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July 14, 2012


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Lots of people pay for car or homeowner's insurance all of their lives and never file a single claim. Likewise with umbrella liability insurance. You pay for the protection just in case you might need it. That why it is called "insurance". So, not needing it because you 'probably' won't need it doesn't wash with me. LTC insurance is rather expensive so it really boils down to affordability.

My dad had a policy and is receiving benefit payments from it right now meaning almost no out of pocket expenses for him. Otherwise, he would have had to sell his house to pay for it. My mother-in-law had a policy and used it for short time before she passed on. I expect to go before my wife and I will do whatever reasonable to make sure that she has enough money left to live comfortably and worry-free after my illness or after recovering from one of her own.

If I need long term care, do I want to force my children to provide it? No. Do I want to force my wife to spend down all of our assets so that I qualify for Medicaid? No. Is it more likely that I will to need long term care than my house will burn to the ground? Yes. Statistics shows that 65% of Americans over age 65 will need LTC at some point in their life? Statistics also show that once you hit 65, you have a 40% chance of spending at least some time in a nursing home. This is why I bought LTC insurance for me and for my wife.

The comments of others and what I write will be similar. We own other insurance because we want to avoid the risk of a loss which may or may not occur.

Are we unhappy that we owned the insurance? The probability of needing long term care insurance before 65 is appproximately 40% and increases as we age.

A few additional thoughts:

1. Why is $2 million in assets the point where not having a long term care plan sufficient? How much money is being produced from this $2 million? If you had to use some of the principal to pay for care giving expenses how would that effect your cash flow and your estate? Would there be capital gains issues?

2. Own a plan which will cover care giving expenses for 1 or 2 years. There are plans available in most states for short term coverage if you feel you will not need care giving services for any length of time.

3. Many people live alone. That does not mean they are alone or want to be alone. If they have sufficient resources for care giving services, where they live (home or in a care facility) will be pleasing for people to visit or for people to go out and visit others or to travel.

4. Being a caregiver is hard work. Receiving care does not mean you should live an isolated, lonley, or cannot do anything life. I see people in wheelchairs, walkers, electric chairs. They would qualify for long term care but they get out and do things. I see them in commercial areas, restaurants, markets, movie theatres, festivals, live music. They can get out and do things if they have people to help them.

This is what long term care insurance or if you have sufficient funds to set aside a reserve fund to pay for those services. The affluent understand that taking a small percentage of your assets to own a long term care plan will preserve the rest of your estate along with preserving your cash flow for your life style.

The average age of someone buying Long Term Care insurance is in the mid 50's so most of them won't go on claim for a while. You should be smart enough to understand this fact.

The federal government tells us that if you reach the age of 65 you will have a 75% chance of requiring some form of Long Term Care service before you pass-away. They also say many people who need care are under the age of 65 as medical science keeps us alive from major health events and accidents.

Most Long Term Care insurance policies have not had multiple rate increases. They have been selling these since the 70's, I wish health insurance and gasoline were as rate stable as Long Term Care Insurance.

You add the Partnership protections available in most states, providing dollar for dollar asset protection, affordable Long Term Care insurance appears to be the best way to plan.

When I purchased my policy I went to and and then spoke to a specialist who represents the top companies. I bought an affordable plan and now have the peace-of-mind knowing my family won't have this burden.

Look at long term insurance as to how quickly or slowly or not at all you want to go bankrupt.

Have none and you will got bankrupt quickly if you are at the extreeme. Slowly if you have minimal complications. Then if you are fortunate the gubamint will take care of you once you are bankrupt.

Have some will help fend off the expenses while tapping your nest. This will drain your assets slowly.

Have ALOT and you protect yourself and you cover you nest. However at what cost? It it worth it?

Seeing that the average person can't even come up with $20 a month worth of savings, I find it hard to believe that someone would even spend $10 a month on insurance that they hope to never need.

Seeing my employer had a company come in 5 years ago to talk about this I was 45 then and totally disinterested. Now that I am almost 50 I listened and started with a simple $1000 a month benefit for three years for $9.10 a month. In 5 years I might look at it again and see where I am at and then I may up it some more.

Like Yoda said "The future is clouded and hare to see"

As a fellow financial planner I agree with many of the points Neal made. Long-term care insurance, like any other insurance should be purchased based on the potential need for the coverage and how much of the cost of the risk (the need for care in this case) the insured is willing and able to bear. In this case the cost of the premiums needs to be factored in as well.

One insurer, John Hancock, has received a waiver here in Illinois (I'm not sure if this extends to other states) that allowed them to put some hefty premium increases in place this year.

I generally have this discussion with all clients in a certain age range (early 50s and above) and we make this decision as part of their unique financial situation. Some opt not to purchase it, some purchase a limited amount and assume they will cover the rest (if needed) from their personal assets, and so on.

