Anyone recently look into Long Term Care Insurance?

marys1000December 23, 2011

I read somewhere years back that if you thought you would need LTC insurance you should consider getting it around 55.

Well I'm going to be all alone in the world and I'm 55 so I need to figure it out. My first and biggest worry is - given how many things we thought would always be there be stable, be honest, (wall street, banks) is it naive to even think that an insurance company is really going to be there with this expensive care package in 15 years?

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I don't think the answer to this is going to be much different than it was back in 2008 when you and some others raised questions about LTC insurance.

Unlike the banks, who got Glass-Steagall repealed (and we would have saved a lot of trees if we had simply reinstated it instead of the hideous Dodd-Frank monster), insurance companies are highly regulated by state authorities. In 200 yrs of insurance only 2 insurers have ever gone bust. And one of those 2 was due to outright reinsurance fraud on cheap term life policies, so the losers weren't customers - the customers didn't actually exist - the losers were the reinsurance companies who got caught in an internal Ponzi scheme, which was discovered by state regulators when they audited the insurer's books, something that's done on a regular basis. It was, as my reinsurance exec boss said, a short-term profitable but long-term stupid crime, because there was no way they weren't going to get eventually caught.

If you're concerned about traditional LTC insurance, which I still consider the least expensive and most effective, there are new 'hybrid' policies out in both the life insurance and annuity area that might reduce your anxiety about 'losing' money. The process for selecting a well-regarded insurer hasn't changed appreciably since I first entered the financial services industry in 1969; if anything it's much easier with the Internet.

There seems to be some good info on the website below. The link is to a specific page that lists LTC options.

Here is a link that might be useful: Guide to LTC website: Solutions

    Bookmark   December 24, 2011 at 1:26PM
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Yes, but his information is accurate, so at least it lets Mary know a little bit more as she continues her research. I agree Mark has breached the terms of posting here, but sooner or later Mary's got to talk to an agent or broker to get some idea of whether she even qualifies for an LTC policy, aside from type and price.

One can only go so far in continuing to post discussion threads. The trouble with LTC is that people talk about it and talk about it, but very few people actually do it. When people talk about financial planning, this is why I keep insisting that it has very little to do with ROI. True financial planning is mitigating your personal risks against not achieving the retirement lifestyle you want to have.

If your LTC risk is high, as ours was, and you don't take steps to mitigate it, your financial planning was and is, inadequate. If you have a high risk of needing help with LTC and haven't budgeted properly for it - whether self-insuring or buying some type of LTC insurance - you are playing dice with your money and possibly involving some risk to those who would need to help take care of you.

Mary's got the right idea - you want to deal with a company that is solid and reliable - but she's participated in many LTC discussions over the past four years, and still has yet to 'pull the trigger.'

LTC insurance just keeps getting more expensive, and if one waits too long, sometimes the decision gets taken away, by a health issue that precludes getting any affordable LTC policy of any type. I have a sense of urgency about it, because I personally have friends/family who were offered LTC insurance in the last ten years and turned it down, and now that they're closer to retirement, honestly admit they regret not buying it. Now they're terrified, and rightly so...but it's too late for them. They're medically rateable, and can no longer afford it.

    Bookmark   December 25, 2011 at 6:28PM
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"My first and biggest worry is - given how many things we thought would always be there be stable, be honest, (wall street, banks) is it naive to even think that an insurance company is really going to be there with this expensive care package in 15 years?"

No it isn't naive. It is one of the few industries that is well regulated in this country. It is about as rock solid as you can hope for in life.

Honestly though, it sounds like you need to get together with a financial planner. Personally, I would recommend a "fee only" planner certified by NAPFA. They can help you determine the best path for you based on your goals. eg your insurance needs may be different if you are just trying to take care of yourself vs trying to pass money on to kids or making sure a spouse is cared etc. These are decisions you should make while you are still relatively young and healthy.

Here is a link that might be useful: NAPFA

    Bookmark   December 27, 2011 at 9:00AM
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Agreed, definitely consult a financial planner... perhaps your bank or tax preparer can suggest someone; or local elder services are often good resources. Ask around to see what your friends are doing.

