understand it has significant negative expected value. Some posts don't seem to recognize that, proposing LTCi in part as a method of forced savings for LTC costs near expected. Insurance isn't the way to do that. As you imply, the reason to buy insurance is for cases far above the expected value that the person could not afford to pay. The problem with LTCi policies is that their coverage tends to be limited to cases still in the fairly fat part of the distribution of outcomes. Insurance markets seem to sometimes do this. The customers and ins co's find common ground on a tolerable premium, it seems, reducing the amount of tail risk the insurers have to bear. But efficient insurance would go the other way, raising deductibles to reduce premium to a tolerable level while actually covering tail risk all the way out. Again if it's 'extremely unlikely' (being in a nursing home for over a decade, etc) it shouldn't cost much to insure against it. But for whatever reason that's not the market and LTCi policies as they exist seem to be of value in only limited cases, definitely not including our own.
delamer
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Re: LTC vs self insurance

Post by delamer »

JackoC wrote: Mon Dec 06, 2021 4:15 pm
delamer wrote: Mon Dec 06, 2021 3:27 pm
cacophony wrote: Sun Dec 05, 2021 11:09 pm
delamer wrote: Sun Dec 05, 2021 10:45 pm
softwaregeek wrote: Sun Dec 05, 2021 10:14 pm
Cash. Insurance isn’t free.
Ah. True, as long as you are one of the people who doesn’t need the care that the insurance would have paid for.
Although I’m not sure what the insurance company’s profit have to do with anything.
The fact that an insurance company is profitable means that on average they pay out less than you would put in through premiums. That means that mathematically speaking, it's a poor bet to make, at least if you can afford to lose.
I just don’t see why averages come into play in this decision. Either you think your risk level justifies the premium or you don’t.
Again to my earlier point, the ratio of payouts to premiums is what matters, not the insurance company's profit. But assuming 'there's profit' is a rough way of saying 'the payout ratio is significantly less than 1' (though much or most of that is due to non-payout expenses rather than profit) I partly agree with your statement. Once everybody understands that the expected value of a LTCi policy is a negative to the tune of a significant % of the expected premiums, then the reason to buy it would be risk aversion to higher than expected LTC costs that the policy would pay. Like any (unsubsidized) insurance.

But first people have to understand it has significant negative expected value. Some posts don't seem to recognize that, proposing LTCi in part as a method of forced savings for LTC costs near expected. Insurance isn't the way to do that. As you imply, the reason to buy insurance is for cases far above the expected value that the person could not afford to pay. The problem with LTCi policies is that their coverage tends to be limited to cases still in the fairly fat part of the distribution of outcomes. Insurance markets seem to sometimes do this. The customers and ins co's find common ground on a tolerable premium, it seems, reducing the amount of tail risk the insurers have to bear. But efficient insurance would go the other way, raising deductibles to reduce premium to a tolerable level while actually covering tail risk all the way out. Again if it's 'extremely unlikely' (being in a nursing home for over a decade, etc) it shouldn't cost much to insure against it. But for whatever reason that's not the market and LTCi policies as they exist seem to be of value in only limited cases, definitely not including our own.
We agree on tail risk issue. The concern is not really about the first 3 years of LTC, but of being an extreme case of needing care for a decade or more.

But apparently, for whatever reason as you say, insurers haven’t been able to develop policies that covers that risk.

It would be interesting to know how much legacy issues play into the LTC policy purchase decisions.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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rich126
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Re: LTC vs self insurance

Post by rich126 »

Slightly off topic but during my visit to the hospice yesterday my father was sleeping and we didn't want to disturb him if we could avoid it. Later he kept questioning how long we were waiting and why we didn't wake him up. I kind of lied a bit and said we were only there for a few minutes. I was off for the day and we had no other plans. Kind of strange how people worry about different things. He was real concerned about having all of his documents in order.

Anyhow what I was going to say was that I was shocked when I spoke to a nurse there and asked what I thought was a stupid question "Do some people actually leave the hospice alive?" The answer was yes and several did last week. And no, I'm not getting up my hope although you always keep a tiny bit of hit in your body. I then did some googling and found stuff like the following -
https://www.mcclatchydc.com/news/article24455983.html
WASHINGTON—Thousands of patients who check into hospices expecting to die are winning reprieves instead. Sometimes attention from loved ones and quality care from hospice staff turn things around. Or doctors guess wrong when they predict that death is near. And sometimes long-odds medical miracles happen. Whatever the reason, roughly 100,000 U.S. hospice patients will win new leases on life this year. That number, which is based on Centers for Disease Control and Prevention figures, is expected to increase as baby boomers age. It's a trend that poses exotic challenges—some wrenching, some magnificent—for hospices and for hospice patients and their families.

Read more at: https://www.mcclatchydc.com/news/articl ... rylink=cpy
Obviously someone like me (hopefully most people) would love to have another year with a loved one but clearly that has to be a wild swing of emotions, preparing for the end and it not happening. And knowing you may have to go through the same thing again not long down the road.

Maybe most knew this but it came as a total surprise/shock to me.
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MikeG62
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Re: LTC vs self insurance

Post by MikeG62 »

A friend of mine described a solution to LTC for a friend of his this way.

They (a couple around 60) bought a $1.0 million term life insurance policy for an annual fixed premium of $8,000 per year from Prudential. They have enough money to fund LTC, but wanted to protect their assets for their children. So should they need LTC, they would pay it out of pocket and their estate/heirs would get "reimbursed" after death from the proceeds of the policy.

I have not looked into this, but if it is as he explained it, seems like a cheap way to get more coverage dollars than one could reasonably obtain buying traditional LTC insurance. Plus, even if no money is ever spent, their heirs get the $1.0 million in insurance following their death.

Anyone heard of anyone doing this. Honestly, seem too good to be true to me.
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JoeRetire
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Re: LTC vs self insurance

Post by JoeRetire »

MikeG62 wrote: Tue Dec 07, 2021 6:12 amI have not looked into this, but if it is as he explained it, seems like a cheap way to get more coverage dollars than one could reasonably obtain buying traditional LTC insurance.
Buying life insurance doesn't give you any "coverage dollars" at all. The assumption here appears to be that you have the money to "self insure". And if you can "self insure" then you wouldn't need to purchase life insurance.

If the goal was to maximize the amount passed on to heirs, then perhaps $5M in life insurance should have been purchased.

