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I’m curious about how many HD readers have arranged for long term care in some way, shape, or form. My policy seems overly complicated, unsurprising since it is an insurance policy. I know it was explained to me at the time.
In the year I turned 60 I used the cash value from a whole life insurance policy to purchase a long term care plan. I no longer needed that life insurance. The actuaries computed a maximum total long term care benefit, spread monthly over six years.
Over the 11 years since, the monthly benefit that at the time seemed so very large, is still large, but not excessively so. If I need long term care this policy should help keep my head above water, considering it in combination with RMDs, Social Security, and my investment account.
If I never use the benefit or I don’t use all of the benefit, then there is an insurance payout to my beneficiary.
I’d be interested to hear what others have planned for LTC. Thanks.
In helping my husband with paperwork related to my mother-in-law’s recent passing, I came across something in our LTC policies I didn’t realize was there, or if I did know, I’d forgotten it—a return of premiums death benefit. If you die before age 65, you get your premiums returned, minus any benefits you’ve received. Between 65-75, the benefit is pro-rated (90% at age 66, down to zero). We bought our LTC policies while still in our 40s, so it was interesting to realize that if one or both of us makes an early exit, that money wouldn’t just go down the drain. I need to update our financial manager (trustee of our estate) about this.
It pays to re-read the fine print. If a neighbor hadn’t advised me to check our policies after my husband died (without using any benefits), I doubt the LTC insurance company would have reminded me that, as a survivor with two policies (the smaller more like a rider), I no longer had to pay the premium on the smaller policy. But no refund of premiums as in your policy.
I had it for a few years in my 40s. It was pricey to start with and then quickly got much more expensive. I did the math – how much I would be paying until the age when I would be most likely to need it, and dropped it, figuring I would have to self fund.
Plan B: Divorce; I told my husband if I ever had a serious stroke or similar issue, to immediately divorce me so at least part of our assets would remain for him and our daughter. Not kidding.
My father had it, and by the time he could have used the homecare benefit, it was very complicated to get approved. My stepmother finally managed to get the mountain of paperwork done, but my dad died shortly thereafter. So it was definitely a financial loss. But I know having the policy gave my father peace of mind – he was very nervous about LTC costs, so in that regard, his peace of mind, it may have been worth it.
I do not have an LTC policy. Every time I have looked, the game has changed which implies the insurance companies are still not sure how to make money from this product. As a result, I can’t evaluate if it is a good buy for me or not.
LTC policies are sold to a market with enough assets that they do not qualify for Medicaid and insufficient assets to not worry about the cost of long-term care. If you have substantial assets, you should consider planning your estate so that your assets are protected from the spend down requirements of Medicaid.