Comments on: Is Long-Term Care Insurance Worth It? http://www.darwinsfinance.com/long-term-care-insurance-worth/ Financial Evolution: Education, Adaptation, Achievement Mon, 06 Feb 2012 15:43:23 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Scott A Olsonhttp://www.darwinsfinance.com/long-term-care-insurance-worth/#comment-6793 Scott A Olson Fri, 24 Sep 2010 17:17:34 +0000 http://www.darwinsfinance.com/?p=2472#comment-6793 Mr. Villhelm, Most long-term care policies have a variety of choices for the Benefit Period. Common choices include: 2 years 3 years 4 years 5 years 6 years 10 years Lifetime/Unlimited Most of the leading long-term care insurer offer a "Lifetime" (aka "unlimited") Benefit Period. That means that no matter how long one might qualify for benefits, the policy would never stop paying the benefits. Over the past 15 years about 30% of my clients have chosen a Lifetime/Unlimited Benefit Period. They are people who want to protect against the worst-case scenario (e.g. Alzheimer's) and make sure that their policy could never run out of benefits. I'm sure that the examples that Mr. Slome provided were for people who had chosen a Lifetime/Unlimited Benefit Period. Scott A. Olson Redlands, CA Mr. Villhelm,

Most long-term care policies have a variety of choices for the Benefit Period.
Common choices include:
2 years
3 years
4 years
5 years
6 years
10 years
Lifetime/Unlimited

Most of the leading long-term care insurer offer a “Lifetime” (aka “unlimited”) Benefit Period. That means that no matter how long one might qualify for benefits, the policy would never stop paying the benefits.

Over the past 15 years about 30% of my clients have chosen a Lifetime/Unlimited Benefit Period. They are people who want to protect against the worst-case scenario (e.g. Alzheimer’s) and make sure that their policy could never run out of benefits.

I’m sure that the examples that Mr. Slome provided were for people who had chosen a Lifetime/Unlimited Benefit Period.

Scott A. Olson
Redlands, CA

]]> By: Villhelmhttp://www.darwinsfinance.com/long-term-care-insurance-worth/#comment-6790 Villhelm Fri, 24 Sep 2010 00:22:47 +0000 http://www.darwinsfinance.com/?p=2472#comment-6790 Mr. Slome, in response to your July 25 analysis of payments made by Company A, B, and C, I believe that you have overlooked a very important point. You example states that Company A has made LTC payments for 12 years, Company B has made payments for 9 years and Company C has made payments for 15.7 years. I find that to be a highly unlikely scenario since most LTC insurance packages today have payment limits of approximately 6 years unless the recipient is not drawing the full monthly benefit, in which case the payments could continue beyond the 6 year limit. If these recipients are still receiving payments into the years you have stated then they obviously are not requiring full nursing home or assisted living benefits, thus making their benefits last longer. The average nursing home or assisted living person who is drawing full benefits will see their benefits come to an end at the end of 6 years if their policy was written to pay for that duration of time. Then they are own their own to finance their care and most of them will resort to Medicaid at that time. Mr. Slome, in response to your July 25 analysis of payments made by Company A, B, and C, I believe that you have overlooked a very important point.
You example states that Company A has made LTC payments for 12 years, Company B has made payments for 9 years and Company C has made payments for 15.7 years. I find that to be a highly unlikely scenario since most LTC insurance packages today have payment limits of approximately 6 years unless the recipient is not drawing the full monthly benefit, in which case the payments could continue beyond the 6 year limit. If these recipients are still receiving payments into the years you have stated then they obviously are not requiring full nursing home or assisted living benefits, thus making their benefits last longer.
The average nursing home or assisted living person who is drawing full benefits will see their benefits come to an end at the end of 6 years if their policy was written to pay for that duration of time. Then they are own their own to finance their care and most of them will resort to Medicaid at that time.

]]> By: Weekend Personal Finance Linkshttp://www.darwinsfinance.com/long-term-care-insurance-worth/#comment-6547 Weekend Personal Finance Links Mon, 02 Aug 2010 05:05:08 +0000 http://www.darwinsfinance.com/?p=2472#comment-6547 [...] Darwin’s Finance asks is long-term care insurance worth it? [...] [...] Darwin’s Finance asks is long-term care insurance worth it? [...]

