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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.
Long before a beloved elder is no longer able to perform one or more of the standard “Activities of Daily Living” or becomes legally incompetent, there will be a period of time in which they need help. Even if you delegate some or all of that work to a paid provider, oversight and vigilance are still required. Our society is hostile to the vulnerabilities that come with aging, and even predatory. It’s tempting to move the discussion away from those realities into abstract debates about insurance products and personal finance. But I believe we need better conversations – both public and private – about how we care for one another. It turns out that money can’t buy you love.
At my wife’s encouragement, we both bought LTCI 12 years ago from our mega-corp in our mid-50s. They are limited policies covering a few years unlike the original unlimited gold standard policies that have now gone away. We have had 2 premium increases (one recent)-not terrible and we foresee keeping them even though at this point we probably could self insure. We are also on waiting lists for a CCRC which can and will provide long term care if needed-the LTCI will still be of value reducing our cost.
After experiencing 10+ years watching my mother go through early onset FTD (frontaltemporal dementia), I am aware of the costs of ongoing care. Her LTCI policy paid out over $750K until her death in 2011 — an “old style”, no limit policy that a few people here have referred to… At age 60 myself now, I have a cash value life insurance policy with a version of an LTC rider, and I just purchased a retirement annuity with a guaranteed lifetime income benefit of $5,000 per month (to trigger at age 69). The annuity has an LTC rider that doubles the monthly income for up to five years if I’m unable to perform 2 of 6 ADLs. The LTC rider included with my permanent life insurance policy is good, but not of great value until I’m 75+. Current pricing of LTCI policies coupled with their certain rate increases led me to the alternative path that I’ve chosen. This path leaves me a bit vulnerable in my 60’s, but I will still be working so we’ll see…
For anyone interested, an ADL is defined here.
I am an Engineer, and I calculate in $’s the benefit and risk of anything to do with insurance and the like. I made the decision at 22 yrs old to never buy any extended warranties. If you live a reasonable life to 60 to 70 to 80 yrs old and beyond, for sure you will come out ahead. That one or two items that give you headaches and have to repurchase, will easily be paid by all the many dollars you saved over the years.
At age 50 in the 1990’s, the LTC insurance question was the talk of the day. Again I made my calculations and I had a wife that wanted LTC, but I could not make the numbers work for us. Raising a family and with college expenses and the like, the added expense was too much. I am now 78 and hoping to live past 90. My reason to not obtain LTC was I could be self insured over my our lifetime. I just did not want to pay all that money to insurance companies, so instead I invested that amount. If you recall even insurance companies did not know how to handle LTC, there were many issues. Remember more than 85% would only need LTC 1 to 2 years. So we made the decision and invested the money and if unused by age 90, we will have well over one to two million dollars in that IRA account. Yes, I am very fortunate even with cancer to not need any LTC. I fully understand LTC worked out well for that 10% to 15% and of course very thankful for our good health.
Everyone has to make the decision to work for them. I am just not a big fan of Insurance companies, as think about it, every large city you go to, some of the tallest buildings downtown, like in Chicago, the Hancock Center are Insurance company buildings. They take as little risk as possible and we all pay for it!
LTC is a very personal decision.
My wife and I now pay $112 and $153 per month for a LTC policy I too out 35 years ago. Premiums have been raised significantly over the years and the benefit is modest – don’t recall offhand without looking it up. But at this point I can’t see dropping it.
LTC is a very general term. Most LTC is provided in the home and by unpaid care givers. Need a more precise definition of the type of care and the risk factors.
Perhaps. Definitions change all the time. But I’m sure you knew what I meant when I posted this.
Best option for financing LTC? Find an employer who is willing to innovate with respect to employee benefits. Innovative designs might include a modular cafeteria plan with employer contributions ordered in a specific manner/priority, group term life insurance with a LTCi rider convertible upon separation, and a Health Savings Account capable health plan. Working on this.
I would suggest you talk with someone who has attempted to collect on a LTC policy. I have heard several bad outcomes. Won’t pay for in-home care, deny all claims and had to engage lawyers, etc.
My mom bought 6.5 years worth many years ago. Covered my father in a nursing home, now my mother first in assisted living and now a nursing home. Next month will end year 6 for her. Fortunately her pension and SS have been banked so when she runs out she can continue to live at that private nursing home. She is 96.5 years old. Without it she would have ended up in big trouble. I fail medical underwriting and can’t get it. Have failed for years due to cancer. No idea how I will cope with this if I live as long as her and her siblings, parents, great grandparents, aunts and uncles…
We activated my mother-in-law’s LTC policy last year when her advancing Alzheimer’s led first to in-home caregivers and then to a residential memory care facility. It worked out fine. The paperwork was a little cumbersome, but it all came out the way it was supposed to, and there were no denials of coverage. It was pretty straightforward.