LTC money and life insurance are two different things, with two different goals.
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MikeG62
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Re: LTC vs self insurance

Post by MikeG62 »

JoeRetire wrote: Tue Dec 07, 2021 7:16 am
MikeG62 wrote: Tue Dec 07, 2021 6:12 amI have not looked into this, but if it is as he explained it, seems like a cheap way to get more coverage dollars than one could reasonably obtain buying traditional LTC insurance.
Buying life insurance doesn't give you any "coverage dollars" at all. The assumption here appears to be that you have the money to "self insure". And if you can "self insure" then you wouldn't need to purchase life insurance.

If the goal was to maximize the amount passed on to heirs, then perhaps $5M in life insurance should have been purchased.

LTC money and life insurance are two different things, with two different goals.
I understand what you are saying, but in some ways it’s a distinction without a difference.

This couple basically wanted to ensure their estate was covered for up to $1.0 million in LTC costs. This product does that.

Also, if they end up paying LTC costs while alive they will get a nice tax deduction for those costs (assuming the costs are significant enough to allow them to itemize - current tax rules).

Whether they incur any LTC costs or not, their estate will receive a $1.0 million lump sum payment (I’m assuming at the death of the second to die spouse?). This for a measly $8,000 per year. Even if they pay in for 35 years, they will only have paid in $280,000 and for this they will get back $1.0 million. It seems surprising to me an insurer would offer a policy on these terms.

And while it is life insurance and not LTC insurance, they have a lifetime benefit of $1.0 million which is far greater than the benefit I see from others who have LTC insurance policies.

Setting aside they “could buy a $5 million term policy” what is wrong with this strategy? Why is buying a LTC policy superior to this approach?

Honestly, I would have expected a term life policy to get prohibitively expensive as the couple ages, but my friend says they are locked in at $8,000 per year for as long as they continue to pay in.
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JackoC
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Re: LTC vs self insurance

Post by JackoC »

MikeG62 wrote: Tue Dec 07, 2021 6:12 am A friend of mine described a solution to LTC for a friend of his this way.

They (a couple around 60) bought a $1.0 million term life insurance policy for an annual fixed premium of $8,000 per year from Prudential. They have enough money to fund LTC, but wanted to protect their assets for their children. So should they need LTC, they would pay it out of pocket and their estate/heirs would get "reimbursed" after death from the proceeds of the policy.

I have not looked into this, but if it is as he explained it, seems like a cheap way to get more coverage dollars than one could reasonably obtain buying traditional LTC insurance. Plus, even if no money is ever spent, their heirs get the $1.0 million in insurance following their death.

Anyone heard of anyone doing this. Honestly, seem too good to be true to me.
On the pricing that does sound at first glance too good but let's just assume it's right. It's not necessarily a bad alternative to LTCi but does depend what your goal actually is. If your goal in buying LTCi is just to make sure you (the older individual or couple) have the money for LTC (without kids feeling pressure to support you) then LTCi while AFAIK a pretty flawed product as actually offered in the market, is the general concept of product you'd want. A life insurance policy does nothing directly to pay for *your* LTC costs, IOW I agree with the previous comment assuming the narrow purpose is to pay for your LTC costs. If OTOH you'd get LTCi despite having enough to likely pay for your own LTC costs, but to avoid those costs wiping out your heirs' inheritance, then maybe life insurance could be viewed as part of the big picture surrounding LTC costs.

Similarly, some posts noted in response to stories of 90 yr old in LTC for a long time (though didn't seem clear if the person started LTC at 90 or had already been in LTC a long time by age 90) 'you're unlikely to even reach 90'. That's not actually true for people of above average life expectancy prospects (upper middle class, not smoker/obese/diabetic, good health habits and history, I would guess it's a pretty common profile here) although everyone in their 60's say has a very significant chance of dying prior to age 90 (just not necessarily >50%). So another way to indirectly address LTC costs would be layering in annuities to raise your income to pay for LTC in the years where both LTC cost is more likely and the company writing the annuity calculates a good chance you won't be around. Again this wouldn't make sense if LTCi policies actually covered a lot of the downside risk of big LTC cost but they don't. If all an LTCi policy will cover is a few years of LTC, more alternatives open up.
MikeG62
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Re: LTC vs self insurance

Post by MikeG62 »

JackoC wrote: Tue Dec 07, 2021 9:53 am
MikeG62 wrote: Tue Dec 07, 2021 6:12 am A friend of mine described a solution to LTC for a friend of his this way.

They (a couple around 60) bought a $1.0 million term life insurance policy for an annual fixed premium of $8,000 per year from Prudential. They have enough money to fund LTC, but wanted to protect their assets for their children. So should they need LTC, they would pay it out of pocket and their estate/heirs would get "reimbursed" after death from the proceeds of the policy.

I have not looked into this, but if it is as he explained it, seems like a cheap way to get more coverage dollars than one could reasonably obtain buying traditional LTC insurance. Plus, even if no money is ever spent, their heirs get the $1.0 million in insurance following their death.

Anyone heard of anyone doing this. Honestly, seem too good to be true to me.
On the pricing that does sound at first glance too good but let's just assume it's right. It's not necessarily a bad alternative to LTCi but does depend what your goal actually is. If your goal in buying LTCi is just to make sure you (the older individual or couple) have the money for LTC (without kids feeling pressure to support you) then LTCi while AFAIK a pretty flawed product as actually offered in the market, is the general concept of product you'd want. A life insurance policy does nothing directly to pay for *your* LTC costs, IOW I agree with the previous comment assuming the narrow purpose is to pay for your LTC costs. If OTOH you'd get LTCi despite having enough to likely pay for your own LTC costs, but to avoid those costs wiping out your heirs' inheritance, then maybe life insurance could be viewed as part of the big picture surrounding LTC costs.

Similarly, some posts noted in response to stories of 90 yr old in LTC for a long time (though didn't seem clear if the person started LTC at 90 or had already been in LTC a long time by age 90) 'you're unlikely to even reach 90'. That's not actually true for people of above average life expectancy prospects (upper middle class, not smoker/obese/diabetic, good health habits and history, I would guess it's a pretty common profile here) although everyone in their 60's say has a very significant chance of dying prior to age 90 (just not necessarily >50%). So another way to indirectly address LTC costs would be layering in annuities to raise your income to pay for LTC in the years where both LTC cost is more likely and the company writing the annuity calculates a good chance you won't be around. Again this wouldn't make sense if LTCi policies actually covered a lot of the downside risk of big LTC cost but they don't. If all an LTCi policy will cover is a few years of LTC, more alternatives open up.
Yes this strategy as explained to me is a couple with the means to pay for LTC, but preferring to avoid taking a big hit to their estate in doing so. So, in that regard - and assuming I was told the numbers correctly - it seems like a good alternative.
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Nate79
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Re: LTC vs self insurance

Post by Nate79 »

MikeG62 wrote: Tue Dec 07, 2021 8:24 am
JoeRetire wrote: Tue Dec 07, 2021 7:16 am
MikeG62 wrote: Tue Dec 07, 2021 6:12 amI have not looked into this, but if it is as he explained it, seems like a cheap way to get more coverage dollars than one could reasonably obtain buying traditional LTC insurance.
Buying life insurance doesn't give you any "coverage dollars" at all. The assumption here appears to be that you have the money to "self insure". And if you can "self insure" then you wouldn't need to purchase life insurance.