]]> By: Jesse Slomehttp://www.darwinsfinance.com/long-term-care-insurance-worth/#comment-6493 Jesse Slome Tue, 27 Jul 2010 03:43:35 +0000 http://www.darwinsfinance.com/?p=2472#comment-6493 Here's how inflation protection grows the benefits of a LTC insurance policy. We typically look at a 3-year benefit plan (the middle of the road in what folks buy). Yearly cost for a $150 daily benefit for a 55-year old is $1,084 (AALTCI's 2009 study) and provides $172,600 of immediate benefit. With 5% compound inflation growth, the value of the benefit grows to $457,957 at age 75. Compound inflation protection about doubles the cost of the "base" plan but it also provides the greatest growth. Most companies offer various forms that cost less. It's why it pays to work with a knowledgeable pro which you can find on the Association's website. Jesse Slome American Association for Lontg-Term care Insurance <a href="http://www.aaltci.org/" rel="nofollow">AALTCI.org Here’s how inflation protection grows the benefits of a LTC insurance policy.

We typically look at a 3-year benefit plan (the middle of the road in what folks buy). Yearly cost for a $150 daily benefit for a 55-year old is $1,084 (AALTCI’s 2009 study) and provides $172,600 of immediate benefit. With 5% compound inflation growth, the value of the benefit grows to $457,957 at age 75.

Compound inflation protection about doubles the cost of the “base” plan but it also provides the greatest growth. Most companies offer various forms that cost less. It’s why it pays to work with a knowledgeable pro which you can find on the Association’s website.

Jesse Slome
American Association for Lontg-Term care Insurance
AALTCI.org

]]> By: Darwins Financehttp://www.darwinsfinance.com/long-term-care-insurance-worth/#comment-6491 Darwins Finance Tue, 27 Jul 2010 02:05:16 +0000 http://www.darwinsfinance.com/?p=2472#comment-6491 <a href="#comment-6469" rel="nofollow">@franny</a>, Good point, I didn't even include inflation in there. Would be interesting to see what the actual return is IF activated 20 years down the road. @franny, Good point, I didn’t even include inflation in there. Would be interesting to see what the actual return is IF activated 20 years down the road.

]]> By: Jesse Slomehttp://www.darwinsfinance.com/long-term-care-insurance-worth/#comment-6479 Jesse Slome Sun, 25 Jul 2010 17:03:46 +0000 http://www.darwinsfinance.com/?p=2472#comment-6479 You are right that long term care insurance isn't an investment and that you hope you never need it. Some 180,000 people received claim benefit payments in 2008 from their long-term care insurance coverage. These are the largest open claims (still being paid) and yes, these people may be receiving back hundreds of times what they paid for protection. But, long-term care insurance is not the lottery. This is not something you really want to win … but it sure can prove to be valuable protection. COMPANY A: Largest open claim: $1.2 million The individual (a woman) purchased long-term care insurance at age 43, paying an annual premium of $1,800. Three years later her claim began and has continued for almost 12 years ($1.2 million in benefits already paid). COMPANY B: Largest open claim: $1.02 million The individual (a woman) purchased long-term care insurance at age 72 paying an annual premium of $12,766. Three years later her claim began and has continued for almost 9 years ($1.02 million is benefits already paid) for her nursing home care. COMPANY C: Largest open claim: $990,000 The individual (a woman) purchased long-term care insurance at age 57 (in 1992), paying an annual premium of $1,215. That same year she had an accident and has been on claim ever since (almost 15.7 years). Total paid (as of 12/31/2008) $989,730 … proving "you just never know." Jesse Slome Executive Director American Association for Long-Term Care Insurance <a href="http://www.aaltci.org/" rel="nofollow">AALTCI.org You are right that long term care insurance isn’t an investment and that you hope you never need it. Some 180,000 people received claim benefit payments in 2008 from their long-term care insurance coverage. These are the largest open claims (still being paid) and yes, these people may be receiving back hundreds of times what they paid for protection. But, long-term care insurance is not the lottery. This is not something you really want to win … but it sure can prove to be valuable protection.