LTC insurance can be a big help. However, if you don't ever use it, I believe the money is just gone. A couple of other choices were suggested to us: use the equity in your home (if applicable), or set up life insurance or an annuity to provide an income source.

    Bookmark   December 27, 2011 at 4:08PM
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"Honestly though, it sounds like you need to get together with a financial planner. Personally, I would recommend a "fee only" planner certified by NAPFA."

I would recommend looking at this site BEFORE you hire any planner.

A link that might be useful:

    Bookmark   December 31, 2011 at 9:30AM
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And any ethical independent CFP would whole-heartedly agree with Mr. Moody (dreamgarden's link) that expecting a non-registered/certified advisor to suddenly conform to the fiduciary standard instead of the useless 'suitability' standard, won't and can't happen immediately as per Dodd-Frank.

Mr. Moody, who is an RIA and certified life/disability Insurance Analyst, is no doubt paid a considerable amount of $$/hr to analyze a client's financial and/or insurance situation. Such people do not come cheaply, nor should they.

If you unable to analyze your financial risk for needing LTC in general and LTC insurance specifically, a CFP who also carries insurance certifications can be helpful.

Anyone who espouses the DIY investing route, for example, is taking on the personal responsibility for evaluating their own risk preferences, and could certainly learn to do the same basic analysis for disability or LTC insurance, just as they doubtless do for their homeowners and auto insurance.

So IF you are able to analyze your own LTC risk factors - then you should do so, and start talking to brokers who specialize in multi-carrier LTC insurance. A good agent can confirm whether your DIY analysis is well-founded or show you that instead, your risk factors are higher or lower than you thought.

For those who are always afraid they will be harassed by insurance solicitations long after they have decided in the negative, a couple of phone calls to the agency office will suffice to remove you from any mailing/phone lists.

    Bookmark   December 31, 2011 at 4:19PM
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I signed on for it a couple years ago when I had an open enrollment opportunity through my employer. I will be 55 in May. It is not employer paid at all but the open enrollment was key as I don't think I would have been accepted otherwise. I pay the entire premium once a year as there's a small discount for doing so. It's around $900. I don't remember exactly what the coverage was but it was decent though not over the top. I conferred with my CFP and he reviewed the plan (through Prudential) and recommended I go for it considering my medical history.

I posted questions here about it a few years ago and more before that when I was trying to find a financial adviser. I did a lot of research on that because I just didn't trust anyone. They were all salespeople to me and that's the last person I wanted advising me on my finances. Some of the people I interviewed were downright sleazy. I finally got a referral through my CPA and I like this person. He is fee only - charges an hourly rate. He reviews my portfolio twice a year and recommends changes and I make the trades myself. He's very good at answering questions and educating me on why he recommends various things.

Most of the communication is via email but this year I finally went in and met with him again to go through retirement planning scenarios. How much do I need to retire when or worst case scenario - both DH and I lose our jobs, how frugal would we have to be to retire right now. It was very helpful.

And I also have to extend many thanks to jkom51 as your advice here has been extremely helpful especially the fiduciary concept. I knew what that was but didn't understand how you tell what kind of financial people have that kind of relationship with you. Definitely a good thing to know.

    Bookmark   January 6, 2012 at 11:15PM
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gibby3000, thanks for the followup. I'm glad to hear that my postings were helpful to you when you needed them.

Your experience is common; it is very hard to find a good financial professional to help you, but once you do, it can make a world of difference in helping your decision making.

There are now many different types of LTC policies. It makes doing the research more time-consuming, but first and foremost, you have to know what your risk profile looks like **to the insurer**; e.g., you need to know how insurable you are. Unless you have personal experience in life or health underwriting, it's best to talk to an insurance professional about this BEFORE deciding what kind of LTC policy you want.

You need to be certain you could qualify for it at an affordable rate, because if you can't, you'll have to try for a different type of LTC insurance. This way, you won't have wasted time picking the 'perfect' LTC policy, only to discover it would be best to select a different type of LTC insurance.

    Bookmark   January 7, 2012 at 3:26PM
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