If the goal was to maximize the amount passed on to heirs, then perhaps $5M in life insurance should have been purchased.

LTC money and life insurance are two different things, with two different goals.
I understand what you are saying, but in some ways it’s a distinction without a difference.

This couple basically wanted to ensure their estate was covered for up to $1.0 million in LTC costs. This product does that.

Also, if they end up paying LTC costs while alive they will get a nice tax deduction for those costs (assuming the costs are significant enough to allow them to itemize - current tax rules).

Whether they incur any LTC costs or not, their estate will receive a $1.0 million lump sum payment (I’m assuming at the death of the second to die spouse?). This for a measly $8,000 per year. Even if they pay in for 35 years, they will only have paid in $280,000 and for this they will get back $1.0 million. It seems surprising to me an insurer would offer a policy on these terms.

And while it is life insurance and not LTC insurance, they have a lifetime benefit of $1.0 million which is far greater than the benefit I see from others who have LTC insurance policies.

Setting aside they “could buy a $5 million term policy” what is wrong with this strategy? Why is buying a LTC policy superior to this approach?

Honestly, I would have expected a term life policy to get prohibitively expensive as the couple ages, but my friend says they are locked in at $8,000 per year for as long as they continue to pay in.
The problem, without knowing the details of the term policy is that term insurance has a fixed period of time. That time is 10, 20, 30 years for example. It isn't forever. The couple could very well outlive the term policy yet run out of funds for LTC. This isn't foolproof.

And life insurance is priced by actuaries. My guess the term is about 20 years only. I went to term4sale and input a 60 year old, $1m term policy with nonsmoking, and above average health the annual policy is about $7k/year for a 20 year term. There were no 30 year policies listed.

So they are likely only covered until they are 80 if this is true. Now maybe it is not term but some type of hybrid that the first X years are fixed and then after it isn't like a universal life (then it gets super expensive after)?
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Re: LTC vs self insurance

Post by randomguy »

MikeG62 wrote: Tue Dec 07, 2021 8:24 am

Whether they incur any LTC costs or not, their estate will receive a $1.0 million lump sum payment (I’m assuming at the death of the second to die spouse?). This for a measly $8,000 per year. Even if they pay in for 35 years, they will only have paid in $280,000 and for this they will get back $1.0 million. It seems surprising to me an insurer would offer a policy on these terms.
You need to factor in the investment returns and policy lapses. 8k/year for 35 years isn't 280k. It is 1.2-4 million dollars (100% bonds->100% stocks) over the past 35 years. If this is a second to die policy, the odds of someone making it to 90 might be pretty high and the odds of policy lapse (say the husband dies and the wife doesn't know to pay the policy) might also be pretty high. Obviously you need all the details to figure out exactly what is going on.

I also would suggest that a lot of the LTC policies might be worth more than that in 30 years. Your 250k LTC policy with inflation rider is likely to be worth a million bucks if you don't use it for 30 years. Lots of guesses involved there though.

From where i am sitting , this is borderline useless. Just invest that 8k/year 50/50. If you live to 95, you are going to have more money than the insurance. If you die early, you probably didn't run up huge LTC bills and your portfolio is fine. Hedging with some short term term might also work out but I have no clue what that costs for a 60 years old....


Pretty much all insurance products have winners and losers. Pay for it today and use it in a year, and you are a winner (well financially). Pay for 30 years before using it? Probably not.
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Re: LTC vs self insurance

Post by MathWizard »

MikeG62 wrote: Tue Dec 07, 2021 6:12 am A friend of mine described a solution to LTC for a friend of his this way.

They (a couple around 60) bought a $1.0 million term life insurance policy for an annual fixed premium of $8,000 per year from Prudential. They have enough money to fund LTC, but wanted to protect their assets for their children. So should they need LTC, they would pay it out of pocket and their estate/heirs would get "reimbursed" after death from the proceeds of the policy.

I have not looked into this, but if it is as he explained it, seems like a cheap way to get more coverage dollars than one could reasonably obtain buying traditional LTC insurance. Plus, even if no money is ever spent, their heirs get the $1.0 million in insurance following their death.

Anyone heard of anyone doing this. Honestly, seem too good to be true to me.
The renewable term life that I had would not insure beyond age 70.5 .
You would want to check that this would not be an issue.
Whole life would be much ore expensive I would guess, and how would you pay the annual premiums once
LTC has exhausted your funds?
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Re: LTC vs self insurance

Post by delamer »

JoeRetire wrote: Tue Dec 07, 2021 7:16 am
MikeG62 wrote: Tue Dec 07, 2021 6:12 amI have not looked into this, but if it is as he explained it, seems like a cheap way to get more coverage dollars than one could reasonably obtain buying traditional LTC insurance.
Buying life insurance doesn't give you any "coverage dollars" at all. The assumption here appears to be that you have the money to "self insure". And if you can "self insure" then you wouldn't need to purchase life insurance.

If the goal was to maximize the amount passed on to heirs, then perhaps $5M in life insurance should have been purchased.

LTC money and life insurance are two different things, with two different goals.
Exactly.

It’s not a strategy to pay for the couple’s LTC costs. It’s a strategy to make sure the kids get sn inheritance regardless of what LTC costs the parents incur.

And I too find it hard to believe that it is effective through the joint life expectancy of both parents, with no premium increases.
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JoeRetire
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Re: LTC vs self insurance

Post by JoeRetire »

MikeG62 wrote: Tue Dec 07, 2021 8:24 am This couple basically wanted to ensure their estate was covered for up to $1.0 million in LTC costs. This product does that.
The life insurance does not ensure their estate is covered for anything other than making sure their heirs get $1m when they die. It has nothing to do with LTC costs.
Also, if they end up paying LTC costs while alive they will get a nice tax deduction for those costs (assuming the costs are significant enough to allow them to itemize - current tax rules).
And that has nothing to do with life insurance. Any tax deduction for costs would occur independent of the life insurance.

