Long Term Care Insurance question pros/cons

[Apple]

I'm at work today so I'll only be able to check in on breaks and this evening to answer any questions.

Right now my employer is offering Long Term Care insurance and I'm trying to figure out if it's a good deal or if there is something out there that is "way better". I have until June 24 to apply (but would like to do so a week before that if I do sign up for it).

Quick and dirty details...
I'm a 32-year-old single mom of one (basically, no spouse to rely on for any help and only one child I'd refuse to burden financially)
No siblings that would take on my care (large family, but we are not all that close)
Dangerous job (I'm an electrician, basically, anything could happen)
I don't do a lot of "stupid" stuff on my free time, but I do work on my own house projects and things (think of a handy-husband and that's what I can do, mend my own fence/gate/plumbing--drain side anyway/electrical stuff/whatever is needed although I do have my limits) but don't usually go out dirt bike racing, skydiving, things like that (I do shoot guns though, again, anything could happen)

The link to specifics is www.ltcfeds.com/documents/files/Book1_ProgDetailsRates_02142005.pdf if anyone wants to see it. Looks like for a max of 5 years of care at $200 a day it would be about $10 a paycheck with the "future purchase" option (I get paid every two weeks) or almost $33 with the 4% inflation option (5% inflation option is over $50 a paycheck so I don't think I'd opt for that one).

I could also try and get unlimited benefits, but I'd have to call for a price on that and not sure it would be worth it.

Plan D
Consider this plan if you will be living in an area where long term care costs are around the national average but you want protection for a longer period of time.
Daily benefit amount: $200
Benefit period: 5 years
Waiting period: 90 calendar days
Inflation protection options:
4% Automatic Compound Inflation Option
5% Automatic Compound Inflation Option
Future Purchase Option
Maximum lifetime benefit: $365,000
Inflation Protection Options:
5% Automatic Compound Inflation Option
4% Automatic Compound Inflation Option
Future Purchase Option

Oh, one more thought... My family generally lives a long time. One Grampa died at age 95, a gramma at 92 (?), and my other grandparents were both in their 80's. I've never had a relative die before age 70 that I can think of. Don't have a lot of health problems in my family, but I do have one aunt that got breast cancer and my dad just got diagnosed with diabetes. Personally I just have grave's disease (treated with Radioactive Iodine so now I'm hypo-thyroid and take a daily pill for that) and other stuff that was taken care of with a hysterectomy.

So, any advice would be appreciated.

TYIA

[Gardening Grandma]

My first thought is that, at 32, you are way too young to be considering long term care insurance. I do have it, but I'm 66 and was 62 when I took it out.

If you were in your 50s or 60s, then I'd start considering it. But not at 32.

With your job, do you have disability coverage? I'd be much more concerned about disability coverage during your earning years and with your occupation.

[lynnerself]

You'll find that there is no consistent advise about long term insurance. Expert maybe what was just posted, that you are too young. Most advice I have seen says to buy in your late 50s, early 60s if you expect to still be in good health by then.
And then to look very, very, very carefully at the benefits and allowable increases in premiums.
There are some real horror stories out there of people paying in tons of money and not being able to get the benefit they thought.

[Deleted]

I'd opt to spend the money on good disability and life insurance benefits.

One problem with "LTC coverage is that, with a few exceptions, it is never paid up. So with good luck, you might be paying for this for fifty years before it kicked in maybe at age 82. It would be sixty years if you made it to age 92 without needing it. That's a lot of years of premiums that are certain to rise in that time frame.

You can't let it lapse, or you've wasted the premiums. Unfortunately, though, that happens to a lot of older adults who have to choose between paying the premiums or paying for their meds and maybe even better cat food for the month. Life gets tough on a fixed income.

Why not simply self-insure in the sense of using this approximately $100 a month to save even more for retirement? You won't necessarily need someone to pick up the bill if you've got sufficient retirement savings to get you into the nursing home for a year or so until you can qualify for Medicaid. Sure, your adult child won't inherit anything, but there's no guarantee he/she will even if you do purchase this.

The picture shifts a little when you are married since all of a couple's resources could be spent caring for one of the couple. There LTC can be a real necessity, but still not at your age.

This is just an opinion, by the way. I am not an expert on insurance.

[Deleted]

May 31, 2011 13:10:09 GMT -5 @southernsusana said:

You can't let it lapse, or you've wasted the premiums. Unfortunately, though, that happens to a lot of older adults who have to choose between paying the premiums or paying for their meds and maybe even better cat food for the month. Life gets tough on a fixed income.

That would be my concern. In addition, the company frequently reserves the right to increase premiums for the group if it turns out they're paying out more than they expected. That's where it can really hurt people already retired. Your premium goes up to an unaffordable level. Do you walk away? And if they didn't have the right to raise premiums I'd worry about what would happen if the company became insolvent.

My personal decision was to self-insure. I'm 58 and comfortable with that given what my projected retirement income compared with nursing home costs (both in 2011 dollars). DH is 72 and has a chronic disease that means he's unlikely to live in a nursing home for an extended period, so even though we're married it still makes sense for us.

[shanendoah]

I agree that at your age, LTC is not what you need to be looking at. It sounds like you think a dangerous job makes it more important, but a 5 year LTC policy is going to do you no good if something happens to you now.
For now, you need to get yourself the best disability insurance you can. That is what will cover you if "anything" happens at work. My MIL was a home health aid who got in a terrible car accident on her way to a client's house. She got worker's comp and is now on SSD, but her private disability insurance is the only thing that actually allows her to live above the poverty level.