I looked into it when I was in my 50s. My conclusions were too expensive and too many loopholes.
I dedicated $500K of our portfolio for me and my wife for LTC, but I still invest all my money as one bucket. I have already doubled our portfolio.
Lesson: More money solves a lot of things, especially liquid money.
This is why we only owned one home and 2 vehicles for decades. Anytime we need something, we rent, or buy it.
We had a part term life, part whole life with built up cash values. We didn’t need the life insurance part, so I did a 1035 into a variable annuity (and this avoids paying taxes on the gains). What I didn’t realize at that time is that once, you move the money to an annuity, you can’t bring it back to life insurance based product.
So ended up getting a single premium (joint) LTC rider off an annuity about 2 years back using the 1035 again from the variable to the SP LTC. Pros and cons of the annually renewable vs. single premium have been discussed quite a bit but to me this made sense in many ways. First off, we don’t need to worry about premiums increasing (but yes, this does require a large layout upfront). And if we don’t use the policy, then the left over money will go to the heirs. I realize this may not work for everyone.
Back in 2005, when I was 55 years old, I started a new job at a large US Corporation. On of the fringe benefits was Group LTC. I was smart enough to buy the benefit and when I left the company in less than a year, I was able to carry the policy with me. I’m thankful I did.
This is a comprehensive LTC policy through John Hancock. The benefits are very strong and include 5% compounded COLA. My daily benefit is currently $361 a day. For NC, that is top tier care.
Since 2005, the policy has increased its premium twice…from $126 to $135 and from $135 to $140. My annual premium id $1675.
My advice to my fellow HD readers…get LTCI as early as possible. My wife isn’t able to get coverage, either through a stand alone policy or a hybrid, so I have had to earmark a substantial portion of our portfolio for LTC for her in the event she needs it in the future.
Jim Burrows has provided some statistical data but I have one thing to add. If you re one of those who thinks I just wait to get LTCI, by age 65, 28% of Americans will no longer qualify for a standard policy, so if you think they are expensive, you don’t want to know what a rated policy will cost.
And for those thinking that it’s too expensive, consider the following…
20 years of $7,000 premium will be $140,000. The median Nursing Home cost in the US today, for a semi-private room, is $8,929 monthly, or $107,148 annually. So you figure it out…your entire premium would be recouped in 15.67 months.
It reminds me of the old Fram Oil Filter commercial, “Pay me now or pay me later.”
Kevin, your financial analysis is correct. Except in our area, it’s more like $13K/month for a nursing home. LTCI is an expensive “bargain”.
No LTCI here. Never seriously considered it. Given my proclivity for falling down, maybe I should.
Be careful. Falling is dangerous.
Just remember the saying that it isn’t the fall that hurts…it’s the sudden deceleration 😆
For me, I take a slightly different perspective on LTC insurance. My wife and I got it while I was still a civil servant, so we had access to a policy managed by OPM for civil servants (including the military). At the time I joined, the cost was very reasonable compared to the going rate in industry plus I had some confidence that cost increases wouldn’t be capricious since the insurance provider cost increases had to go through an approval process by OPM. That said, at this point I consider it a bridge until my wife and I go into a CCRC. Assuming we’re healthy enough to qualify and able to get into a CCRC (in 10 years or so) I intend to probably drop the LTC if we’re in a financial position to comfortably handle the CCRC financial requirements based on “worst case” (ie. only 1 of us is alive and it’s the one with the smallest income stream). But until that time, it’s just “insurance” to me, just like my home or car insurance. I hope I never need it, but if I do, then it’s there. Yeah, I’m a bit over-the-top trying to remove risk for whichever one of us is the survivor, which statistically will probably be my 5 years younger wife.
First some perspective. From Long-Term Care Statistics 2024 | ConsumerAffairs® you can get the following information.
52% of people 65+ will need some LTC
25% of people 65+ will need LTC for less than 1 year
10% of people 65+ will need LTC for 1 to 2 years
11% of people 65+ will need LTC for 2 to 5 years
7% of people 65+ will need LTC for 5 or more years
One way to address some of this cost is LTCI. When one thinks of LTCI, I believe it is crucial to remember that this is INSURANCE. The purpose of insurance is to protect you from catastrophic losses. It is not to pay for every expense you ever have. Your homeowner’s insurance doesn’t pay for the maintenance on your house, but it does pay if the house burns down IF that ever happens.
When does a need to pay for LTC become catastrophic? That answer will depend on each person’s financial situation. Can you afford to pay for 30 days, 6 months, a year, five years? Most LTCI policies come with a 90-day exclusion period meaning that one must pay for the first 90 days before the insurance kicks in. You can get longer exclusion periods which will result in a lower cost. It’s worth giving this serious thought.
