Long Term Care Insurance question

declansmomOctober 5, 2008

My FIL just turned 81. Only one long term care insurance provider has agreed to insure him for home care / assisted living / nursing home coverage up to $ 150 per day, but cost would be $10,000 per year.

Many people are saying "Don't take insurance because you will end up on Medicaid anyway and they will take all your money."

His financial picture is 75K cash and condo worth approximately $150K.

He may be coming to live with us, so this is a very important decision for us, as some of the care may fall to us.

Does anyone have any experience with long term care insurance, and if so, is it a good idea or will he be throwing his money out the window?

Any suggestions would be greatly appreciated.

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Talk to an elder care attorney before you make any decisions.

I don't know what state you are in, but google "elder law". Here's one link that might help. A consult with someone experienced in elder law will be worth it!

Here is a link that might be useful: elder law

    Bookmark   October 6, 2008 at 12:23AM
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Well, this is the problem with waiting until you're elderly - or even if you are in your 60's but with chronic conditions - the cost of the insurance is so high it becomes questionnable whether you can afford it. And it doesn't matter what type of insurance you are discussing, the cost for any type of insurance in your 80's is enormous, assuming (as you have found) that you can even find any carrier to insure you. We were fortunate to have bought our LTC policies when we were in our late 40's and it was very affordable; we would have trouble even qualifying now since my DH had a stroke at 50.

These days guessing what RE is worth is pretty pointless. So many people are having trouble qualifying for loans - the refusal rate has soared, percentage-wise, as credit has tightened - it would be best to actually wait until the condo is sold to see what profit it will bring.

Questions to consider are:
- What is the actual cost of a specific nursing home facility you would consider putting your FIL in? How much of the insurance will cover it? Remember that the ancillary costs won't be covered, you'll (or he) be out of pocket for some expenses even if the policy covered the entire basic facility cost.

- What is the current cost of home service care in your area? It is far more likely he will need home care than nursing home care. Adding a home care rider to LTC insurance doubles the cost of the premium, but it is essential, as is a compounded annual benefit increase (which is also an expensive but necessary option).

- What does his doctor say about his ability to perform the six ADLs, now and in the future (which will be guessing, but you need some sort of info here to guide you)? In order to draw on the policy, he must be unable to perform 3 ADLs in order to qualify - you'll need to check on this #, it varies in some policies. Ours is a 2/ADL definition.

It is generally advised that in situations like these, with limited financial assets, that you do NOT use your own assets to cover expenses. Using your FIL's assets first will then enable him to qualify for government assistance, and then you can chip in voluntarily to help out with the extras to make him comfortable, wherever he is.

Consulting an elder care specialist might actually be a better bet than an an elder care attorney. Jane Gross of the NYTimes runs an occasional blog about elder care, and gave a link to two websites where you can go for helpful referrals and advice:

www.eldercare.gov - to find the Area Agency on Aging (AAA) in your area.

www.caregiver.org - the Family Caregiver Alliance

Good luck to you.

    Bookmark   October 6, 2008 at 12:36PM
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Thank you very much for your suggestions. We will look into the websites and continue to research the best option.

    Bookmark   October 6, 2008 at 11:02PM
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I wouldn't do the insurance unless he has a wife who needs the money, then you would do a division of assets. I am alone and have no long term insurance because my husband is no longer living. I expect the money to be spent on my care, that is as it should be. If I am able I will find an assisted living or a care home with a vacant private room and pay for it until I go on medicaid. those are the instruction I gave my POA.

    Bookmark   October 12, 2008 at 3:14PM
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I have been looking into long term care insurance for myself. The idea of paying premiums and then have an unexpected event, such as death, happen would concern me. I have been looking into rates, as well as the types of policies available. After doing some research, I came across Care Protector Plus by Preservation Advantage. If anyone has heard of it, please respond. From what I gather, one would purchase a variable universal life policy and a life insurance policy and you would be able to leave your death benefit and premiums to your heirs if someone were to happen, which would be great. I'm going to continue to research it, but it sounds very interesting.

    Bookmark   December 17, 2008 at 2:23PM
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call your state's insurance office and ask them about that company. i am not sure of the name of the office, but it help consumers with insurance questions.

    Bookmark   December 17, 2008 at 8:46PM
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Here's the issue with any type of variable universal life policy - the agent's premium and company fees can be set up different ways. Surprise, surprise - the default on running a customer quote is set to the agent/company advantage, NOT the consumer. You can get them to change this - BUT you have to ASK. The agent should be willing to do this, but very few of them will volunteer (not surprisingly).

This is a hybrid policy currently very "hot" in insurance circles because so many people think they might be "wasting" their premium dollars.

Needless to say, you will pay more for such a hybrid policy, than you would if you just bought level term life insurance and a standard LTC policy. Unless you seriously need life insurance for estate reasons - I have it, but for a very specific reason - I can't see why anyone would buy these types of policies.

You pay for auto insurance and homeowners insurance for years, with most people never making any serious claims. Is that money wasted? No - it is intended to mitigate risk in an emergency.

LTC insurance is no different. If your life expectancy factors are good, you want to age "in place", and you can't afford to self-insure, then buying an LTC policy can help mitigate the risk of running out of money and being forced into only Medicaid facilities, rather than having a variety of choices open to you.

LTC insurance is not for everyone, and there are many policy details needing prudent and careful review. It may indeed be true that a hybrid policy would work well for you...but I would carefully compare it with the standard policy and a level term life quote before making any decision.

Good luck to you and others going forward. This is not an easy or simple decision to make. You will need the help of an ethical insurance salesman, and that's something you will need to find on your own. They do exist, so start searching and asking lots of questions.

    Bookmark   December 19, 2008 at 12:59PM
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there are only 2 private pay homes in our city of 450,000 and they charge big bucks = $6,000. a month or more. even with insurance i don't think it would cover that. my husband's cost $4,000. plus, it was not private pay. we did a division of assets, so i was okay financially when died.

    Bookmark   December 19, 2008 at 5:34PM
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Have you found out IF an insurance company will even carry him? You've gotten the premium amount, but until you have actually applied, filled out all the forms, and the insurance company has gotten his records from his doctor, you don't know if they will offer him insurance.

I am basically healthy with one medical problem, one most women have, and I was denied LTC insurance. I was shocked.

    Bookmark   December 24, 2008 at 4:35PM
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socks12345, you might want to try another carrier. Each insurer underwrites differently, so you might be able to find coverage somewhere else.

    Bookmark   December 24, 2008 at 9:41PM
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Thanks for the suggestion, jkom. I don't think I'll pursue it further as I was really "on the fence" about the expense and took this as an indication of which side of the fence to fall on. It's a painful decision either way.

I noticed you are from CA too. I was looking at one of the State approved policies (John Hancock) FYI. Thanks again for the input.


    Bookmark   December 26, 2008 at 5:17PM
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my mom made some good decisions about her estate. she legally gifted us most of her money, then later when she got upset over maintenance problems on her home we bought it from her. she is 96 and still living alone.

    Bookmark   December 27, 2008 at 1:04PM
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