You are conflating two unrelated financial moves.
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Re: LTC vs self insurance

Post by willthrill81 »

Nate79 wrote: Tue Dec 07, 2021 10:12 am The problem, without knowing the details of the term policy is that term insurance has a fixed period of time. That time is 10, 20, 30 years for example. It isn't forever. The couple could very well outlive the term policy yet run out of funds for LTC. This isn't foolproof.

And life insurance is priced by actuaries. My guess the term is about 20 years only. I went to term4sale and input a 60 year old, $1m term policy with nonsmoking, and above average health the annual policy is about $7k/year for a 20 year term. There were no 30 year policies listed.

So they are likely only covered until they are 80 if this is true. Now maybe it is not term but some type of hybrid that the first X years are fixed and then after it isn't like a universal life (then it gets super expensive after)?
That was my first thought about the 'life insurance to protect our assets from being drained by LTC' strategy. Thanks for the info. It seems that this could provide some protection, but it certainly won't provide lifetime protection if you live a long time.
randomguy wrote: Tue Dec 07, 2021 10:27 am You need to factor in the investment returns and policy lapses. 8k/year for 35 years isn't 280k. It is 1.2-4 million dollars (100% bonds->100% stocks) over the past 35 years. If this is a second to die policy, the odds of someone making it to 90 might be pretty high and the odds of policy lapse (say the husband dies and the wife doesn't know to pay the policy) might also be pretty high. Obviously you need all the details to figure out exactly what is going on.
Yes, the $8k annual premium is not a great of a deal as it seems when you take the opportunity cost into account.

Another problem with this approach is that it completely ignores inflation. Just 2% inflation will halve the buying power of a dollar in 36 years, and 3% inflation will do the same in 24 years.

A hybrid LTCi policy might be a better approach than traditional LTCi for some people, though I believe that these also do nothing directly to address inflation risk. Michael Kitces did a good summary of this insurance product awhile back in this post.
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MikeG62
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Re: LTC vs self insurance

Post by MikeG62 »

Nate79 wrote: Tue Dec 07, 2021 10:12 am
The problem, without knowing the details of the term policy is that term insurance has a fixed period of time. That time is 10, 20, 30 years for example. It isn't forever. The couple could very well outlive the term policy yet run out of funds for LTC. This isn't foolproof.

And life insurance is priced by actuaries. My guess the term is about 20 years only. I went to term4sale and input a 60 year old, $1m term policy with nonsmoking, and above average health the annual policy is about $7k/year for a 20 year term. There were no 30 year policies listed.

So they are likely only covered until they are 80 if this is true. Now maybe it is not term but some type of hybrid that the first X years are fixed and then after it isn't like a universal life (then it gets super expensive after)?
I was told the annual premium was fixed at $8,000 and would continue at this level for as long as the person paid into the policy and there was no end date. Admittedly, this seems odd for a "term" policy, as all term policies I've ever heard of had a finite term. So, I need to go back and press my friend for clarification.
randomguy wrote: Tue Dec 07, 2021 10:27 am
You need to factor in the investment returns and policy lapses. 8k/year for 35 years isn't 280k. It is 1.2-4 million dollars (100% bonds->100% stocks) over the past 35 years. If this is a second to die policy, the odds of someone making it to 90 might be pretty high and the odds of policy lapse (say the husband dies and the wife doesn't know to pay the policy) might also be pretty high. Obviously you need all the details to figure out exactly what is going on.

I also would suggest that a lot of the LTC policies might be worth more than that in 30 years. Your 250k LTC policy with inflation rider is likely to be worth a million bucks if you don't use it for 30 years. Lots of guesses involved there though.

From where i am sitting , this is borderline useless. Just invest that 8k/year 50/50. If you live to 95, you are going to have more money than the insurance. If you die early, you probably didn't run up huge LTC bills and your portfolio is fine. Hedging with some short term term might also work out but I have no clue what that costs for a 60 years old....


Pretty much all insurance products have winners and losers. Pay for it today and use it in a year, and you are a winner (well financially). Pay for 30 years before using it? Probably not.
I did not run the math on the past 35 years, but I did run it (simplistic model using excel) for a hypothetical 35 year period where the $8,000 was added to the portfolio every year and the portfolio was invested 50% in equities and 50% in bonds. First iteration assumed equities returned 6% per year and bonds 3% per year. Value at the end of year 35 was $681K. Then ran it assuming 8% annualized return on equities and 3.5% on bonds and came out with a value of $894K in 35 years. Ran it one last time using 10% for equities and 4% for bonds (boy, I'd sign up for those returns over the next 35 years in a heartbeat) and the terminal value was $1.183 million. So, I don't think the right "compare to" is $1.2 million to $4.0 million.

Also, these people may well not live anywhere close to 35 additional years, which would have them dying at 95. More likely they'd pass in their 80's with the terminal value being considerably lower than the numbers I posted above. In fact, the value at the end of 25 years using the 10% equity and 4% bond returns is only $541K.
JoeRetire wrote: Tue Dec 07, 2021 12:23 pm
MikeG62 wrote: Tue Dec 07, 2021 8:24 am This couple basically wanted to ensure their estate was covered for up to $1.0 million in LTC costs. This product does that.
The life insurance does not ensure their estate is covered for anything other than making sure their heirs get $1m when they die. It has nothing to do with LTC costs.
Ok, but it's a way to cover LTC costs (up to $1.0 million) other than through purchasing a LTC insurance plan - and that is the point.
JoeRetire wrote: Tue Dec 07, 2021 12:23 pm
MikeG62 wrote: Tue Dec 07, 2021 8:24 am Also, if they end up paying LTC costs while alive they will get a nice tax deduction for those costs (assuming the costs are significant enough to allow them to itemize - current tax rules).
And that has nothing to do with life insurance. Any tax deduction for costs would occur independent of the life insurance.

You are conflating two unrelated financial moves.
Yes, the tax deduction is independent of life insurance. However, my point here was that by paying for the LTC costs out of pocket (with future cost recovery through the life insurance) one would be entitled to a tax deduction. My assumption (perhaps an incorrect one and you can correct me if I am wrong) is that if the LTC costs are paid out of proceeds from a LTC insurance plan one would not be entitled to the same deduction.
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Re: LTC vs self insurance

Post by Wrench »

AnnetteLouisan wrote: Sun Dec 05, 2021 7:35 pm Here’s an example of inflation protection in LTCI even when you don’t elect automatic inflation protection (to keep premiums low). It’s the future purchase option:

Age 54, time to accept or decline the future purchase option on my LTCi. Current benefit with John Hancock (through work) is $350/day for 3 years after 90 day waiting period for $63/mo premium. I can’t self insure and I don’t want to skip LTCI entirely.