And when looking at whether or not you need LTC, don't just look at how long people in your family live, look at how healthy they are for those last few years. Does dementia run in the family type questions.
After my step-father's death (and helping DH and I with some of the issues around MIL) my mom decided to get LTC insurance. She's in her early 60s and severe osteoperosis runs in her family. Since she can afford to, she pays more for her LTC policy because it has a benefit that something like 50% of the premiums she paid will be returned to her estate should she die without ever using the insurance.

[pepper112765]

May 31, 2011 10:59:03 GMT -5 Gardening Grandma said:

My first thought is that, at 32, you are way too young to be considering long term care insurance. I do have it, but I'm 66 and was 62 when I took it out.

If you were in your 50s or 60s, then I'd start considering it. But not at 32.

With your job, do you have disability coverage? I'd be much more concerned about disability coverage during your earning years and with your occupation.

Her premiums would be way cheaper because of her age, so if she were to do it now it would be beneficial. A medical condition could occur later that may preclude her from coverage. As a for instance, based on the plan documents I have and the rate table when the plan was offered, her premium would be $59.70 per month, which includes long term care facility, professional home-community care at 100%, compound inflation with a 10 year to Age 65 APO.

[pepper112765]

May 31, 2011 13:29:58 GMT -5 pepper112765 said:

May 31, 2011 10:59:03 GMT -5 Gardening Grandma said:

My first thought is that, at 32, you are way too young to be considering long term care insurance. I do have it, but I'm 66 and was 62 when I took it out.

If you were in your 50s or 60s, then I'd start considering it. But not at 32.

With your job, do you have disability coverage? I'd be much more concerned about disability coverage during your earning years and with your occupation.

Her premiums would be way cheaper because of her age, so if she were to do it now it would be beneficial. A medical condition could occur later that may preclude her from coverage. As a for instance, based on the plan documents I have and the rate table when the plan was offered, her premium would be $59.70 per month, which includes long term care facility, professional home-community care at 100%, compound inflation with a 10 year to Age 65 APO.

Edited to add: I additionally have short and long term disabililty insurance.

[Gardening Grandma]

(I get paid every two weeks) or almost $33 with the 4% inflation option (5% inflation option is over $50 a paycheck so I don't think I'd opt for that one).

So OP is looking at $858 annual prem (with 4% inflation) or $1300 annual prem with 5% inflation coverage.

Her premiums would be way cheaper because of her age, so if she were to do it now it would be beneficial.

My annual premium with 5% inflation coverage is $1700/yr. That's a difference of only $400/yr. (And my policy has more coverage)....If each of us needed to use the coverage at say age 85, I will have paid $32,300 in premiums, whereas OP would have paid $68,900. I don't think the annual savings is worth paying for that many years of coverage.

I'd still recommend getting the best disability policy she can get.

[Bluerobin]

If you are young with few assets, let the state provide your long term care.

[Apple]

Thanks everyone for the input! I'll have to crunch more numbers tonight... My job doesn't offer disability insurance but I've been meaning to look into that to see what it would cost. I tend to be a saver so I would hope that I'd have the money available when I get older, but you just never know. Just trying to get things I hadn't looked at yet as well as different points of view. Relying on the state for my care is not something I think I'd like at all, but I've worked my arse off to be where I am and have more assets than I'd want to give up at this point.

[tiredturkey]

We carried disability insurance during our working years, figuring we could self-fund income replacement for 1 year but wanting something for the longer haul. It was neither dirt cheap nor prohibitively expensive; premium depends on a mix of health, nature of employment and how many $$ you are looking to replace for how long. We figured the odds were slim we would both be disabled simultaneously; we had no children to provide for. If you shop for disability ins., look for a policy that offers partial benefits if you can work part-time and one that offers retraining to a new profession.

We purchased LTC coverage when we retired at 62 and 54 respectively. It runs us $522/month, six months waiting period, 10 year benefit period, 4% annual adjustment. It also offers partial benefits for in-home care.

My vote, at your age look for disability insurance, not LTC. Yes, down the road you could be denied LTC coverage due to a pre-existing condition but who knows? Insurance is always a crap shoot; damned if we do and damned if we don't.

[gooddecisions]

My parents tried to get a LTC policy not long ago when they retired in their 50s. The problem with waiting until later in life is that the insurance companies will pull your medical records and deny you if they see anything that might be a risk. My folks had medical records for back issues due to golfing- they are active and healthy but their active life style contributed to back pain and they were denied as a result. Like others have said, there is no recourse when your provider changes policies and premiums- which will happen because they will not guarantee your rate or policy guidelines. Unfortunately, experts like Suze Orman never mention this problem when suggesting everyone needs LTC insurance.

You don't need it if you're wealthy and you don't need it if you're poor, but it you want to protect a modest amount of assets (like my parents), it is nice to have. Now their plan is to take a bottle of tylenol PM if their health declines to the point they would need LTC. Personally, I wouldn't want to take out a policy in my 30s for a modest amount only for it to increase 100 times in my 50s and limit what I originally signed up for. I agree- darned if you do and darned if you don't.

[Deleted]

This is my dilemma. At age 57, I can't insure against every possible contingency. The $500 a month TiredTurkey mentions is the amount I save toward my retirement (outside my state pension). I rather suspect that my children would rather I save so as not to be a "burden" in retirement. I, too, am sort of a proponent of the "bottle of tylenol PM" if my health reached the point where I had to go into LTC. It certainly won't be comfy or fun. We aren't talking assisted living with sing-alongs and trips to the mall.

In any case, I can only save for one or the other, and I chose retirement savings. I honestly think that if it were just me alone, I would have enough money to get me into the nursing home. The kids could then spend down the assets until I qualified for Medicaid.

Is it my preferred plan? Of course not. But I'm not sure I can do it all, and NOT eating catfood while I am able to live alone takes precedence over the nursing home.

Besides, my daughter PROMISED me a nicer nursing home if I gave her a good college education (family joke).