We’re in the 7%.
Keep in mind most LTC is not provided institutionally and most is part-time and a significant amount provided by family members.
This is true, but so is the fact that most people’s homes aren’t total losses when they burn. You insure for losses can’t afford…not only the likelihood of occurrence.
The beauty of a comprehensive LTCi policy is that benefits are available in a variety of locations…Home Care, Assisted Living, Nursing Home, and Memory Care.
That is true. Just to be clear, the numbers above are for paid for long-term care support.
I couldn’t afford the premiums in my 50s. Couldn’t get through underwriting in my 60s. I’ve seen people pay the premiums for many years, then be forced to drop out when it got too expensive.
For those who could both qualify and afford a policy, I have seen them work really well.
There are some hybrid annuity/LTC products that look interesting. Perhaps there are some articles in the HD archives?
Check out this section of the money guide, as well as the links at the bottom to two articles the site has run:
https://humbledollar.com/money-guide/hybrid-insurance-policies/
Thanks, that’s a good resource. The annuities I recall seeing multiplied the premium by 4. The underwriting was practically “are you breathing”. And there where literally no surrender charges, allowing you to cash it in if you ever had second thoughts. Of course they also earned the salesman a huge commission, go figure.
Why does the fact that someone earned a commission for providing a service seem to be an issue?
Yes, the underwriting is tougher on the life insurance-linked LTC policies.
Hi Jeff,
In 2001, when I was 56 years old, my wife insisted we buy LTCI as her parents had just come off a terrible few years paying out around $100,000/year for her dad’s 24-7 care. He had Alzheimer’s.
I admit I wasn’t interested and paid no attention to the genuinely nice lady salesperson. For about $2,000/year each, we bought policies providing a daily benefit of $200.00 increasing 5% a year. To say I had no idea what other benefits it provided or under what conditions payouts started was an understatement.
Fast forward to April 2020 when my wife fell in our home. She suffered a severe traumatic brain injury (TBI) and was hospitalized and in rehab for a solid six months. The country was just starting to deal with COVID which complicated her care. No need to go into more detail at this point since this is a TLCI discussion.
I pulled out the policy and attempted to read it. It was overwhelming to me. Fortunately, the in-home care company I selected assigned me a specialist in LTCI to review my policy for me. Her very first statement to me was, “They don’t sell policies like this anymore. I’ve never seen one like this.” My heart sank.
However, I was in much better shape than I realized. She went on to tell me, it was all good. I had a “gold-plated” policy. Fortunately, I signed up for everything including the kitchen sink.
Starting while she was in the acute rehab hospital, I provided her with an aide during her awake hours. The policy requires me to pay for the first 100 days. They would have waived that requirement if we started in-home services if she came home immediately after the hospital.
There were some conditions in the policy that did not meet my needs, for example, her care plan had to be created by the LTCI carrier to receive full benefits. I had no problem with that except for the timing. They wanted her to come home first before they would create her care plan. That wouldn’t work because I needed to order DME with long lead times.
It turned out that I had a rider that allowed any RN of my choosing to create her care plan at any time and they would pay 80% of the fee charged. The policy also provided $50,000 for DME purchases. She needed items Medicare might or might not supply. The rehab facility recommended a special hospital bed and tilt-in-place wheelchair. Those two items were $9000. Medicare would have never paid that much.
After she came home, my wife transitioned from 24-7 care for the first 18 months to 60 hours/week. I expect she will have aides for the rest of her life. First, she qualified because she was missing all six ADLs (The policy triggered at just two). Now she meets the chronically ill requirement with severe cognitive impairments and should never be left unattended.
The daily rate is now slightly over $614. Because she is receiving benefits, her premium is waived. To date, her in-home care provider has received over $400,000. Here’s the gold: our LTC benefits have absolutely no limits. (There are limits on both coverage and lifetime amounts in most other policies)
I still have my policy with identical benefits. My premiums are now $8,350/year and climbing. There is no point in either canceling or reducing coverage now. I see care in my future as well.
We modified our home to age in place three times starting back in the mid 1990’s. We changed our minds and signed up to move to a CCRC in late 2025. Assuming we have no new health issues, an aide will care for her in our independent living unit. If she needs additional care and moves to an elevated medical unit, LTCI will pay for that instead. And I have the same coverage should I need more care as well.
I am so thankful my wife did not want us to have what her parents dealt with. We learned life can change in an instant. It was not something we ever thought about or prepared for.
I know that terms like TBI and Cognitive Impairment are scary but compared to what other survivors and their families deal with, we are incredibly lucky.
My wife is well enough that I have no issues caring for her on nights and weekends. Having an aide allows me to do all the things I need and want to do during the week. My present health issues prevent me from caring for her 24-7.
