Insurance Question

[forHISglory]

It seems the vote is overwhelmingly in favor of the LTC insurance. I'm taking your suggestions and life experiences very seriously, and will start to research the insurance. I knew I could count on you all to tell me the truth! Thanks!

One reason I really didn't consider it was because of our family history. Everyone except one grandpa lived to a very old age, and stayed in their homes. So they had relatively good health. But I realize that genetics can't do everything. So the odds are with me that I too will live a long and healthy life, but it's no guarantee.

[Russ]

I'm curious about the cost of LTC insurance?

[forHISglory]

Russ, I have no idea. That's what I will start to investigate. I would imagine it will be more expensive for us at our age than for younger folks.

[Josephhgoins]

The odds at your age that you'll need it are remote to astronomical.

Dave Ramsey says that you need it when you turn 60.

Personally, I'm inclined to go 50-55.

Mid 30s? No way.

Unfortunately, I have enough health concerns that I am sure I would probably take advantage of it in some way sooner rather than later. Also, being a "confirmed bachelor" I will not have kids to take care of me in any way at any point. My sister has also decided not to have children, so it isn't like I can spoil a nephew or neice in the hopes they will take care of me as I get older.

All my grandparents either had to have full time at home care or nursing home care, so I believe that eventually I will need it as well. They were lucky enough to have kids that chipped in.

[peanut]

For Canadians, I just found a report on long term care in Canada on the CUPE website. Checked out the summary and updates. The report is over 100 pages! Interesting. Apparently we have a two tier system...one for the rich and one for the poor.

Personally, we'd be okay if only one of us had to use the system. But if we both were in LTC at the same time, we'd be in big trouble.

[peanut]

just did some calculations on a site as to the cost of LTC insurance. No wonder no one has it! You have to be stinking rich to afford it! It's $400-800/mth. up here! And that's just for one person, not a couple.

[Greebo]

just did some calculations on a site as to the cost of LTC insurance. No wonder no one has it! You have to be stinking rich to afford it! It's $400-800/mth. up here! And that's just for one person, not a couple.

Probably because that's for paying for the "two tier" system for "the rich" coverage.

Query: Is "two tier" another way of saying "those who can afford to pay for whatever level of service they like vs. those who have to get others to pay for basic coverage"?

[forHISglory]

I started researching on the AARP site today and found this article. Go to aarp.org and in the search box type in "long term care insurance". There are a multitude of documents, including one that divides up statistics and info state by state.

Long-Term Care Insurance: Is It Right for You (and Your Parents)?

by: Jonathan D. Pond | from: AARP | May 21, 2009
Policy Features Worth Considering

While skepticism about "new and improved" insurance policies is healthy, enhancements of long-term-care policies may be worth considering. Why? Every several years, Congress tightens eligibility requirements for Medicaid coverage of nursing-home costs.

Here are examples of innovative features in long-term-care policies:

Combination policies. Money that is not used for long-term care is paid out in the form of annuity distributions.

Shared care. Couples can tap into each other's policies in case one exhausts benefits.

Flexible payout. This generally means that policyholders can change how they're reimbursed from month to month, so they can better meet their long-term-care costs.

Most people have to think about buying long-term-care (LTC) insurance. Your parents may be considering it, whether they’re still working or retired. The purchase often presents the most nagging insurance question for people over 50.

What’s more, LTC coverage may not be necessary or affordable. Before buying, take the following into account:

Family status. Consider the financial risk of incurring out-of-pocket expenses for long-term care: impoverishing a spouse, partner, or other financially dependent family member. Single people don’t face that risk, so all other things being equal, they have less need for LTC insurance.

Affordability. Most LTC experts say the ideal candidates for long-term-care coverage are those who can comfortably afford the premiums and can handle premium increases, which are becoming quite common.

Your general financial picture also determines how affordable LTC policies are for you. One common measure is net worth, excluding the home, or more simply, the amount of investments and savings you expect to have after you retire. People with less than $500,000 in investments might not be able to afford LTC coverage.

Another more reliable measure of affordability is how much the insurance will cost as a percentage of your expected retirement income. If the premiums are likely to consume more than 10 percent of your income, you probably can’t afford the coverage.

Singles with more than $1 million in investments, and married or partnered couples with more than $1.5 million in investments, may want to consider self-insuring. If this describes you, though, remember that a long stay in a nursing home or extended home-health care could whittle down even a large nest egg.

Family health history. Not a perfect predictor, the health patterns of parents and grandparents can still indicate what the future may hold. If your parents experienced chronic health problems or other conditions that required prolonged care, this may argue in favor of an LTC policy.

Importance of passing on an inheritance. If passing on an inheritance is important to you, an LTC policy could protect some of your assets for future generations.

Before Buying a Policy

An LTC policy can be an expensive, long-term investment. Consider the following:

Understand the limitations and features of the policy. Long-term-care insurance is aggressively sold. Many purchasers don't understand what they're getting—or not getting.

Become an expert on long-term-care insurance before buying a policy. Its premiums could be one of your biggest retirement expenses. So make the most of your hard-earned dollars.

If your employer offers LTC insurance, consider it. But while policies offered through an employer may be less expensive, the benefits may not be as comprehensive as you would like.

Favor policies that provide comprehensive home health-care coverage and coverage for nursing homes. Inflation protection is also an important feature, particularly for boomers who are considering this coverage.