They are asking me to accept or decline an increase to $373/day for $71/mo. Although I usually decline, I heard on this forum and from an LTCI salesperson recommended by someone whose judgement I trust that my coverage amount may not be enough and wondering if a $23/day increase is worth the extra $80. a year ($7x12 mos). I can afford it.

On what basis would I make this decision? What would you do?
Find out what it costs for skilled nursing in your area. My FIL was just placed in skilled nursing in a good facility in a MCOL area outside a major city on the east coast. Cost: $460 per day. If that is the cost in your area in a facility that you would want to be placed in, then you should get the increase. OTOH, if the costs in your area are lower than $350 per day, perhaps you need not do so. But, $80 per year seems like very little to get an increase in benefits of $23*365=$8395 per year down the road, especially when inflation over at least the next year or so looks to be relatively high.

Wrench
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Re: LTC vs self insurance

Post by JoeRetire »

MikeG62 wrote: Wed Dec 08, 2021 5:18 pm
JoeRetire wrote: Tue Dec 07, 2021 12:23 pm
MikeG62 wrote: Tue Dec 07, 2021 8:24 am This couple basically wanted to ensure their estate was covered for up to $1.0 million in LTC costs. This product does that.
The life insurance does not ensure their estate is covered for anything other than making sure their heirs get $1m when they die. It has nothing to do with LTC costs.
Ok, but it's a way to cover LTC costs (up to $1.0 million) other than through purchasing a LTC insurance plan - and that is the point.
Life insurance payouts don't occur until the owner is deceased. LTC costs occur before that.
So the former cannot cover the latter.
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Re: LTC vs self insurance

Post by Silk McCue »

JoeRetire wrote: Thu Dec 09, 2021 9:24 am
MikeG62 wrote: Wed Dec 08, 2021 5:18 pm
JoeRetire wrote: Tue Dec 07, 2021 12:23 pm
MikeG62 wrote: Tue Dec 07, 2021 8:24 am This couple basically wanted to ensure their estate was covered for up to $1.0 million in LTC costs. This product does that.
The life insurance does not ensure their estate is covered for anything other than making sure their heirs get $1m when they die. It has nothing to do with LTC costs.
Ok, but it's a way to cover LTC costs (up to $1.0 million) other than through purchasing a LTC insurance plan - and that is the point.
Life insurance payouts don't occur until the owner is deceased. LTC costs occur before that.
So the former cannot cover the latter.
You seem to be arguing semantics here when the intent is clear (at least to me) in this exchange. The insurance policy is to “make whole” the estate up to a million dollars that might have been spent on LTC, not to actually pay for the LTC.

Cheers
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Re: LTC vs self insurance

Post by Shackleton »

Sandtrap wrote: Sun Dec 05, 2021 6:26 pm
willthrill81 wrote: Sun Dec 05, 2021 6:24 pm
delamer wrote: Sun Dec 05, 2021 5:46 pm
Sandtrap wrote: Sun Dec 05, 2021 5:39 pm Here's a realistic scenario:

Age 90. Needs at home full time care. Unable to be in a facility.
Cost: 10-12,000/month.
Duration: 8 years until passing.

Would you be able to pay for this out of pocket for yourself?

j :D
Maybe realistic, but not probable: https://www.aaltci.org/long-term-care-i ... m-care.php

(And yes, I realize the linked numbers are for nursing home care.)
Roughly 75% of those who need such care need full-time care need it for fewer than 3 years. Exceptionally few 90 year olds would need it for 8 years.
Yes. You're right.

Example from MIL recently passed. LTC ins was not in place.
Good points.

So mamy ways of looking at these things of life.
thanks!
j
I think so much of the “need” or desire for LTC insurance is colored by a person’s prior experience. In my case, my mom had LTC insurance through John Hancock that had a yearly premium of $3600/yr for $400k benefit with 90 day elimination when she was 76(the last year I paid the premium, it was cheaper when she was younger). It had been in place for 16 years. At 76 she suffered major health issues (congestive heart failure, stroke and dementia) that required her to move into a memory care facility and I started a claim. The policy paid out immediately and no further premiums were required. Because the policy had an inflation rider, the total benefit amount continued to increase during the 10 years she was in the memory care facility, and it ended up paying out just under $500k in total benefits over 6 years. At that point, I paid for her care out of her portfolio. She passed away at 86 after 11 years at that memory care home.

Was she an outlier for her longevity with such major health issues? Absolutely. Did my experience drive me to purchase a LTC insurance policy? Yes it did. Hubby and I have LTC policies, each with 90 day elimination periods, $300k benefits with inflation protection. We pay $1200/yr for mine and $1600/yr for his. The policies have been in place for 8 years and the price has not changed at all. We purchased the policies because if one of us needed LTC we wanted to ensure we didn’t spend down our retirement funds too drastically (we are bother retired.) I will probably look at increasing the elimination period before the next renewal. We see the LTC policies as just a small way to add some peace of mind, but not a way to fund all LTC. But again, I think my view is entirely based on my experience with my mom and her LTC policy.
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Re: LTC vs self insurance

Post by JoeRetire »

Silk McCue wrote: Thu Dec 09, 2021 9:33 am
JoeRetire wrote: Thu Dec 09, 2021 9:24 am
MikeG62 wrote: Wed Dec 08, 2021 5:18 pm
JoeRetire wrote: Tue Dec 07, 2021 12:23 pm
MikeG62 wrote: Tue Dec 07, 2021 8:24 am This couple basically wanted to ensure their estate was covered for up to $1.0 million in LTC costs. This product does that.
The life insurance does not ensure their estate is covered for anything other than making sure their heirs get $1m when they die. It has nothing to do with LTC costs.
Ok, but it's a way to cover LTC costs (up to $1.0 million) other than through purchasing a LTC insurance plan - and that is the point.
Life insurance payouts don't occur until the owner is deceased. LTC costs occur before that.
So the former cannot cover the latter.
You seem to be arguing semantics here when the intent is clear (at least to me) in this exchange. The insurance policy is to “make whole” the estate up to a million dollars that might have been spent on LTC, not to actually pay for the LTC.
I understand. My point is that the estate has to have the money to pay for the long term care in the first place. Life insurance doesn't provide that.

If you want your heirs to receive $1M when you pass, buy life insurance.
If you want to pay for your long term care out of your assets, make sure you have saved enough.

Doing the former doesn't ensure that you can do the latter. The two are completely independent decisions. You can do neither, one, or both.
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Re: LTC vs self insurance

Post by randomguy »

JoeRetire wrote: Thu Dec 09, 2021 10:09 am
I understand. My point is that the estate has to have the money to pay for the long term care in the first place. Life insurance doesn't provide that.

