Long-Term Care Insurance: Not Always a Good Buy

LTC

I have an LTC plan, It is called a Partnership with NYS. If anyone is familiar with this program would you please comment? The problem I have with the program is if I want to move elsewhere, I have to run back to NYS. when I think I'm ready to "Kick the Bucket".in order to receive the care. However I had an Aunt who gave much care to others, namely family; She was found dead in her home with no-one having checked on her to see how she was. I said this is not for me. Presently many find themselves in dire straits and aren't able to provide help for others. I figure under these circumstances, we need to protect ourselves!

Very Good Article

Michello, your comments are right on target. Too many are pushed by high pressure salespeople into buying long term care insurance.

do your homework

All I can say to many of you is talk to several different companies and agents. Get a life insurance policy that covers LTC? Sounds like some agent found a sucker. Listen, insurance is insurance. The whole basis of insurance is everyone pass in a small, somewhat fixed cost, and only a few people benefit. It is the same for auto, home, life, and long term care. So, the simple point is do you want to trade in a relatively small monthly payment and know you have the piece of mind that you will not be wiped out financially, or don't you? Long-term care is just like any other insurance. If you want the piece of mind, get it. And like any other insurance, there are some bad apples out there, but also like most insurance, most companies are reputable, pay claims on time, and try to stay competitive. If an agent is telling you something that sounds too good to be true, it probably is. Do you homework, shop around. And as for Mike F who had a financial advisor tell him to get life insurance that includes LTC, I say find a new advisor. Combining two things into one doesn't save you anything, in fact, it probably costs you more and means you probably don't have good life insurance or good long term care insurance. Risk is risk and the insurance companies have to make enough to cover the risk. I assure you that you are not getting a good deal when you combine two risks into one policy, other than it just sounds good because at least you get something back. How can a company afford to give you something back? By charging everyone more than they need to. It's that simple.

LTC insurance a must

I encouraged my mother to purchase LTC insurance about 11 years ago. Although her company has raised rates twice, it is still a great value and my brothers and sisters and I, and my mother, have great piece of mind. The increases were relatively minor. The key is do your homework, choose a financially strong company that, as best as you can tell, is committed to long term care insurance. That is, if the company is mainly life insurance and investmentments and ltc only makes up a tiny bit of their business, stay away. The top dogs currently appear to be Genworth #1, Hancock #2, Met Life #3. If I were buying today, I wouldn't buy from anyone but one of the top three carriers.

LTC will NEVER be part of Medicare or nationalize healthcare. Our taxes would be insanely high.

long term care-inflation protection

I am deciding whether or not to buy a policy - some companies are offering inflation protection at 5%5% compounded and some according to the consumer price index-these are the 2 protections I am most interested in. The CPI costs less than the 5% compounded. Do you think CPI is good and realistic option? What is the downside to the partnership plans aside from having to return to the state where it was purchased to get the government benefit without spending down assets. How much will they allow you to keep of your own assets? Thank you.

Long Term care

Is Prudential a good Company?

Inflation Protection

To Steve Parker of Nebraska,

I can understand your viewpoint and if long term care insurance was as you described (e.g. without inflation protection, sacked with huge rate increases, and useless after you run out of benefits), then I would agree with you that it shouldn't be purchased. However, you are mistaken.

Most policies that are purchased include an automatic inflation benefit which increases the benefits of the policy by a certain percentage each year. The increases in the benefits do not make the premium go up.

In your state of Nebraska (as well as about 15 other states right now), you can buy a LTC Partnership policy that has an automatic inflation benefit built in. If you need care for a very long time and the policy benefits are exhausted, you can then apply to the state to pay for your care. Normally, in order to have the state pay for your care, you have to spend your savings down to $2,000. However, if you have had a LTC Partnership policy which has paid $XXX,XXX in benefits, you can then keep $XXX,XXX in savings and still be able to get state-funded care.

You can learn more about the Nebraska Long Term Care Partnership at the following website:

http://www.doi.ne.gov/ltcare/index.htm

You can learn about the other states offering such programs at the following website:

http://www.dehpg.net/LTCPartnership/map.aspx

In regards to rate increases, of the top 5 insurers selling long term care insurance today, only 2 of them have had rate increases on their LTC policyholders (and those rate increases were very modest, ranging from 8% to 16%). Even a 16% rate increase on a policy that is over 10 years old, works out to less than a 2% increase per year.

An insurer's rate increase history is required to be published and disclosed to potential applicants. You can learn more about the rate increases of LTCi policies at the TX Dept. of Insurance website and the CA Dept of Insurance website:

Here are the links:

https://wwwapps.tdi.state.tx.us/inter/asproot/consumer/ltcrgsearch/ltcrgdisc.html

http://www.insurance.ca.gov/0100-consumers/0060-information-guides/0050-health/ltc-rate-history-guide/rate-history-long-term-care.cfm

Lastly, in a recent survey of people who purchased long term care insurance most of the people responded that their primary reason for purchasing a policy was to protect their assets and/or income for their spouse/partner (not their children). Having adequate LTCi coverage prevents the healthy spouse from having to liquidate assets too quickly (especially in a down market).

Scott A. Olson, CLTC

A gray tsunami cometh

You can find the Modern Healthcare article, "A gray tsunami cometh: Long-term care is challenged by the onslaught of the baby boomers, but concern is muted by a lack of immediacy," here:

http://modernhealthcare.com/apps/pbcs.dll/article?AID=/20080721/REG/765188172

Long term Health care - an idea

My financial advisor (NOT an insurance agent) suggested I get a life insurance policy that provides Long Term Care if needed. However, if LTC is not needed, the policy is simply one that pays on death.

LTC insurance

When you get LTC insurance agents and associations attacking you, you know you've hit a nerve.

As any LTC agent or insurance company well knows, the two issues that have dogged LTC insurance from the start are

1) no provision for inflation (You buy coverage now for $40,000 a year and find that in 10 years when you make a claim, you need $54,000 (at 3% inflation))--so where does the extra $14,000 a year come from?

2) If you don't pay the premium, increased or not, the policy lapses and everything you have paid until then is wasted. There may be a couple companies that allow you to opt out of increased premiums in exchange for lower coverage, but of course as time goes by and inflation increases the cost of nursing homes at the same time you are decreasing your coverage, you may well ask yourself if LTC insurance makes any sense at all. (Using the example above, if care goes up $14,000 in 10 years, but your coverage went down $10,000 because you paid a level premium, then you have a $24,000 a year hole to fill. Does it make any sense to be a private pay patient for 2-3 years before running out of money rather than go on Medicaid immediately? Keep in mind the care is the same, although some nursing homes may not admit Medicaid patients.

If you were really worried about leaving assets to your children, you'd be better off giving them each $10,000 a year (limit before owing gift tax) until your money ran out.

And of course, like health insurance, even if you think you are "insured," there is a maximum benefit. Once you hit the maximum, you're on your own.

And sure, the LTC insurance companies have paid claims. But you know what? They're entitled to up to 30% of the premium to cover "expenses." Sounds like a sweet deal to me.