I am generally not a big fan of this type of insurance and don't know if I will buy it someday or not. However, there is a major mistake in the calculations in this article that has to be pointed out for accuracy sake. Dr. Robert Weed alluded to it in his comment.

The author cites a 2% usage rate based on the number of people holding policies and the number making claims. This is a terribly bad use of math. It's so bad that it makes one wonder if it is purposely misleading. LTC insurance has become much more popular of late so most people currently holding policies have recently bought them and are in their 50's or early 60's, an age prior to most people needing it. Many of those people will eventually use it.

The only way to calculate the percentage of people that make claims is to examine the records of all the people who have died in say the last few years and then calculate what percentage of those that had policies made claims.

I assure you that number will be much higher than 2%.

I'd like to see the Investment News article, but the link is broken. Please update this.

"over 8 million people own this insurance, but only 180,000 people receive benefits."

Might be hard to draw any real conclusions from those two data points. For all we know 7 million of those policies are just 1-2 years old.

' Society of Actuaries concluded that people with less than $250,000 or more than $2 million probably don’t need it.'

This part I do agree with in general. People with low or high assets aren't the best candidates for LTC. If you have little money then its too much of a burden to afford LTC premiums and worst case you can fall back on the medicaid safety net.

If you are a mult-millionaire then you can self insure. Still I can certainly see a good reason to get LTC even if you're high net worth. It helps mitigate and plan for a risk.

Also I think if youre less than 50 years old then LTC isn't really necessary. There is low risk you'd use it before you're 60 or older. Premiums are lower in younger years but I assume it adds up to similar net present value either way. i.e. you can pay thenm $1000 for 40 years or $2000 for 20 years.

Anyone else think that the closing line somewhat contradicts his entire thesis?
"You’re going to have to pay significantly more for this coverage if you work with a top rated company but it’s worth it." Sounds like, you don't need a home theater, but if you get one, go with the 72 inch screen because it's worth it.

I'm in the camp that thinks it is wise to have LTC coverage. If a couple can only afford one policy, I think it is more important to choose based on factors other than gender, ie.. whose health is questionable, who has the family history of heart disease, who is older. My interest in having coverage is so that if one of us needs care while the other is alive, we don't exhaust our marital resources as quickly. Also, I think it is more crucial to have coverage in your fifties and early sixties. These should be peak earning years for most people. But if you have a qualifying event in those decades, you are also suddenly out of the workforce. Instead of topping off retirement savings, you may face a rapid and unexpected spend down.

The facts that are getting thrown around in the comments are so wild I don't know where to begin to respond other than to ask readers to actually read the facts stated above in the post.

1. People are assuming that sales of LTC have ramped up so the 2% claim number (provided by a pro LTC group) is misleading. They have the burden to show the sales skew the numbers. I have no reason to believe that sales have exploded in the last 2 years.

2. People above cite stats of 65% to 75% of our populations needed LTC. They do not cite how long or at what cost. Yet that data is needed in order to make an intelligent decision. Often, people throw data points around in a desperate attempt to prove that what they did is right rather than try to understand the reality of the situation.

3. Dr Weed talks about "most people" and "most companies" yet I've worked with clients for 29 years. Every single client who owns a policy has had to deal with significant price increases. None of those people have yet to make a claim.

4. Again, I just don't know where people get the "we know 7 million of these policies were sold in the last 2 years". LTC has a very high consistency rate . Meaning, once people buy the rarely let them lapse. I would say that most of the policies out there are older.

The headline of this article is a bit misleading. Yes, long-term care insurance may not be right for you, but it also may be a great investment. You really have to consider your budget and your life circumstances in deciding whether to buy long-term care insurance. Sure, it's not for everyone. But when you consider the thousands of dollars that long-term care can cost in just one year's time, long-term care insurance may be a savior.

I have longterm care and have had it for several years. It is over $100 month. I am 71, am healthy. I intend to read my policy again. If I were to be ill, I am afraid that the $150 a day I could receive (if I couldn't walk, etc. etc.) might not be enough with today's rising healthcare rates. I think I would be able to retrieve $5,000 if I decide to cancel it. What are your comments.

I'm 79 and do not have LTCI however I have a very large investment portfolio that generates a large annual income, in addition to receiving a pension and SS. I have been married for 56 years, have 3 children, one daughter in particular with whom I am very close lives nearby.

In order for someone to make an intelligent and useful appraisal of your circumstances they would require full details of your total financial picture. Like you, I am very healthy now but one's health can change very quickly. $4,500/month is plenty if you only need a little help, but it is nowhere near enough if you are unable to drive and have a debilitating and worsening health condition such as Alzheimers or Parkinsons.

Anyone ever filed a claim for LTC benefits? Dealing with that BS with John Hancock as well as dealing with a dying mother (from cancer) absolutely sucks. The claims department has one objective: deny claims. Only when you pull an attorney into the mix to enforce the contract do they finally start paying up. Good luck for those of you who ever have to file a claim (especially with John Hancock).

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