If you want your heirs to receive $1M when you pass, buy life insurance.
If you want to pay for your long term care out of your assets, make sure you have saved enough.

Doing the former doesn't ensure that you can do the latter. The two are completely independent decisions. You can do neither, one, or both.
Not really. If I have a 1 million dollar life insurance policy, I don't need enough assets to pay for LTC. I need enough to pay for a couple of years and then I can go on medicaid. I will have accomplished my goal of leaving my kids money and paying for LTC. Basically I will have pushed the tail risk of needing a decade+ in LTC off onto the state....
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Re: LTC vs self insurance

Post by Silk McCue »

randomguy wrote: Thu Dec 09, 2021 11:11 am
JoeRetire wrote: Thu Dec 09, 2021 10:09 am
I understand. My point is that the estate has to have the money to pay for the long term care in the first place. Life insurance doesn't provide that.

If you want your heirs to receive $1M when you pass, buy life insurance.
If you want to pay for your long term care out of your assets, make sure you have saved enough.

Doing the former doesn't ensure that you can do the latter. The two are completely independent decisions. You can do neither, one, or both.
Not really. If I have a 1 million dollar life insurance policy, I don't need enough assets to pay for LTC. I need enough to pay for a couple of years and then I can go on medicaid. I will have accomplished my goal of leaving my kids money and paying for LTC. Basically I will have pushed the tail risk of needing a decade+ in LTC off onto the state....
I don’t think you are going to be very happy with your quality of life on Medicaid alone. You might want to plan a bit more with an Irrevocable Grantor Trust to provide additional support beyond what Medicaid will be doing for you.

Cheers
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Re: LTC vs self insurance

Post by ResearchMed »

Silk McCue wrote: Thu Dec 09, 2021 11:29 am
randomguy wrote: Thu Dec 09, 2021 11:11 am
JoeRetire wrote: Thu Dec 09, 2021 10:09 am
I understand. My point is that the estate has to have the money to pay for the long term care in the first place. Life insurance doesn't provide that.

If you want your heirs to receive $1M when you pass, buy life insurance.
If you want to pay for your long term care out of your assets, make sure you have saved enough.

Doing the former doesn't ensure that you can do the latter. The two are completely independent decisions. You can do neither, one, or both.
Not really. If I have a 1 million dollar life insurance policy, I don't need enough assets to pay for LTC. I need enough to pay for a couple of years and then I can go on medicaid. I will have accomplished my goal of leaving my kids money and paying for LTC. Basically I will have pushed the tail risk of needing a decade+ in LTC off onto the state....
I don’t think you are going to be very happy with your quality of life on Medicaid alone. You might want to plan a bit more with an Irrevocable Grantor Trust to provide additional support beyond what Medicaid will be doing for you.

Cheers
This would depend upon the facility.

There are facilities, some very nice indeed, that will accept someone after financial vetting, and then they agree to keep you if you run out of money. The "worst" that might happen at such a place is needing to share a room.

However, even that isn't always necessary. Where MIL lived, and where we plan to go, they do not have any double rooms for Skilled Nursing (except a few that they can arrange for a couple, upon request). So the "worst" there would be a shared bath. If someone is available to cover that extra charge, then one doesn't even need the shared bath.

MIL's SN facility was just starting to help us transition her to Medicaid as we saw the end of her money loom in the distance.
We were going to cover the (not inexpensive) cost of a "private bath" room. But if she had remained bed-ridden, then we figured she herself wouldn't be sharing any bathroom at all (and the other room's occupant would end up with something close to a private bathroom, other than what any of MIL's attendants/nurses/etc., might be using for her care).

The full cash cost had been >$20k/month, and she would have stayed right where she was.
She passed a short time later, and Medicaid was never needed.

What is VERY important, to make this work, is to get accepted in a "nice place" when you have enough money so they will acept you and agree to "keep you".

RM
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Re: LTC vs self insurance

Post by willthrill81 »

Silk McCue wrote: Thu Dec 09, 2021 11:29 amI don’t think you are going to be very happy with your quality of life on Medicaid alone.
It depends. In some areas, the facilities and care will be the same or nearly so, and if only one of the spouses is alive by the time the LTC is needed, there might be no effective difference in being on Medicaid vs. not.
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Re: LTC vs self insurance

Post by MikeG62 »

Silk McCue wrote: Thu Dec 09, 2021 9:33 am
JoeRetire wrote: Thu Dec 09, 2021 9:24 am
MikeG62 wrote: Wed Dec 08, 2021 5:18 pm
JoeRetire wrote: Tue Dec 07, 2021 12:23 pm
MikeG62 wrote: Tue Dec 07, 2021 8:24 am This couple basically wanted to ensure their estate was covered for up to $1.0 million in LTC costs. This product does that.
The life insurance does not ensure their estate is covered for anything other than making sure their heirs get $1m when they die. It has nothing to do with LTC costs.
Ok, but it's a way to cover LTC costs (up to $1.0 million) other than through purchasing a LTC insurance plan - and that is the point.
Life insurance payouts don't occur until the owner is deceased. LTC costs occur before that.
So the former cannot cover the latter.
You seem to be arguing semantics here when the intent is clear (at least to me) in this exchange. The insurance policy is to “make whole” the estate up to a million dollars that might have been spent on LTC, not to actually pay for the LTC.

Cheers
Correct.
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Re: LTC vs self insurance

Post by Silk McCue »

willthrill81 wrote: Thu Dec 09, 2021 11:41 am
Silk McCue wrote: Thu Dec 09, 2021 11:29 amI don’t think you are going to be very happy with your quality of life on Medicaid alone.
It depends. In some areas, the facilities and care will be the same or nearly so, and if only one of the spouses is alive by the time the LTC is needed, there might be no effective difference in being on Medicaid vs. not.
Let’s assume a stellar Medicaid facility. Having additional funds, not accessible by Medicaid, to support their needs would never be a bad thing.

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Re: LTC vs self insurance

Post by willthrill81 »

Silk McCue wrote: Thu Dec 09, 2021 11:45 am
willthrill81 wrote: Thu Dec 09, 2021 11:41 am
Silk McCue wrote: Thu Dec 09, 2021 11:29 amI don’t think you are going to be very happy with your quality of life on Medicaid alone.
It depends. In some areas, the facilities and care will be the same or nearly so, and if only one of the spouses is alive by the time the LTC is needed, there might be no effective difference in being on Medicaid vs. not.
Let’s assume a stellar Medicaid facility. Having additional funds, not accessible by Medicaid, to support their needs would never be a bad thing.

