Annual Enrollment: Long Term Care Life Insurance

[schildi]

Hi all!

Our annual enrollment comes up, and it looks like one of the choices is Long Term Care Life Insurance.
Is that something I should consider?

Here is an example:
age at issuance: 45
monthly premium (non smoker): $110
monthly LTC benefit for up to 50 months: $4,000
death benefit: $100k

I am assuming that if you survive your spouse and don't need LTC, then there is no real benefit? 
Not sure I understand this completely.

What is the general consenus between all the money savvy folks here? Do you have LTC insurance?

Thanks for any advice!

[MN-Investor]

My personal opinion is that's a better investment to put the money into a low expense ration broad based stock index fund. Fund a Roth IRA if that's an option. Or just open a brokerage account.

[MN-Investor]

I'm not a fan of long term care insurance. The contracts can be complex. Can they raise the rates at any time so that you lose the insurance and everything you've paid in? Can they adjust the benefits at any time? If you are in your mid-80s and need the insurance, who will work with the insurance company to get those benefits, to fill out the forms saying you qualify for those benefits, to fight the insurance company if they deny you those benefits?

[schildi]

Thanks, good points there!
What makes me suspicious also is the bundling of LTC insurance with life insurance. Usually not a good thing, I believe, right?!?

[MN-Investor]

I'm a firm believer in term insurance possibly during your working years. My husband's employer and my employer offered it free. It would pay for a burial. My brother carries it because his wife is a stay at home mom.

But when my sweetie retired, we had enough in savings to pay for a burial and we had enough saved such that our savings would fund our retirement adequately. There was no longer any reason for us to have term insurance.

I'm not a fan of mixing products. If you think you'll need term insurance, look into its costs and benefits. Adding LTC insurance just muddies the calculations.

[Deleted]

I agree with not bundling life insurance with LTC. Too many moving parts and expense components.

I never carried any life insurance other than what my employer provided- usually 5X salary or so. After my divorce, my will specified that DB and DSIL would take DS (Ex wasn't fit to take him) and I knew they were frugal and probably wouldn't use a dime of it except for his college. When I retired DS was on his own and there was enough in the investments for DH, who was 15 years older, to live quite well.   DS and DDIL do carry extra on each other because she's a SAHM.  I wouldn't want either of them to remarry in haste- DDIL because she needed a breadwinner or DS because he needed someone to raise the kids.  They all deserve better.

LTC insurance also scares me because of the problems people have had with steep premium increases, cuts in coverage in lieu of increases and battles with the insurer when coverage was actually needed.

[minnesotapaintlady]

Are you married?  I'm single and see zero reason to have LTC insurance.  I'm not going to leave a partner destitute if my assets all got eaten up with LTC.   If I was going to get LTC insurance, it probably wouldn't be through work. Maybe there is a portability clause in there or something, but what are the chances you'll actually still be employed there when you actually need the insurance. Assuming something happened to you wouldn't you be put on STD, then terminated to go on LTD?  That's what happens where I work. 

[jerseygirl]

No LTC insurance, we’re self insured . We’ll never get Medicaid but that’s a blessing cause it means you’re almost destitute

If younger snd still working think a good disability policy is much more important

[gs11rmb]

A woman in my bookclub (she's late 40s) was saying that she'd been paying a LTC premium for her mother since she was 22.  Her mother is now about 80, needs help, but LTC won't pay.  I think there are so many loopholes/stipulations on LTC that I'm beginning to view it as not much better than a scam.

[wvugurl26]

I really think it's better to just invest those premiums. A good friend's grandma paid the premiums for many years. She was single and did not want to burden her family. LTC refused to pay because she could still feed herself so they said she didn't need care. Meanwhile she had dementia/Alzheimer's so bad that she couldn't safely prepare food or remember she needed to eat. Fortunately she had enough cash to pay for the care for the rest of her life.

Life insurance and disability yes. I agree I'm thinking LTC is a scam.

[Deleted]

Oct 21, 2022 8:25:44 GMT -5 gs11rmb said:

A woman in my bookclub (she's late 40s) was saying that she'd been paying a LTC premium for her mother since she was 22.  Her mother is now about 80, needs help, but LTC won't pay.  I think there are so many loopholes/stipulations on LTC that I'm beginning to view it as not much better than a scam.

I know of two cases- the financial guru Jim Cramer and a guy who posted on the Early Retirement Board- who had similar stories.  Both ended up fighting the insurance companies and they won but pretty much broke even after lawyers' fees.

Insurance companies have had a very hard time making money on these policies.  They were initially priced with very little data so the assumptions about mortality had to come form general population stats.  We can guess, of course, that people who buy LTC insurance are more likely to anticipate longer lives. maybe because they're in good general health, don't smoke and have long-lived relatives.  We can also guess that people in LTC live longer than people in similar conditions trying to survive at home.  Adjusting for those is a crapshoot.

Then you get the "death spiral".  Increase the rates and the people who drop out first will be the ones who are less likely to need LTC.  The ones who will hang on through thick and thin are the ones who have had a parent diagnosed with Alzheimer's.  So, the population that continues to renew will be more expensive to cover.  Rinse and repeat.

I worked for an insurance sub of GE that they eventually sold.  They also offered the LTC business to the buyer.  The buyer didn't want that piece.

[azucena]

LTC works better and is more reasonably priced in other countries because the insurance companies don't have to worry about PR risk and lawsuits.  Life insurance pricing is easy - you're either dead or you're not.  Actuaries have centuries of data to rely on for pricing.  LTC requires way more definitions and trying to cover most/every scenario - a doctor usually has to sign off on your qualifications.  The general population doesn't have the same mortality or morbidity as the insured population.

And Athena is correct that actuaries are lacking data for accurate LTC pricing.  Plus, LTC costs are increasing so fast that it's hard to keep up.   LTC gives the insured the option to claim, and policyholder behavior can be difficult to predict.

If I were going to buy LTC, I'd actually take a look at those combined with life insurance because the pricing is more likely to hold.  The insurance company holds reserves to pay for the life claim and the LTC claim is a portion of the death benefit that would eventually be paid our anyway.  For us personally, I'm planning to self insure LTC risk using our investments.

[NomoreDramaQ1015]

Oct 21, 2022 8:25:44 GMT -5 gs11rmb said:

A woman in my bookclub (she's late 40s) was saying that she'd been paying a LTC premium for her mother since she was 22.  Her mother is now about 80, needs help, but LTC won't pay.  I think there are so many loopholes/stipulations on LTC that I'm beginning to view it as not much better than a scam.

My mom was looking into and decided it was not worth it.  A BIG factor is assuming that the company will still be in business by the time you need it.  They go under you don't get all those premiums back.  

Even if they don't go out of business many are starting to drop policies because as baby boomers age they are getting more claims.  It can apparently be very difficult to get them to honor your policy if they drop coverage after you already purchased.

Then the amount of loopholes to be able to deny claims.  You think health insurance can be bad my mom said they got nothing on LTC.

In the end it's probably better to hoard/invest that money then if you outlive it so be it and really educate yourself on the laws regarding surviving spouses for your state.  We should probably start looking into that since DH will turn 50 next year and I am 10 years younger than him.

[TheOtherMe]

From reading this thread, I think I am quite pleased I was told I don't qualify for LTC.

[schildi]

Thanks all!
I will skip it, no doubt!