Her current care plan states she qualifies for 24-7 standby care and supervision. My LTCI would cover that up to a maximum of $225,000 for 2024 with the $614 daily limit. Again, that increases by 5% compounded every year.
In summary, we consider ourselves fortunate for her miraculous recovery, our decision to purchase LTCI, and our ability to afford the ever-increasing premiums.
It sounds like you had a Genworth Unlimited Care Plan or the John Hancock Unlimited Care Plan. In the late 1990’s these were still being sold by a handful of companies. Shortly thereafter, Unlimited Plans began to disappear. To the best of my knowledge they are no longer available.
You were fortunate to have a smart and insistent spouse.
God Bless your wife and may her recovery continue.
You’re right, Kevin, my wife surely deserves all the credit. Yes, Genworth is the carrier. Even though they continue to experience financial difficulties, they have never disappointed us. The staff on the phones have always been professional and helpful. My experience might be exceptional. And again, you are right, those unlimited policies have been retired. I plan to keep up with the premium increases – throwing good money after “good”.
Richard – thanks for providing this personal take on LTC experience and how you have navigated the system. Best of luck to you going forward.
I bought a group LTC policy 18 years ago, starting in my late forties. The annual premiums have increased over time and now give me pause — last year’s was nearly $3000 — but in context they seem fair. So far I have paid $25,473 for $849,000 in lifetime coverage. For many years, I could deduct the premiums on my state income taxes (sadly, no more). LTC premiums are deductible on federal income taxes, as once was useful to me when my medical expenses exceeded the IRS threshold.
Although I plan to continue paying premiums, I worry that, if needed, the policy won’t get used. Childless and without any younger family members, who will engage with the insurance company for me to start coverage?
JoBo…
Do you not have someone with your Medical Power of Attorney? An executor for your Will might serve as both.
If you haven’t already done so, I would make sure to have a person designated to receive copies of your premium notices, so you do not accidentally lapse your policy.
In addition, you need to contact a local office of your LTCi company and arrange for a Continuing Care Coordinator contact.
As to your premiums…they are very much inline. Consider the fact that 100% of your entire premiums paid would be recouped in 3-4 months of care. As long as the premium cost isn;t taking food off your table, there continuation seems paramount, since you have no family members to provide care.
Continued Good Health!
Jo Bo, you mention a very troubling issue. Discuss with your eldercare attorney or accountant how a care manager from a care management company can work as an advocate for you.
When my wife fell and suffered a TBI, her daughter’s friend recommended a care manager. She often worked for children who lived far from their parents and needed local help. I needed help with coordinating my wife’s care.
Another option might be talking with the best home care company near you. My wife’s company had an LTCI specialist who helped me with her insurance company. She also arranged direct payments to her company for ongoing care. While I get copies of all invoices and payments, I do not need to be involved at all.
We bought group LTC for each of us about 35 years ago. I added it as an employee benefit. It’s a very modest daily benefit, but I don’t recall the amount.
Over the years Prudential tried several times to get us to drop it, then raise rates by 40% in one jump and then 27%.
We still have it and the premium is $152 and $111 per month for Connie and me. No increase last couple of years. 🤞
This is from my comment to Adam Grossman’s “Their Loss, Your Gain”:
Just before turning 51 in 2001 I purchased a LTCI policy now at MetLife, originally from TIAA. I didn’t want the uncertainty of future premium increases. I chose the simpler alternative, a considerably more expensive but fixed $2580 annual premium for 5-year coverage with 5% compound annual increase in $200 daily and $365k lifetime maximum benefits. No annual renewal letter, just the same premium year after year.
I knew that the nominal sum of 20 years’ fixed premiums before retiring in 2021 would be more than offset by my CCRC’s $60k discount on the entry fee for having this LTCI coverage. With inflation in the years since, the fixed annual premium has felt less and less burdensome. (My CCRC also promises to keep me if I run out of money.) As for claims, I haven’t needed the coverage (yet); how much hassle our CCRC’s insurance coordinator will encounter in getting authorization remains to be seen.
I moved to a CCRC which promises to keep me if I run out of money. It has Assisted Living and a Skilled Nursing facility that is Medicare and Medicaid certified. The mega-corp I worked for offered LTCi back when I was in my 40s or 50s, but I couldn’t justify paying decades of premiums for coverage I might never use. Premiums have gotten higher and benefits lower since.
Not buying LTC insurance. Too expensive, risky, and getting costlier as the years go on. FIL had it; by the time he figured out he might be able to use it for home health care, he was on hospice. Never got a cent of benefits out of it. Our Roth IRAs, which we hope to pass on to our kids, could instead be used for LTC as a last resort.