Cheers
Agreed. More money is never a bad thing. :wink:

But that doesn't mean that more money results in a meaningfully better quality of life. And it really doesn't mean that it's worthwhile to do what may be necessary to have more money.
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Re: LTC vs self insurance

Post by Silk McCue »

willthrill81 wrote: Thu Dec 09, 2021 11:47 am Agreed. More money is never a bad thing. :wink:

But that doesn't mean that more money results in a meaningfully better quality of life. And it really doesn't mean that it's worthwhile to do what may be necessary to have more money.
I’d rather have it and not need it than need it and not have it. That can be accomplished with a modicum of Medicaid planning.

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Re: LTC vs self insurance

Post by willthrill81 »

Silk McCue wrote: Thu Dec 09, 2021 11:58 am
willthrill81 wrote: Thu Dec 09, 2021 11:47 am Agreed. More money is never a bad thing. :wink:

But that doesn't mean that more money results in a meaningfully better quality of life. And it really doesn't mean that it's worthwhile to do what may be necessary to have more money.
I’d rather have it and not need it than need it and not have it. That can be accomplished with a modicum of Medicaid planning.

Cheer
Agreed.
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Re: LTC vs self insurance

Post by randomguy »

Silk McCue wrote: Thu Dec 09, 2021 11:29 am
randomguy wrote: Thu Dec 09, 2021 11:11 am
JoeRetire wrote: Thu Dec 09, 2021 10:09 am
I understand. My point is that the estate has to have the money to pay for the long term care in the first place. Life insurance doesn't provide that.

If you want your heirs to receive $1M when you pass, buy life insurance.
If you want to pay for your long term care out of your assets, make sure you have saved enough.

Doing the former doesn't ensure that you can do the latter. The two are completely independent decisions. You can do neither, one, or both.
Not really. If I have a 1 million dollar life insurance policy, I don't need enough assets to pay for LTC. I need enough to pay for a couple of years and then I can go on medicaid. I will have accomplished my goal of leaving my kids money and paying for LTC. Basically I will have pushed the tail risk of needing a decade+ in LTC off onto the state....
I don’t think you are going to be very happy with your quality of life on Medicaid alone. You might want to plan a bit more with an Irrevocable Grantor Trust to provide additional support beyond what Medicaid will be doing for you.

Cheers
It is the same facility. I think i will be as happy with it when I was paying as when medicaid is. I don't know if I will be happy with my quality of life in either case:). Realistically it is unlikely to happen as the odds of ending up in a place for more than 4-5 years is low as are the odds of having bad returns for my 20+ year retirement. But you do need a plan to handle it. And yes hiding more money in trusts is another way of going.
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Re: LTC vs self insurance

Post by capran »

It is such a difficult decision, and we have revisited it many times. Both my parents passed at 83. Dad was smoking a cigarette in his easy chair, living alone. Mom had to go into hospice for several weeks after battling lung cancer (lifetime smoker). Her parents very early bought into one of those continuum of care places. Pay a high price for a home that you live in as long as you need it (and pay a monthly maintenance fee (that had risen to over 1200 a month, plus utilities of course), but when you exit the home the organization keeps it, whether you pass away or need some level of care, ranging from apartment with no support to intensive support, and then you pay additionally for that level of care depending on how early on you bought into their program. Her dad passed mid 80's and spent a very short time in their care facility, almost more like a hospice room. Her mom stayed in the home until age 91 and then moved to an apartment for her last 13 months. That included meals, house keeping, and just checking in several times a day, but didn't require much in was of meds or other service. And for that they only charged her 77,000 a year (because she had bought in 25 years ago).

Given the above family history, we have passed on LTC Insurance. I will be 70 next birthday and she will turn 67 next month. I took a smaller pension with 100% survivor benefit, but we didn't use that option for her pension, so that would go away, but we are deferring her SS to 70. If she were to pass my SS and Pension would be @ 64k. Her's would be 85k, both with COLA's. By aggressively converting our tax deferred/IRA we will be just under 1 mil at the end of this year, with Roths at 624k, and taxable investments bringing total portfolio to 2.1, plus home conservatively valued at 550k. If we can continue to convert IRA's aggressively our net portfolio and cash will decline every year as income taxes are paid on the tIRA conversions. We set up a revokable trust many years ago under the belief that there might be some advantage shielding some assets from having to be eliminated before Medicaid might kick in, but we do need to revisit that to increase our understanding. Bottom line is we are hoping we have the funds to cover whatever might be needed for assistance and care. We were always do-it-yourselfers in most things, and try to balance the possible need for some support with the chance that we might not need much care based on family history.
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Re: LTC vs self insurance

Post by willthrill81 »

capran wrote: Thu Dec 09, 2021 12:44 pmWe set up a revokable trust many years ago under the belief that there might be some advantage shielding some assets from having to be eliminated before Medicaid might kick in, but we do need to revisit that to increase our understanding.
Only irrevocable trusts will protect assets from Medicaid. Revocable trusts are useless for Medicaid planning. You can read about this here.

Moving assets to an irrevocable trust often has significant tax complications, but such a trust can still be worthwhile in some circumstances. Note that assets which have been in the irrevocable trust for fewer than 5 years are subject to the 'look-back period' and can be clawed back by Medicaid. If you want to use such a trust, you need to contact a qualified attorney ASAP.

It's possible that a Medicaid-compliant annuity may help you as well. Gifting assets to your heirs and/or charity now can also be helpful.
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Re: LTC vs self insurance

Post by JoeRetire »

randomguy wrote: Thu Dec 09, 2021 11:11 am Not really. If I have a 1 million dollar life insurance policy, I don't need enough assets to pay for LTC. I need enough to pay for a couple of years and then I can go on medicaid.
You can use that same approach without the life insurance.

But if you somehow think life insurance is connected with other insurances, you can purchase as much life insurance as you like.
Buy another $1m in life insurance and "self-insure" your car, home, etc.

It doesn't have to make sense to me, just you.

Good luck.
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Re: LTC vs self insurance

Post by randomguy »

JoeRetire wrote: Thu Dec 09, 2021 1:17 pm
randomguy wrote: Thu Dec 09, 2021 11:11 am Not really. If I have a 1 million dollar life insurance policy, I don't need enough assets to pay for LTC. I need enough to pay for a couple of years and then I can go on medicaid.
You can use that same approach without the life insurance.
Nobody is saying otherwise. The decisions though are linked together as you are trying to solve 2 problems not 1. If you are better off with life insurance, trusts, annuities, or a few other options will depend on your exact situation.
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Re: LTC vs self insurance

Post by capran »

willthrill81 wrote: Thu Dec 09, 2021 12:57 pm
capran wrote: Thu Dec 09, 2021 12:44 pmWe set up a revokable trust many years ago under the belief that there might be some advantage shielding some assets from having to be eliminated before Medicaid might kick in, but we do need to revisit that to increase our understanding.
Only irrevocable trusts will protect assets from Medicaid. Revocable trusts are useless for Medicaid planning. You can read about this here.