COMPANY A: Largest open claim: $1.2 million
The individual (a woman) purchased long-term care insurance at age 43, paying an annual premium of $1,800. Three years later her claim began and has continued for almost 12 years ($1.2 million in benefits already paid).

COMPANY B: Largest open claim: $1.02 million
The individual (a woman) purchased long-term care insurance at age 72 paying an annual premium of $12,766. Three years later her claim began and has continued for almost 9 years ($1.02 million is benefits already paid) for her nursing home care.

COMPANY C: Largest open claim: $990,000
The individual (a woman) purchased long-term care insurance at age 57 (in 1992), paying an annual premium of $1,215. That same year she had an accident and has been on claim ever since (almost 15.7 years). Total paid (as of 12/31/2008) $989,730 … proving “you just never know.”
Jesse Slome
Executive Director
American Association for Long-Term Care Insurance
AALTCI.org

]]> By: Scott A Olsonhttp://www.darwinsfinance.com/long-term-care-insurance-worth/#comment-6478 Scott A Olson Sun, 25 Jul 2010 16:25:47 +0000 http://www.darwinsfinance.com/?p=2472#comment-6478 Who should own long term care insurance is a good question. I think it makes more sense for a married couple to own a policy, rather than a single person. If a single person uses all of her savings or income to pay for care, it may not directly impact a dependent or loved one. If a spouse or domestic partner requires care and uses up a significant portion of the couple's savings or income to pay for the care, the healthy spouse would have quite a burden to bear: both emotionally and financially. Should the wealthy own long term care insurance? Today, most business owners (and self-employed persons) can use pre-tax dollars to protect their personal assets with LTC insurance. Also, there are LTCi policies available that will refund all the premiums to your heirs (even if you were on claim for a lengthy period of time.) The returned premiums can be passed to your heirs outside of the estate, through a trust. Additionally, the policy’s benefits can be paid to the trust and passed to the heirs outside of the estate. This can be an effective strategy for reducing the size of your taxable estate, while increasing the assets passed on to your heirs. Scott A. Olson <a href="http://www.LTCShop.com" rel="nofollow">www.LTCShop.com</a> Who should own long term care insurance is a good question. I think it makes more sense for a married couple to own a policy, rather than a single person. If a single person uses all of her savings or income to pay for care, it may not directly impact a dependent or loved one. If a spouse or domestic partner requires care and uses up a significant portion of the couple’s savings or income to pay for the care, the healthy spouse would have quite a burden to bear: both emotionally and financially.

Should the wealthy own long term care insurance?

Today, most business owners (and self-employed persons) can use pre-tax dollars to protect their personal assets with LTC insurance. Also, there are LTCi policies available that will refund all the premiums to your heirs (even if you were on claim for a lengthy period of time.) The returned premiums can be passed to your heirs outside of the estate, through a trust. Additionally, the policy’s benefits can be paid to the trust and passed to the heirs outside of the estate. This can be an effective strategy for reducing the size of your taxable estate, while increasing the assets passed on to your heirs.

Scott A. Olson
http://www.LTCShop.com

]]> By: frannyhttp://www.darwinsfinance.com/long-term-care-insurance-worth/#comment-6469 franny Sat, 24 Jul 2010 13:52:16 +0000 http://www.darwinsfinance.com/?p=2472#comment-6469 In evaluating LTC insurance you also need to think about inflation. If you think that there will be significant inflation between now and the time you may need to access the benefits, you will probably conclude that it is not a good deal. Paying large premiums in 2010 dollars to receive payments in 2030 dollars is a losing proposition, IMO. In evaluating LTC insurance you also need to think about inflation. If you think that there will be significant inflation between now and the time you may need to access the benefits, you will probably conclude that it is not a good deal. Paying large premiums in 2010 dollars to receive payments in 2030 dollars is a losing proposition, IMO.

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