Instead of buying long-term-care insurance, consider using the money you would pay in LTC premiums to invest in other ways. Think on this: According to a 2005 study published in the journal Inquiry titled "Long-Term Care Over an Uncertain Future: What Can Current Retirees Expect?," only 37 percent of all 65-year-olds will need long-term care in a nursing home or assisted-living facility. Most will stay less than two years.

You can cut premium costs by limiting the LTC policy to three years or less. However, if you spend much longer than that in a nursing home, you may impoverish yourself anyway. According to the study I mentioned, 8 percent of us will spend more than five years in a “nursing facility.”

If you're worried about nursing-home costs draining your resources, consider investing some of your retirement savings in an annuity. That assures you and/or a surviving spouse or partner a lifetime source of income that won’t be forfeited to the nursing home.

You may lower premium costs by eliminating all the expensive bells and whistles while keeping the inflation kicker. Lowering the daily reimbursement rate and increasing the waiting period until benefits kick in also lowers premiums.

If you can only afford to insure one person, women are more likely to spend extended periods in nursing homes.

Factor-in the possibility that your LTC premium will increase. Many policyholders have had to endure premium increases of 50 percent or more in a single year. Those burdened by increasing premiums can pay the higher cost, pay the original premium by accepting scaled-back coverage, or let the policy lapse.

While you’re in the market for a new policy, ask the agent or the insurance company whether or not premiums on policies they’ve previously issued have gone up. If premium payments have increased, find out how much.

Instead of LTC, you or your parents could also think about continuing-care communities. These communities provide all levels of care—independent living, assisted living, and nursing-home care. By choosing a continuing-care community, you may eliminate the need for an LTC policy.

When Should You Buy an LTC Policy?

Keep in mind that the annual premiums for LTC coverage are much higher if you wait until your 60s or later to take out a policy. Few experts recommend purchasing coverage before age 50. After age 70, premiums may become prohibitively expensive.

While you’ll pay lower premiums if you buy a policy at a younger age, keep in mind that you’re likely to pay a long time before collecting benefits, if ever. The average age at which people enter nursing homes is 83.



On the other hand, a compelling argument for purchasing a policy at a younger age is that health issues could render you uninsurable at an older age. Buy an LTC policy at a younger age if any of the following apply:

• If your health is deteriorating
• If you engage in high-risk activities
• If your family has a history of early disability

If your fear of the unexpected is robbing you of sleep, you may want to obtain coverage now rather than waiting. Too, decisions of equal importance are whether you can afford the premiums or are wealthy enough to self-insure.

[peanut]

greebo. In Canada we're *supposed* to have universal health care -- that is, everyone gets the same care no matter what their income. Guess not.

[chickadee-7815]

We have life insurance policies that hopefully will cover the cost of our funerals. If you have money put aside for that, then insurance may not be necessary. Funeral prices are really rising, though.

[peanut]

OK, did some checking out with a retired friend who used to work in the insurance industry here in Canada. Turns out the only real difference income makes is if you are not nursing home material. Up till then you can choose what you want according to income.

At that point there are private and government run nursing homes. Private is very expensive and run by corporations or churches. Most people can't afford them (I'm thinking over 90-95%). Or the insurance to get into them.

Government nursing homes charge according to income and there is a cap. So if you're rich you pay more than if you're poor. These nursing homes are full and over crowded right now. There are usually 4 beds to a room or, if you're lucky 2 beds. You're as likely to have a garbage collector as a judge beside you in one of these. There are a few private rooms that get put up for a draw periodically. If you're lucky you get put on a list to have a chance at one.

There is no guarantee the private run nursing homes will have any better care than the government run ones.

Her summary? Don't bother with Long Term Care insurance if you're Canadian.

Now you Americans are an entirely different kettle of fish...

[Lora88]

It averages around 3500 a year and most agents reccommend purchasing before 65 years old You buy a certain amount of years My uncle purchased 4 years and died on the night before the four years were up in the nursing home Both my parents went into homes my Dad for a short time Medicage covered the first ninety days after that he was a self pay My mother only had medicare covering for 30 days and she became a self pay it depends what your in the home for. If it is a skilled nursing need then medicare last longer and you only have a co pay but Dementia blindness incontinence etc are not covered. Both my parents were able to take care of themselves until around 87 then it was a rapid downhill My mother is 94 and unable to care for herself but not what medicare calls ill hence the long stay in the nursing home Really wished they had purchased the insurance but they too never thought they would need it

[DeniseM]

You can purchase a combined policy that provides coverage for long term care benefits and life insurance. If you never need to use long term care benefits, the total coverage amount will go to your beneficiary. If you do use it, the total amount of long term care benefits will be deducted from the death benefits and the balance will be paid to your beneficiary.

Denise Mancini
Disclaimer: I work for AccuQuote and this is my personal opinion.
AccuQuote.com

[wjcalderon]

My financial adviser strongly advised that I get LTC when I retired early.
He did some research and came back with very good policies, but they were outrageously expensive - $400-500 per month.
In doing my own research, I discovered that Federal Long Term Care insurance is available to family members of current or retired federal workers.
As the "adult child" of a living retired military father, I qualified for a very good plan for $175 per month. The rate is supposed to remain the same as long as you have the policy.
They did make some changes a couple of years ago that could have increased the price. But they gave me options that would keep the price the same. In my case, I chose to lower the inflation protection from 5% to 4% to keep the same price.
It not only pays for nursing homes, but also pays for home care (even by a family member).

If there are any of you out there that think you might qualify for Federal Long Term Care insurance, you really should look into it.

https://www.ltcfeds.com/index.html