Moving assets to an irrevocable trust often has significant tax complications, but such a trust can still be worthwhile in some circumstances. Note that assets which have been in the irrevocable trust for fewer than 5 years are subject to the 'look-back period' and can be clawed back by Medicaid. If you want to use such a trust, you need to contact a qualified attorney ASAP.

It's possible that a Medicaid-compliant annuity may help you as well. Gifting assets to your heirs and/or charity now can also be helpful.
Thank you for that link and clarification. Looks like it was another one of those things the attorneys that market and then produce, used as a ploy to get people to implement their trust product. Kind of like when they put up all kinds of scenarios where famous rich people lost half their estate to probate costs, as if that could happen to the average Joe in an uncomplicated estate situation as exists in Washington State. Hopefully we live long enough to revisit the "trust vs will" issue. Hoping to put it off 13 months while we are consolidating retirement accounts. Plan to be done with that process January 2023.
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Re: LTC vs self insurance

Post by KRP »

TN_Boy wrote: Mon Dec 06, 2021 1:16 pm
JoeRetire wrote: Mon Dec 06, 2021 6:34 am
TN_Boy wrote: Sun Dec 05, 2021 9:08 pm And if you have a house and move to a care facility, well you sell the house.
And your spouse finds somewhere else to live.
If you are in assisted living, well, most of your expenses are for that.
Unless you have a spouse.
The OP added two data points to his original post -- one that he is married, the other that the 250k was not his only savings (I noted in another post I didn't like the idea of bucketing the 250k).

For the house, my point remains 100% valid. Yes, if both spouses are living, and one goes into LTC, the other probably doesn't want to sell the house to pay for the LTC -- though a reverse mortgage is clearly a possibility in some situations. Though, if their savings are low enough that they can't afford even a short stay in LTC for one spouse, they probably couldn't afford LTCi premiums for 20 years either ...

I've spent a lot of time in LTC facilities and there are a lot of widowed women in those facilities. I think most of them have sold their house......

A paid off house absolutely something that should be considered when thinking about how to pay for LTC, especially for the "last spouse."

To the OP: one reason I keep urging you to read the prior posts is that all these points have been gone over in great detail previously. People with similar experiences have different takes on the advisability of LTC insurance. You will not get the "correct" answer here, you will only get various facts and opinions.

I'll summarize my viewpoint as saying my experience across four parents (including my spouse's parents) was that two required NO LTC, 1 needed 18 months of LTC, the fourth needed 3 years. The two in LTC had LTCi insurance, but benefits were limited to 5k a month. While the insurance was "nice" it made no significant difference in the financial situations of those two parents. And the policies were a lot cheaper than you can get now.
Had a family member need care not long ago at a +$30K a month burn rate. Health insurance coverage had a limit (in days), but fortunately they recovered (apparently not typical, but :D ) and exited before days exceeded the limit.

LTC insurance that has an upper limit (which I now translate into <= 4-12 months of costs based on my actual experience) isn't really "insurance" in my mind, as any "long term" serious care issue will easily exceed the limit and consume all assets and leave the surviving spouse with nothing to cover their needs. I imagine a functional LTC insurance pool would more likely NOT cover any costs to the insured up to the first $XXX,XXX (priced appropriately) and then kick in with no upper bound, but I haven't seen an LTC policy like that yet...has anyone?
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Re: LTC vs self insurance

Post by willthrill81 »

KRP wrote: Thu Dec 09, 2021 3:49 pm LTC insurance that has an upper limit (which I now translate into <= 4-12 months of costs based on my actual experience) isn't really "insurance" in my mind, as any "long term" serious care issue will easily exceed the limit and consume all assets and leave the surviving spouse with nothing to cover their needs. I imagine a functional LTC insurance pool would more likely NOT cover any costs to the insured up to the first $XXX,XXX (priced appropriately) and then kick in with no upper bound, but I haven't seen an LTC policy like that yet...has anyone?
Policies with no limit on benefits are available, but I have no idea how much they cost. Policies with lengthy elimination periods are also available in some areas.

You could contact a LTCi broker for more detailed information. But keep in mind that such a person is naturally biased strongly toward believing that LTCi is the very best solution to the problem of funding LTC and convincing you of the same.
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Re: LTC vs self insurance

Post by KRP »

willthrill81 wrote: Thu Dec 09, 2021 4:17 pm
KRP wrote: Thu Dec 09, 2021 3:49 pm LTC insurance that has an upper limit (which I now translate into <= 4-12 months of costs based on my actual experience) isn't really "insurance" in my mind, as any "long term" serious care issue will easily exceed the limit and consume all assets and leave the surviving spouse with nothing to cover their needs. I imagine a functional LTC insurance pool would more likely NOT cover any costs to the insured up to the first $XXX,XXX (priced appropriately) and then kick in with no upper bound, but I haven't seen an LTC policy like that yet...has anyone?
Policies with no limit on benefits are available, but I have no idea how much they cost. Policies with lengthy elimination periods are also available in some areas.

You could contact a LTCi broker for more detailed information. But keep in mind that such a person is naturally biased strongly toward believing that LTCi is the very best solution to the problem of funding LTC and convincing you of the same.
Thanks willthrill81, including the caveat about salespeople...er...brokers. :wink: (are they called brokers because they make people broke? lol)
KRP
Posts: 225
Joined: Thu Aug 27, 2020 11:56 am

Re: LTC vs self insurance

Post by KRP »

Tangentially, I've also read about LTC yearly cost increases on various threads here, which seem to squeeze people into sunk-cost stay or go decisions as they approach the age they may need it...is there such a thing as "term" (i.e. fixed price over some term) LTC?
Silk McCue
Posts: 8954
Joined: Thu Feb 25, 2016 6:11 pm

Re: LTC vs self insurance

Post by Silk McCue »

KRP wrote: Thu Dec 09, 2021 4:52 pm Tangentially, I've also read about LTC yearly cost increases on various threads here, which seem to squeeze people into sunk-cost stay or go decisions as they approach the age they may need it...is there such a thing as "term" (i.e. fixed price over some term) LTC?
There are numerous threads on occasional rate increases. I don’t know of any that are about annual increases (not saying they aren’t there).

Cheers
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